Commentary > Game Over
GameCube jitters
Nintendo disputes report that it puts next generation machine on hold.
February 10, 2004: 10:42 AM EST

NEW YORK (CNN/Money) The Nintendo faithful are nervous these days.

On one hand, Shigeru Miyamoto, Nintendo's chief game architect (and the inventor of Mario, Donkey Kong and Zelda), told the latest issue of "Official Nintendo Magazine" that the company is hard at work on the successor to the GameCube. On the other is a report in a leading Japanese newspaper that Nintendo has decided not to release a follow-up console for at least two or three years, opting instead to focus on additional games and peripherals for the GameCube.

Nintendo's corporate office denied the report, which originated in the Nihon Keizai Shimbun newspaper.

"Are we getting out of the hardware business? Absolutely not," said Perrin Kaplan, vice president of marketing and corporate affairs for Nintendo of America. "We're working on our next generation console and plan to launch at the same time as our competitors."

Which competitor that is remains a mystery -- there's only two and they have different launch dates. There's growing speculation among analysts and publishers that Microsoft will launch its follow-up to the Xbox in 2005, a year earlier than originally speculated. Sony is still expected to launch the next PlayStation machine in 2006.

A 2005 launch for Nintendo is possible, but unlikely. And if the company waits until 2006 to debut its next machine, it really wouldn't be a big deal at all. (In fact, it's what pretty much everyone has been expecting it to do.)

Let's say the report is on target, though. (After all, Nihon Keizai Shimbun was the media outlet that first reported Sega was exiting the hardware business three years ago a story Sega vehemently denied, until it cancelled the Dreamcast.) A 2007 launch could have serious repercussions. The GameCube launched a year after Sony's PlayStation 2 and never made up the lost ground. The console, in fact, barely held its own with a first time contender in the field, the Xbox.

The general consensus among industry insiders is Nintendo's next console could be its last, unless the company sees substantially better sales numbers than it has for the past two rounds. (Kaplan disagreed with this assessment.)

When it comes to game machines for the living room, Nintendo has never topped the sales of its original Nintendo Entertainment System, which launched in 1985. The original PlayStation trounced the N64 (outselling it by 65 million units). And the PS2 has outsold the GameCube by a 5:1 margin.

While Sony (SNE: Research, Estimates) and Microsoft's (MSFT: Research, Estimates) machines include multimedia functionality (such as a DVD player), Nintendo focuses solely on games. There have been no indications the company plans to waver from that philosophy.

Yielding to the PlayStation and Xbox wouldn't mean getting out of the video game business, of course. The Game Boy continues to boast record sales. The company will unveil a new portable dual-screen system in May called "Nintendo DS". And Nintendo's vast collection of popular characters would ensure a healthy run as a third-party publisher. Some analysts, in fact, say they half-expect to see the company transition in this direction.

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"We would not be surprised to down the road see Nintendo make its console games for Sony and possibly [Microsoft]," wrote UBS analyst Mike Wallace in a note Monday.

While it said its next generation console plans are on course, Nintendo did not dispute the article's assertation that the company plans to release peripherals meant to diversify playing styles and improve connectivity with the successful Game Boy Advance system. Kaplan declined to offer additional details on what peripheral or peripherals are in the works. (Those, too, could be announced at the E3 trade show in May.)

Click Mario Morris for previous columns

Just the rumor of Nintendo delaying its next machine caused some major ripples in the industry Monday, however. Publisher THQ (THQI: Research, Estimates) saw its shares fall 3.6 percent, due to its heavy reliance on income from Nintendo games. Nintendo shares were off 3.3 percent in Tokyo.

It's not just the faithful who are nervous.  Top of page

Morris is Director of Content Development for CNN/Money. Click here to send him an email.

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