Nintendo Sees Room For Expansion, Potential DS Sales Of 152M

Nintendo president and CEO Satoru Iwata says the Wii and Nintendo DS still have room to grow their audience. He predicts that DS's total installed base in Japan, Europe, and the U.S. could reach reach an "ultimate potential" of 152.2 million units, driven by strong European sales and the system's "gaming population expansion." Speaking with investors at the company's third quarter financial briefing, Iwata addressed concerns that Nintendo's console sales might have peaked and could deflate in the next fiscal year starting April. He attributed these fears to the past platform cycle theory, which dictates a five-year lifespan for video game consoles. "Especially in the case of DS," he admitted, "when you apply this five-year cycle theory to a platform that has been through its 5th holiday season since its 2004 launch, a concern that DS business may slow down in the next fiscal year may appear to be logical at first glance." Iwata, however, then characterized the theory as obsolete and inapplicable to DS and Wii. He pointed out that Nintendo's handheld has seen its sales develop uniquely in each territory, primarily due to to the system's "gaming population expansion" with non-traditional titles aimed at casual gamers. As a result, sales for the portable in Japan almost equal that of the U.S.'s, and Europe's sales are the highest of the three markets. In previous console generations, lifetime-to-date figures for Japan were less than half that of the U.S.'s, while Europe's sales were also significantly lower. The company head shared data for DS hardware units sold per territory so far -- 25.1 million in Japan, 27.6 million in the U.S., and 31.4 million in Europe, totaling 84.1 million. For comparison, the PlayStation 2's lifetime-to-date units sold for all three territories combined is 97.5 million. He also forecasted the handheld's "ultimate potential" growth in the U.S. and Europe, according to the percentage of DS owners in Japan (19.76 percent out of a population of 127 million), where the system's "gaming population expansion" has been in effect the longest. Applying that percentage to other markets, the DS's units sales could potentially grow to 60.9 million in the U.S. and to 66.2 million in Europe. Added to Japan's 25.1 million, the DS's installed base would total 152.2 million units for the three regions. "It can be said that the U.S. has 2.5 times as much the potential of Japan, and Europe has even bigger, undeveloped potential," said Iwata. "Of course, they are theoretical potentials and not the actual demands of today." He continued, "The fact is, the current European game market potential is smaller than that of the U.S. This is because the ratio of people who enjoy video game in Europe is still less than those in the U.S. and in Japan. However, since the European market has grown rapidly in the last two years, and portable game market has come close to the level of the U.S., the situation is changing." Iwata believes that as the company will be able to find even more potential after further considering each country in the entire European Union, adding that the DSi and emerging countries will further drive unit sales. Based on that outlook, he commented, "I don’t think it is appropriate to conclude that DS is reaching its final stages on the market and that the market will be saturated in the next fiscal year." Also expecting continued growth from Wii, the Nintendo president said, "With new customers acquired by the gaming population expansion efforts, it is not impossible for Wii’s total sales to exceed the final install base of PS2. Wii still has much more room for expansion."