Nintendo is boosting GameCube shipments as it faces off against Microsoft's Xbox video-game console and Sony's PlayStation 2 for a larger stake in the $20 billion video-game market in the holiday shopping season. Gamemakers may benefit as Americans cut back on travel and instead spend on home entertainment in the wake of terrorist attacks, investors said.
"It's going to be a cocoon Christmas: Americans will stay home and play games," said Simon Ross, a fund manager at AIG Global Investment in Tokyo, who manages $200 million in Japanese equities including Nintendo. "It's going to be a good Christmas for Nintendo."
The US is crucial for Nintendo as sales there accounted for almost half of total revenue in the six months ended Sept 30. The additional shipments will reach the US between January and March to supplement dwindling supplies.
"GameCubes are sold out in most shops in the US," Minagawa said.
As supplies of the console dry up in stores, where the GameCube sells for $199, the price on the Internet is increasing. The console is priced at $399.99 on the Amazon.com Web site.
The size of the shipment increase depends on the supply of memory and graphics chips used in the devices, Minagawa said.
"We want to ship as much as possible, but it all depends on whether chip production can catch up," he said.
NEC the third-largest chipmaker, makes microprocessors and graphic chips for the GameCube. International Business Machines designs the chips.
Nintendo plans to sell 1.3 million consoles in the US and 1.4 million in Japan by the end of December. The GameCube went on sale on Sept 14 in Japan and on Nov 18 in the US. The console is not yet sold in other countries.
More important for profits, Nintendo aims to sell 10,000 units of its game software for GameCube by March 2002. The company will sell 20 software titles in the US and 10 in Japan by Dec 31.
Game console makers recoup production costs for hardware by selling software copied onto optical disks.
"We are losing very little money by selling GameCubes, but by combining software and hardware, the GameCube business will make money in the year ending March 2002," Minagawa said.
Sony's game unit, which makes and sells PlayStation 2 and its older versions as well as software, returned to profit in the July-to-September period after having lost money for six consecutive quarters.
Microsoft, the biggest software maker, said yesterday it has so far sold more than one million Xbox consoles in North America and expects to meet the company's sales goal of as much as 1.5 million consoles by year end. The Xbox was released on Nov 15.Sony, the biggest maker of game consoles, plans to ship 20 million PlayStation 2 consoles in the year ending March. The PlayStation 2 was released in March 2000.