GameCube production halted~Nintendo clears console inventory, hints at new product

[Jewels]

TOKYO, Aug. 7 — Nintendo is to press the pause button on production of its Game Cube consoles while it clears inventory of unsold machines, the company’s president said on Thursday. But Satoru Iwata promised the struggling games company was developing a radical new product to be announced next year — however he gave few details save to say it would be a departure from mainstream gaming consoles “that will have a big impact on the world”.

THE HALT IN PRODUCTION will last until autumn as Nintendo struggles against competition from Sony’s PlayStation 2, the leading console in the global market, and Microsoft’s XBox. PlayStation 2 has shipped more than 51m units since its launch in 2000 compared with under 10m for Nintendos competing Game Cube, which was launched in 2001.

Mr Iwata, who gave no figures on how much inventory was left to clear, acknowledged that the group had stumbled with the Game Cube console and conceded that it had made a strategic mistake by not ensuring that it had a consistent flow of attractive software for the Game Cube.
But he cast doubt on the ability of Nintendo’s competitors to continue attracting users with games that are becoming more and more graphically sophisticated and difficult to play.
“Games that are sophisticated require a lot of time and energy,” he said. As games became more complicated, players were given up playing and this was leading to the gradual shrinkage of the market, he warned.
“We are thinking of launching a completely different kind of game.
We are confident that we can develop a product that anyone can enjoy and that will provide people with a new kind of excitement,” he said. Mr Iwata declined to provide any more details about what kind of new product Nintendo is working on, saying only that the company would make a further announcement with details next spring.
He did, however, suggest that the new console would aim to return the games industry to its roots of providing fresh excitement through games that can be enjoyed by anyone, including those who do not normally play video games.
Investors are concerned that Nintendo has not risen to the challenge provided by competitors, such as Sony and Microsoft, by targeting the casual user, which is where most of the growth in games demand has been coming from.
Earlier this year, Nintendo’s share price plunged on news that Sony would launch a handheld game, challenging Nintendo in a market that it has dominated. It was hit again when Sony announced a new multi-function machine that would combine a DVD recorder with the PlayStation. Nintendo’s share price, which closed at Y9,690 on Thursday, is 19 per cent below this year’s high of Y11,890.

Nintendo’s mission is to develop simple games that anyone can enjoy, and by doing so bring back those people who have given up playing games into the market. If Nintendo succeeds in doing that, it might even achieve sales of Y1,000bn, Mr Iwata said. That compares with sales last year of Y504bn.

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