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Nintendo gets in the game
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November 16, 2001: 7:51 a.m. ET
GameCube launch Sunday will bring final player into the video game battle.
By Staff Writer Chris Morris
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NEW YORK (CNNmoney) - As Nintendo enters the now three-way fight for video gamers this Sunday, it brings a machine that may boast fewer features than the Microsoft Xbox or Sony PlayStation 2, but it also brings one that has a significantly lower price tag.
Nintendo's GameCube gaming system will retail for $199 - $100 lower than the industry - leading PlayStation 2 and the just-released Xbox. Nintendo says it hopes the lower price tag will attract gamers who can only afford one new system this year.
If pre-orders are any indication, it might have hit upon a sound strategy. Toys R Us.com sold out of its first round of pre-ordering in just four minutes when it offered the gaming system Oct. 8. A second pre-ordering round (which offered more units than the first one) sold out in 10 minutes. The site has held the largest percentage of its units to put on sale Sunday, but even then, getting your hands on one is expected to be a difficult challenge.
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Pikmin is one the GameCube's most anticipated games. | |
"If you really want to get your hands on one of these without camping out at a retail store, the best advice we have ... is to sign up for one of the 'delivers' programs (a subscriber email from Toys R Us.com)," said Jeanne Meyer, vice president of corporate communications for the site. "This gives you a sneak peak into what we're doing. You learn first when we're going to put them on sale. But even then, you're going to have to be fast on the mouse."
Wall Street analysts, though, say the price of the GameCube isn't what's selling the machine. The pent-up demand among "hard core" gamers for any new system pretty much guarantees a sell-out, regardless of price.
"Whether it's $200 or $300 is not going to matter," said Mike Wallace of UBS Securities. "Nintendo and Microsoft are going to sell every machine they can put on the shelves."
Meyer concurs: "This is one item where people aren't afraid to step to the plate and spend some money."
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Watch a scene from Nintendo's Rogue Leader game.
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Unlike Microsoft, though, which is reportedly losing as much as $100 per Xbox sold, Nintendo is losing just $20 or so per machine, says Wallace. The company also charges a higher licensing fee ($11 versus the $7-$9 charged by Microsoft and Sony). The result is a healthier bottom line.
Not everything about the GameCube's launch plan is as sound as the lower price tag, though. The system arrives with just 10 available games - compared with the 15-20 that accompanied Xbox earlier this week. And reviews of many of the early games have been lukewarm.
In fact, Japanese sales of the GameCube (which launched in September) were less enthusiastic than the company had hoped for. John Taylor, managing director and analyst for Arcadia Investment Corp., says many things contributed to the poor showing: The lack of game titles, the genre of those titles (which weren't the action/fighting games that hard-core Japanese gamers love), a light advertising campaign and the fact that the machine went on sale right after the Sept. 11 attack on America.
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Mario's younger brother rids a house of ghosts in Luigi's Mansion. | |
Some industry insiders saw this as a sign that only two of the three big players would be able to stay in the fight. P.J. McNealy, senior analyst at Garner G2, though, disagrees.
"The market has the elasticity to support three players," he said.
Some might point to Sega's failed Dreamcast as evidence contrary to that, but McNealy says Sega's console was the victim of truly bad timing and the power of the PlayStation.
"The Dreamcast was delayed," he said. "Then, when it was finally launched, it faced the looming spectre of PlayStation 2. And buyers held onto their money."
Nintendo has established itself over the years by developing memorable, fun titles, though. And that's something analysts say will ultimately work in its favor.
"Nintendo is the Disney of the interactive world with its characters," said Taylor. "They have an incredibly strong library of titles."
Wallace agrees, calling Nintendo "the best software company in the world."
While the Xbox touts its hard drive and surround-sound capabilities, Nintendo has quietly been building a network of gaming devices that work together. The company's phenomenally popular GameBoy Advance (a standalone handheld gaming system) can be used as a controller on the GameCube. The system also features an industry first - wireless controllers which will allow players to enjoy games from up to 30 feet away (and make the living room safer for family members to cross without tripping).
Despite the increased competition it faces, Nintendo is eager to expand its market share. For years, it has controlled the children's market of video games. Older gamers, though, have tended to scoff at its offerings, finding Mario and Spyro the Dragon too cutesy for their tastes. The GameCube, though, will offer several titles aimed at those critics, including "Star Wars Rogue Squadron II: Rogue Leader," a LucasArts-developed title that offers in-game graphics that are almost movie-like.
"Nintendo has a very interesting opportunity, if they choose to use it, to get a larger market share of the older audience," said Taylor. "Nintendo has always had the core audience of younger players. At this time during other console launches, they've had a business plan that was less attractive for third-party publishers. This time around, the model is real similar to Xbox and Sony. My sense is you're going to see more third-party support, which gives them a bigger shot at that older audience." 
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