“My Name is Reggie. I’m about kicking ass and taking names — and We’re about making Games.” – Reggie Fils-Aime, President and CEO of Nintendo of America
Every day we are bombarded with scary information – the mysterious stock market has crashed around us as we suddenly find ourselves in a recession strong enough to rival the great depression. Truth be told we are living in scary times, companies are either dropping out left and right or they are feeding off federal funds to keep going. I do not know about you, but I wonder about the future of video games in this bleak economic stagnation, and with good reason.
Video games are seen as a luxury item, something that is good to have but not a necessity to everyday life. Because of this one might immediately put the survival of Companies like Sony, Microsoft and especially Nintendo in doubt. Unfortunately, while two of the big three bring in heavy profits from other ventures, Nintendo’s luxury items are the only thing keeping it going. So what does this mean? Will the stock market consume Nintendo? Hardly, Ninny is about making games, and that is both a blessing and a curse.
First we have to look at the negative aspects of having such a niche company. The most dangerous aspect of Nintendo’s cache is that it has no other financial backing, if for some reason the gaming industry bombed then Microsoft or Sony could potentially feed of the larger companies until they could sustain themselves again; Nintendo does not have that luxury. Further more, as people spend less and less- fearing for their pocket books- Nintendo might have to cut back on what it produces giving it’s competitors an edge on them.
Of course that is all speculative, if the gaming industry falters Nintendo will be in trouble. However that does not seem to be the case. That chart I posted is the stock market price of Nintendo over the past year –and it certainly does look bad- however that is not the full story. Anyone who knows the Stock market realizes that stocks are sold not based on current value, but their speculative value. Simply put; they are selling at a price they think the stock will be worth later, now. So does this mean the stock market is not actually a running barometer of the economy? Yes, especially in times like these where stocks are taking a nosedive simultaneously. To get a clearer picture of how Nintendo is doing we have to look at sales.
Looking at this chart gives a much brighter impression of not only Nintendo, but the gaming industry as a whole. It’s not really that hard to figure out why either; Nintendo is doing well for two main reasons, Price, and people.
Price is not hard to figure out, people want to play video games and they don’t really wont to pay a lot of money. A Wii or a DS is a perfect combination of those two wants. Further more with Nintendo’s emphasis on “everyone can play” it makes the price of the equipment more negligible when explaining to ones wife why they bought it. If you don’t believe price could draw people in just look at the sales of the 360 and the PS3. These two systems are often thought of being similar, and having similar games, so why then does the 360 have twice as many sales? The only thing making the 360 a better buy is it’s cheaper price tag.
Of course one might ask why people are buying video games in the first place, I had figured everyone was living off of mud water and canned beans by now. However, it is a little known fact that when the economy tanks the entertainment industry flies. Escapism is the most appropriate word I can think of; people trying to escape their lives turn to movies, music or video games. Of course trying to escape reality doesn’t mean they can, people still have little money no matter how much they dream of being Link…going full circle here it’s clear that the Wii is the best choice for the weak check book.
What does this all mean? In two words: Don’t panic. Nintendo might not have the genius of Bill Gates, or the backing of a entertainment giant behind it, but what it does have is the fact they make games. They make them well. And they make them cheap. In the end that is all the consumer cares about, and that is what will keep Nintendo afloat.