Nintendo: Is The Wii Losing Steam

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Nintendo had near-record profits  for it most recently reported period, but they were not up to expectations because of  what analysts view as faltering sales of its flagship Wii game console.

For the fiscal year ending in March, Nintendo made $5 billion. The company said that it was forecasting a modest 1% increase in Wii sales for the upcoming year which would put the figure at 26 million units. By any measure, especially sales of Microsoft’s (MSFT) Xbox 360 and the Sony (SNE) PS3, that number is still extraordinary.

Pessimists about Nintendo’s prospects would argue that the Wii is losing it popularity. Or, perhaps its market penetration is so high that finding new customers is becoming more and more difficult.

There is a better case to be made on Nintendo’s behalf which is that if it can hold sales level during a sharp economic downturn in which consumer spending has slowed to a crawl, Wii demand will actually show exceptional resilience and Nintendo will keep the lead that it has over Microsoft and Sony, or perhaps increase it, so that when consumer demand returns the company’s profits will move up sharply again.

Not many consumer electronics devices will be able to claim flat sales over the next twelve months. The Wii’s impressive success story is not done.

Douglas A. McIntyre