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Nintendo Cuts Some Fees for Software

Video games: The move may result in lower retail prices for Game Boy Advance titles, which could help boost sales.

November 23, 2001|HIROSHI SUZUKI | BLOOMBERG NEWS

KYOTO, Japan — Nintendo Co., the maker of video games such as Pokemon, reduced the fees it charges software companies that make games for its Game Boy Advance portable system to boost sales, software makers said.

Cutting fees may result in cheaper games and increased software sales, said Brian Farrell, chief executive of Calabasas Hills-based THQ Inc., the biggest U.S. maker of Game Boy software. The retail price of Game Boy Advance games made by software developers could fall to between $29 and $34 in the U.S. by March, compared with $39 now.

Eight months after Game Boy Advance's debut in Japan, Nintendo is counting on the device's software to help propel sales during the all-important Christmas season.

The fee cut indicates sales of the new games may have lagged company forecasts, analysts said.

"It is very unusual for Nintendo to lower royalty charges for software for a game machine which has been in the market for only a few months," said Soichiro Fukuda, an analyst with Nikko Salomon Smith Barney Ltd., who rates the stock "neutral." "This may be a sign that the shift of game fans to Game Boy Advance from Game Boy is not as smooth as Nintendo expected."

Nintendo, which controls more than 90% of the market for portable video games, makes more than three-fourths of its sales from Game Boy-related products.

Sales of Game Boy Advance software have failed to surpass those of games designed for older versions of the device. Nintendo sold 19.1 million copies of software for the new version of the handheld player in the six months ended Sept. 30, the same amount sold for the older Game Boy series player in the period.

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