Friday, November 3

Nintendo: with Simplicity in Mind

The Economist (Oct 28 edition) has an interesting article on Nintendo.

The video game industry is a wildly innovative and fast-moving one in which current generation of consoles become obsolete every 5 years or so. The console makers have been competing for complexity: more graphics, more memory, more time needed to complete the game. Among them, Microsoft (XBOX 360) and Sony (PS3) has been neck-to-neck in the competition, with Nintendo the distant third.

However, Nintendo is trying a radically different approach to regain market share: to go simple and reach the mass market. Example: Nintendo launched the mobile console "DS" in 2004. Its most popular games include "Nintendogs" where players can pamper, teach and train virtual dogs and get them into competitions, kind of like an interactive version of tamagochi. Not surprisingly a lot of female (new) players got hooked into the game.

Another popular one which I tried and really like is the "Brain Training" games. It includes casual but addictive games like Sudoku which appeals to a new group of players beyond the traditional avid types (boys/guys in 10s - 30s). It also suits people like me who love playing but can't afford the time to finish a series of epic games.

Encouraged by DS, Nintendo is going to launch its latest console, "WII", with simplicity in mind. For example, the controller is now more like a remote control than the joypad with buttons all over the place. We can now play tennis and fishing with this motion-censored control. How cool!

Sony is still pushing for the ever sophisticated model with blu-ray, powerful chips and all that stuff. However, the complexity has caused delays and a resulting lofty price (US$500, vs US$249 for WII). I would sell Sony's stock (ticker: 6758) if I own any (I don't).

If you are looking for alternative play, Nintendo is the obvious one, although it is still a risky bet. You can also consider the big game developers such as Electronic Arts (ticker: EA) and Activision (ticker: ATVI) because publish video games for everyone, which greatly diversify the risk. However, if Nintendo does come out as the winner, these developers will also suffer slightly because Nintendo tends to develop more of its own games.

Sony claimed the top spot in the video game industry with a radically designed Playstation. Would Nintendo able to repeat the story? This is certainly an exciting industry to play and watch!

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