Nintendo Wii officially recession-proofDecember 11, 2008: 6:43 PM ET
By Yi-Wyn Yen
Nintendo seems to have bucked the recession. The Japanese video game manufacturer has doubled November sales of the Wii in the U.S. from a year ago, according to NPD's latest release on gaming sales.
The demand for the Wii remains strong since the game console's debut two years ago. The company sold a record 2 million Wiis last month, higher than the previous 23 months. Nintendo (NTDOY) has significantly increased shipments of the red-hot Wii for this holiday season after dealing with a shortage last year. Last November Nintendo sold 981,000 Wiis.
Analysts were taken by surprise by how well the $249 console has performed in a flagging economy. "Two million? You sure? This is mind-boggling," said Michael Pachter, a top industry analyst for Wedbush Morgan Securities. Pachter had predicted sales of 1.4 million Wiis. "At least Nintendo is meeting demand."
That's something the company didn't manage to do last year, when it underestimated the craze for its consoles. Nintendo had to offer IOUs for the Wii last December and ran out of the DS, its handheld console, before Christmas. This time around, Nintendo increased its holiday inventory for the Wii by 50% and 10% for the DS for the shopping season. November sales for the touchscreen DS, which launched four years ago, tripled to 1.6 million from October '08 sales, according to NPD.
The NPD numbers also looked strong for the Xbox 360 (MSFT). A recent price reduction to $199 for its entry-level version, exclusive titles like Gears of War 2 and Fable 2, and a major software upgrade moved 836,000 Xbox consoles in November. Gears of War 2 was the top seller for games with 1.6 million copies sold.
Sony (SNE) is struggling to pick up steam with the PlayStation 3, which remains the priciest of the three console makers. Sony sold 378,000 units of the PS3. The company released Home, its sophisticated virtual reality world, on Thursday to attract more gamers to the PlayStation platform.
Reports that consumers are drastically cutting back on spending hasn't stopped nearly 15 million people in the U.S. who have bought a DS or Wii this year. "The consumer is voting with their wallets and pocketbooks," said Nintendo of America president Reggie Fils-Aime. "That the Wii and DS represent the best entertainment value in the marketplace explains why these strong sales are happening."
Pachter says it's because people are now choosing a Wii over a latte. "There's a solid middle class that's going to make substitutions to buy games. Now it's buy a Wii and don't eat out for a month, or don't take that ski trip," he said. "Or cut out Starbucks."