Nintendo: the gaming landscape has changed forever, but console’s are doing just fine

Five years ago, video games were in a “golden age.” The Playstation 2 was dominating sales and found its way into most households, and gamers still plugged controllers into their systems to play their games. Then people began texting on their phones — and the world changed forever, said Nintendo of America’s president Reggie Fils-Aime.

Video game developers and console manufacturers face a completely different set of problems now that social networks like Facebook and Twitter have risen to power, Fils-Aime said at the 18th annual Digital Entertainment conference hosted by BMO Capital Markets today.

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“Some observers might think that 5 years ago in the glory days of the PS2, Game Boy Advance, that those days could never be matched,” Fils-Aime said. “We’re facing challenges today that never existed before.”

Today, social gaming and casual gaming dominate game sales. Zynga, a private social gaming company, has a valuation as high as Electronic Arts — one of the largest publishers in the world — according to some metrics. The Apple App Store and games on mobile devices like Android and the iPod Touch and iPhone have also emerged as significant players in the video game industry.

Year-over-year sales have been declined slightly, according to data on game sales by NPD group. In September, game sales fell 8 percent when compared to the same month a year ago. Despite a strong showing by Halo: Reach, and now Call of Duty: Black Ops, there’s at least a little bit to be worried about, as gamers have tightened their budgets heading into the holiday season.

But Nintendo isn’t all that worried about keeping up with sales — and neither should any other company, Fils-Aime said. Console manufacturers have exceeded the sales records of the last console generation that included the Xbox, Playstation 2, Game Boy Advance and Nintendo Gamecube. When compared to the same holiday season in the past console generation, current console sales are up 45 percent. Game sales are also up 26 percent when compared to the same holiday season in the last console generation, Fils-Aime said.

“As good as the good old days were, things could and did get much better,” he said. “Systems designed exclusively for the primary purpose of playing games are doing just fine.”

A large part of that has to do with increasing prices of consoles. During the last generation, consoles sold for between $100 and $150, whereas consoles now sell for anywhere between $200 and $400.

Content producers like Electronic Arts and Nintendo have also begun making games to reach a wider audience. And with the introduction of motion controls, more and more people have begun playing video games. 62 percent of all people between the ages of 6 and 74 now play video games as of October, compared to 45 percent back in November of 2007, Fils-Aime said.

“Motion control has suddenly become the rage exactly 4 years after it started arriving, including each Wii sold,” Fils-Aime said. “And over time, people have changed their minds to become active players.”

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To date, Nintendo has sold 65 million units of its Wii remote motion controller and 50 million add-on analog stick controllers for the Wii remote. It has also sold 12 million Wii balance boards, used for games like Wii Fit. Microsoft and Sony have jumped on board with motion controlled gaming by releasing the Kinect and Sony Move, respectively, but they have a long way to go before they reach Nintendo’s momentum in the space.