<<Reuters
UPDATE - Nintendo sells 1.5 mln GameCube consoles in Europe
Tuesday January 7, 3:33 pm ET
By Bernhard Warner
( Adds detail about U.S. sales in paragraphs 11, 22-23)
LONDON, Jan 7 ( Reuters) - Japan´s Nintendo said Tuesday it had sold 1.5 million GameCube units in Europe last year, holding off rival Microsoft for second place in the hotly contested video game console market.
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The company also said it sold three million of its portable Game Boy Advance devices in Europe in 2002, and that a new model aimed at older players would be introduced in March.
With the sales update, Nintendo maintained its slim hold on the number two position in game consoles in Europe, well behind Sony´s PlayStation 2 but ahead of Microsoft´s Xbox.
Analysts say the GameCube and Xbox, which were both launched last year, are in a close battle for second place, and that Microsoft could overtake Nintendo in Europe, particularly if it sticks to an aggressive strategy of bundling free games in with each Xbox sale.
Ben Keen, executive director of market research firm ScreenDigest, forecast Tuesday that Xbox sold 1.4 million consoles in Europe last year, while PlayStation 2 sales are expected to come in at around six million.
He forecast that Xbox would outsell GameCube in 2003 by a margin of 2.6 million units to GameCube´s 2.2 million units. NO CHANGE IN PRICE
Nintendo European managing director David Gosen said the strategy in 2003 would be to push new game titles, but not touch the price tag. GameCube carries a suggested retail price of 199 euros ( $207), compared to 249 euros for the Xbox.
"We intend to make 2003 a strong year for GameCube, in which we focus on new games and we intend to build on our number two position," European manager David Gosen told Reuters.
He said that over 80 new games would be launched for GameCube in 2003 and more than 60 new Game Boy Advance games.
A new and thinner Game Boy Advance, called Game Boy Advance SP, will be introduced in Europe for between 129 and 139 euros on March 28. Current Game Boy Advance devices retail for around 99 euros in Continental Europe.
The company added that the new device will be launched in the United States on March 23 at about $100. Nintendo has sold some 11.5 million units in the United States since its launch in June 2001.
Nintendo will also enter the online gaming market in March, when it will promote its first title and begin selling broadband and dial-up modem adapters for European Internet users to engage in multi-player online gaming.
The company has not disclosed prices for the adapters. It will launch online gaming with one title, Phantasy Star Online, an action game developed by Sega Corp.
DOWNPLAYING ONLINE
Nintendo´s rivals Sony and Microsoft have announced more elaborate online gaming plans, in some cases forging business partnerships with telecommunication companies and Internet service providers to tap into a market expected to surpass $1 billion world-wide by 2006.
Gosen downplayed the potential of the online gaming market, saying the relatively slow rollout of high-speed broadband connections throughout Western Europe would limit uptake in the next few years.
"In the short term, it is clearly not going to be a significant market in terms of size," Gosen said.
Analysts who attended Tuesday´s trading update in London suggested Nintendo was holding back on its online gaming plans to avoid the hefty investment costs involved, including the installation of computer servers able to handle thousands of players.
"Online gaming is going to bring in revenues, no question about it," said Keen. "The question mark is whether you can keep costs down."
Keen applauded the company´s introduction of the sleek, new Game Boy Advance SP, saying it would appeal to a new, older group of players. He estimated that Game Boy Advance sales, including the SP and older version, would hit 4.5 million units in Europe this year.
"It will definitely broaden the market," he said.
Gosen said Nintendo had plans to ship two million Game Boy Advance SP units by the end of the fiscal year in March.
In the United States, computer gaming analysts have for weeks been buzzing about the potential for such a device and its affect on companies like THQ Inc.(NasdaqNM:THQI - News) with significant exposure to the Game Boy. Several warned of a shortfall in their December quarter profits on weak sales.
"While not a full upgrade to the Game Boy, the new SP does address some of the major concerns, such as the lack of screen lighting and poor battery life," Investec analyst James Preissler said in a note. "This news should be a positive for the video game group, in particular, THQ, which has been impacted by the decline in sales of Game Boy Advance.">>
