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Analysts differ over Nintendo’s future

The research released by Strategy Analytics concludes that Nintendo must abandon its current console hardware strategy, and instead “do a Sega” by focusing on third party development instead. The group predicts that the GameCube will face a serious decline in 2003, with sales falling by 4 per cent while sales of the rival Xbox rise by 12 per cent.

DFC Intelligence, on the other hand, points out that Nintendo is the second largest company in the games industry, with $4.6 billion in revenue last year (behind Sony, with $8.2 billion; we assume that the exclusion of Microsoft here means that only games-related revenues are being counted) and predicts that the company will continue to pursue a console hardware strategy, describing it as “one of the true industry innovators”.

Although DFC acknowledges that Nintendo has made poor strategic decisions in the past, and criticises the company for failing to engage the adult gaming market effectively, it believes that the company may be changing its ways – with aggressive bundling deals on hardware, and newly forged relationships with key third parties such as Namco, Square, Capcom and Sega.

The one factor which links both reports is that both research groups are critical of Nintendo in many ways, but both acknowledge that the company should not be underestimated – with Strategy Analytics predicting that it could be the market leader in the software market if it abandoned console sales, while DFC Intelligence suggests that the GameCube may not be the dismal failure predicted elsewhere, and points out that the company has a chance to reinvent itself with the next generation of hardware in 2005 regardless.