Nintendo's End Game Still All About Games, Analysts Say

Does Nintendo have its sights set on expanding its gaming devices into increasingly broad media platforms?

The company has declared its intention to enter the social networking and content-sharing realm. It plans to launch a Mii channel where Wii users can share their Mii avatars and engage in popularity contests--along with existing Wii channels offering news, weather reports and photo sharing. Some have predicted that Nintendo will try to monetize these channels.

Then there's Konami's intriguing Nintendo DS "beauty navigation software," set to launch in Japan this fall, which could signal a movement into non-game marketing territory.

Interesting speculation, but Nintendo's initiatives continue to be primarily about enhancing its position in the games business--not indicators that it has media platform aspirations akin to those of Microsoft and Sony, say digital media analysts interviewed by Marketing Daily.

"Nintendo has been adamant about viewing itself as a game company, not an entertainment company," points out Michael Goodman, director of digital entertainment for the technology research and consulting firm Yankee Group. "Yes, they're building a social network, but it's more a gaming social network than a whole networking system like Microsoft's Marketplace," and most of the channels being offered through Wii are not unique in function, he says.



In short, Goodman doesn't buy predictions that young people will "drop MySpace" in favor of Mii.

Further, while the Wii's applications may expand somewhat, it was designed first and foremost as a game console, whereas the PlayStation 3 and Xbox 360 were designed to function as entertainment systems, Goodman says.

David Cole, game analyst for DFC Intelligence, agrees that Nintendo is closely focused on games and its established business model. "This is a very conservative company," Cole says. "The Mii channel will help build buzz, and they're also doing things like offering digital downloads of classic game products. But these are designed to add value for the core game consumers, and get them to buy more robust software."

"At the end of the day, it's all about games--the rest is secondary," concurs Michael Gartenberg, vice president, research director for JupiterResearch.

Of course, Nintendo's dramatic shift in strategy and much-hailed comeback have amply demonstrated its nimbleness within its core business. And marketing savvy has been as much a part of that success as hardware.

Nintendo used the handheld DS, launched in 2004, as a testing ground for the hardware concept behind its plan to reach well beyond the core gamer audience of young males--emphasizing user-friendliness, fun and lower price over mind-blowing graphics requiring ever-more-powerful chips.

When DS sales failed to take off, Nintendo responded with Nintendogs, the virtual puppy-nurturing game that proved irresistible to many demographics, and women in particular. "Brain Age" and other adult-oriented games soon followed, drawing in Boomers and even their parents.

With the Wii, launched late last year, Nintendo set out to capture a broad demographic from the outset--not only with the console's intuitive wireless controller, attractive pricepoint and compact, décor-friendly design, but with a suite of games that offer something for everyone. That required moving away from its traditional preference for making its own software, to collaborate with independent software partners.

The results: Wii racked up 2.5 million units in U.S. sales between January and April, compared to PlayStation's 1.3 million and Xbox 360's 5.4 million.

"Nintendo learned from the lessons of the DS, and has made the Wii's appeal more all-encompassing from Day One," sums up Goodman.

An application like Konami's "Dream Skincare" DS software, which will enable women to input daily body temperature, weight, and other information and receive tailored regimens for healthier skin--may not fit with traditional concepts of "games," but it's all part of Nintendo's game plan.

"Nintendo is continuing to extend its base by opening up new market segments," Goodman says. "They're focused on providing fun game platforms--but what constitutes a 'game' may depend on the segment."

"They may be expanding the definition of games, but these titles are all intended to be fun game products," agrees Cole, who also points out that the particularly voracious Japanese game-playing market is in many ways unique. (It's not yet clear whether the skincare software will be sold outside of Japan.)

And while Nintendo might consider models for trying to monetize its new channels, these experts say it's extremely unlikely that the company would risk alienating its customer base by introducing advertising.

"Nothing's inconceivable, but they would face serious challenges"--including the growing legal barriers surrounding advertising to children, observes Goodman.

"That would require a big change in the company's basic philosophy," adds Cole. "It took years and years before they would even consider taking advertising in their own Nintendo consumer magazine, because they wanted to preserve its purity. And when they finally started accepting it, it was on a very limited basis."

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