A Level Closer To the Mainstream

Nintendo of America's Reggie Fils-Aime says the company is convinced it did the right thing by courting mainstream buyers with a relatively low price when it introduced the popular Wii.
Nintendo of America's Reggie Fils-Aime says the company is convinced it did the right thing by courting mainstream buyers with a relatively low price when it introduced the popular Wii. (By Susan Goldman)
By Mike Musgrove
Sunday, October 11, 2009

Nintendo of America's president and chief operating officer, Reggie Fils-Aime, says that when he talks to groups, he tries to make a habit of asking one question: How many of you have played a video game?

When he started at Nintendo, years ago, only about a third of adults raised their hands. Now that ratio has flipped in the other direction. In Washington last week, Fils-Aime said that only about a fifth of the people he encounters these days say they've never picked up a game controller.

That's an anecdotal sign of audience growth, and one that game and hardware sales figures generally bear out. But as a video game executive who'd like to see his industry more firmly entrenched in pop culture, Fils-Aime wants there to be a day when the question itself is a little superfluous -- along the lines of asking whether a person has ever read a book or seen a movie.

"We're moving from being a niche market into the mainstream," he said, "but we're not there yet."

Once upon a time, Nintendo trailed its competition, but in recent years the company has been well ahead of the pack both with its Wii console and its DS mobile game device. At the end of September, the company announced a price cut for the Wii, to $200 from $250, a move that the company hopes will boost the system's recently slowing sales again this holiday season.

The No. 1 player in a market has the luxury of not fessing up to a lot of mistakes. Analysts say the company may have left millions of dollars on the table during the Wii's first two years, when the device was priced at $250 and nearly impossible for people to find at retail stores. The company could've made more money with a higher price, the argument goes, but Fils-Aime said that Nintendo wouldn't handle the Wii's launch much differently if given a second chance.

"Absolutely not," he said. The device's lower price was central to attracting the mainstream consumer who might otherwise have tuned out the Wii, goes his argument. "We wouldn't do it any other way."

Microsoft and Sony have also cut their prices recently. Microsoft now offers one version of Xbox 360 priced at $200, and in recent weeks Sony has offered a slimmed-down version of its game console priced at new low price of $300. Some consumers are finding the prospect of a game system that also doubles as a player of high-definition Blu-ray movies attractive: Sales are up 300 percent, according to the company.

With Nintendo's advantage on the price front eroding, Michael Pachter, a video game industry analyst at Wedbush Morgan Securities, predicts that console sales will start to even out this year among the three companies. Having spent years in which meeting demand was its biggest struggle, the Wii may be starting to see competition in its rearview mirror.

"Nintendo is a victim of its own success now, because sales of anything less than 25 million a year for the Wii looks like a failure," he said. "But they're still selling more consoles than the other guys."

Both Microsoft and Sony have announced new types of game controllers that appear to be inspired by the Wii's popular motion-detecting controls. Both companies already offer consoles with better graphics and more multimedia capabilities than the Wii.

Fils-Aime shrugs off those developments. Those motion-detecting controllers don't exist yet, so there's not much to comment on, he said. And with new game software such as Wii Fit Plus, the sequel to a best-selling exercise title from last year, the company figures plenty of people will take an opportunity to grab the Wii console at its new price.

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