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Q&A

Nintendo at top of its game

Sales of its Wii and DS video consoles stay hot in the downturn, firm's U.S. chief says.

October 27, 2008|Alex Pham | Pham is a Times staff writer

Nintendo Co.'s sales are speeding along faster than a getaway car, shrugging off economic woes as if they were bugs on the windshield.

Its Wii video game console continues to be sold out in many stores. Sales of its DS hand-held console remain hot despite its being a 4-year-old product, ancient by game-technology standards.

Sales of the Wii Fit exercise game, launched in May, are on track to surpass those of one of 2008's bestselling titles, Grand Theft Auto IV, by the end of the year, according to projections by Wedbush Morgan Securities.

All that has driven up the Kyoto, Japan, company's market value to nearly $45 billion, on par with Walt Disney Co.

The man at the wheel in North America is Reggie Fils-Aime. The 47-year-old is sometimes called the Regginator. It's easy to see why. As president of Nintendo of America, Fils-Aime has relentlessly promoted his company's products to mainstream consumers, expanding its marketing efforts in such unlikely places as AARP Magazine and Good Housekeeping and on daytime talk shows.

We caught up with Fils-Aime last week in Long Beach, where he was spreading Nintendo's message to 14,000 people attending the Women's Conference.

How are women taking to Nintendo's products?

Half the owners of our hand-held DS console are women. In terms of people who claim the Wii console as theirs, a third are women. That compares to about 20% for typical consoles. Among those who play the Wii, 50% are female.

What's the appeal?

With the Wii remote, anyone can play. It's made the system much more inviting and appropriate for gamers of all ages. Men love the competitive nature of games. In our research, women enjoy the social nature of games. That's why Nintendogs [a game for DS] did so well with women. There was no winning. You just had to take care of this cute dog.

Has Nintendo felt any blow-back from the economic crisis?

We have not seen any negative impact. The sales data show both the Wii and the DS up in September over a year ago. The Wii continues to be largely sold out at retail. We know consumers see our form of entertainment as a strong value because the entire family can play and because each game has more than 50 hours of play time.

What about the holidays?

For Nintendo, we project very strong sales. Our two platforms [Wii and DS] account for almost 70% of the dollar growth of the industry in the U.S. in the first nine months of this year, compared to last year.

Given that strong position, retailers are providing us with tremendous support. Retailers view the Wii and the DS as a way to draw more consumers into their stores. They are using it as a loss leader to drive traffic. This week, for example, Target is selling the DS for $125, when the normal price is $129.99.

What measures has Nintendo taken to prevent a shortage of Wii consoles this holiday?

Nintendo has continually raised the production levels of the Wii hardware. We're now producing 2.4 million units a month worldwide. Last year, we made 1.6 million a month. So we've made a 33% increase. One of our competitors projects they will sell 10 million consoles worldwide this year. For us, that's three months of production. We're producing an unprecedented level of hardware to try to meet demand.

The Wii Fit has been out nearly five months, but it continues to be in short supply. Why?

I was in our New York Nintendo World Store last Tuesday, and there was a line of 40 people. Every single one of them bought a Wii Fit. We know the demand continues to be very, very strong.

At this point, only about 3 in 10 stores will have Wii Fit in stock. We are dramatically increasing shipments of Wii Fit. We've sold somewhere around 3 million units. The demand has been so brisk that it has been difficult to catch up. The other challenge is that we're seeing demand from a whole new market. Of the people who stood in line in New York, 60% were working women. This is a demo that arguably has never bought a video game, and they're buying it for themselves.

With a nontraditional gamer as your primary consumer, are you seeing a different sales pattern?

The typical industry sales curve has a strong ramp up in the first month or two that then drops off. Our products ramp up and sustain sales at high levels over long periods of time. New Super Mario Bros. for DS [released in May 2006] is still selling at a strong pace. Most video games that old would no longer be stocked by retailers. This is a major paradigm shift in the industry.

Any advice on scoring a Wii this holiday?

Look at retailer circulars. Go to their websites. We're flowing products into stores on a very regular basis. Once you see it on the shelf, you ought to buy it. While we're bringing 50% higher level of supply into the market this holiday, we don't know if the demand will be even higher than that.

--

alex.pham@latimes.com

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