Those comments seem slightly odd - in the first instance, dropping the price during a recession would seem to be a good way to stimulate demand.

In the second instance, the Wii is not "new entertainment": it's now over two years old. He may be trying to set expectations for a potential drop in sales in the EU and US, but as the article notes, the key problem is that Nintendo appear to have been sitting on their laurels and relying on casual momentum instead of attempting to promote new IP and experiment with the Wii's motion controls. It'll be interesting to see what is announced in June - and whether or not this will do anything to improve the non-casual-gamer perception of the platform.

Admittedly, Nintendo have done amazingly well by following their own road, but I can't help thinking that their current attitude is leading to a cliff edge in the near future...

I agree with you juice uk, though I wouldn't go so far so as to say they would possibly move off a cliff edge.

They do need to produce new IP, but they haven't been doing a completely terrible job trying to broaden their audience using existing IP.

If Nintendo develops products, they don't leave room for third parties. When they don't do it, they are resting on their laurels... They are doing what they did with the Nintendo DS, they are giving time to third parties to start developing. Unfortunately, third parties are still left with blank stares.

If PS3 were doing a real recovery one could say the product reached a saturation point and everyone is looking for an alternate console. But the Japanese market is now switching to handhelds. They already use phones to watch TV, so it seems suitable that they are switching their entertainment to the mobile platform. As a proof, Nintendo DS and PlayStation Portable have been besting the console parts since a year or so ago.

Sounds like a lot of excuses. A price cut on a price elastic luxury good always spurs demand.

The real issue is that they are stagnant on their own IP and the 3rd party titles are generally of abysmal quality.

The last thing that I thought was cool from N was the wii fit - but it's not that well executed and is sadly destined to be thrown in the GreatNintendoBinOfAbandonedPeripherals along side Robby and the light gun.

*IF* (for example) they really threw some thought behind the wiifit with actual weight loss programs & progress tracking of cardio programs they could have a monster of a hit.

Nintendo has done that the past few console generations (not had many good games). Started with N64 where they had no good games, and the first party games were so spread out. That trend continued with the Gamecube, and now it is once again how they do things with the Wii. I stopped buying Nintendo after the N64 because of how disappointing it was compared to the PS1.

Roberto, Japan has always been a mobile platform consumer. It's not that they are just now switching, but that they have really have always been. I mean when you spend half of your day on trains it just helps.

Sure, but let's remember the PlayStation 2 sold over 20 million units over there. I am starting to believe the combined amount won't reach that much once this generation is done for.

It seems entirely healthy to me to try and spur demand through quality products and interesting propositions rather than through price-cuts, which offer at best a temporary boost.

It's a very forward thinking and confident position to say 'we need to do better to make people excited about our product at its current price' compared to 'we need to slash the price to compensate for a lack of exciting releases'.

I find the approach of honestly appraising the market situation and shouldering the responsibility for improving it to be quite refreshing.

I had stated in another posting that this was inevitable to happen...Wii has been dominating for so long that people who already own a Wii will eventually buy a PS3.

What Nintendo needs now is "quality" 3rd party support. The fact that Wii titles are going down in Japan reflects that better software is appearing on other units. The casual audience may be digging into "Price is Right" etc., but gamers looking for a challenge are going elsewhere.

I was playing my old PS1 the other day, and I was thinking of the technology difference and 3rd party edge Sony had over Nintendo with their 64. When Nintendo came out with the Wii, it finally seemed that Nintendo was once again back on track, but in my opinion, they are relying too much on Wii Music-style casual entertainment and large gaps between quality titles.

Motion-Plus was to give 3rd parties "better 1:1: motion" to work with but now that is pushed to at least June.

Now, if we keep in this scenario, it will be interesting to see if this trend begins in North America.

It seems more likely to me that the Wii is reaching market saturation in Japan, so gaining incremental sales is going to be significantly harder now than at launch. That difficulty would exist in any market.

How do we determine the saturation point? How many PS2s are in Japan? How much bigger is the "expanded audience" than the target for the PS2?

PS2 was stated as 20 million earlier in this post.
End of year number in Japan were reported at 8m Wii, 3m PS3, and 1m X360 (http://www.gamasutra.com/php-bin/news_index.php?story=23132)

Clearly there are many factors leading to the lack console sales, but it is troubling. I tend to agree that price cuts aren't the best thing, that the Japanese market seems to be transitioning to handhelds, that the market is buying less games, and that great mass-market software is lacking in the industry in general.

Games are always the #1 solution. WiiSports captivated the world. WiiFit may outsell the PS3 as Nintendo reported at the GDC, but the overall state of games is one of transition, and clearly the signs from the Japanese market shows that things are rough right now. I'm curious to see what Monster Hunter does to the Wii demographic, and if EA's line-up (Tiger Woods w/MP, Beatles, Boom Blox 2, Dead Space) does to possibly prevent the same situation in the US.

I wish Nintendo would focus a little bit more on their own IPs and also on creating brands that sit well with the "core gamers." Other systems have a range of these sorts of games and while I dig Nintendo for doing "their path," we are looking at incredible dry spells of games of Nintendo IPs and great 3rd party support. You would think that a return to form was in order. But instead Wii Music is given.

I like that more people are playing games. It's good for the hobby, good for the industry and breaks the stereotype of what a "gamer" is. I just wish we have a few Castlevanias and Star Foxes to go with the Wii Music and Bratz (insert type). And perhaps if they had that, the sales in Japan would be better. There is only so many system that can be sold on the base level "casual" (and I've begun hating labeling games and the people who play them) games.

OK, so, Russell, that suggests to me that the Wii is not at saturation. There are 20 million PS2s, and that's without the Wii's "expanded audience," so unless "expanded" actually means "contracted," or the market has just shrunk dramatically overall in the last nine years, it's not saturation.

@ Bob,

I am not so sure it is likely that the Wii will hit the all time high saturation in Japan on the PS2 because I do not believe the system will last 9 years like the PS2 has. I also see a lot more increasing competition for Nintendo in Japan from PS3 than Sony had for the first 7 years on the PS2 (from both Nintendo/Sega at the time). I stand by my assertion that Nintendo has reaped all the low hanging fruit and maintaining the phenomenally successful sales rates in Japan seems unlikely to me (International sales of Wii seem much more healthy to me and I suspect will have more longevity). I have no stake either way but for sure it should be interesting to see what happens there.

Bob, let's put it this way: While the PlayStation 2 reached 21.5m in Japan, Game Boy Advance sold 17m. Nowadays, Wii is at 8m with Nintendo DS at 26m (Nintendo amounts can be obtained form http://www.nintendo.co.jp/ir/pdf/2009/090129e.pdf) and the PlayStation portable at 11m. As I mentioned previously, I believe there is a shift from home console to portable that will prevent Wii from reaching PlayStation 2 sales.

In my point of view, most of the players who used to play in a PlayStation 2 now game in Nintendo DS or PlayStation Portable. It seems an obvious shift that as you grow up you spend less time in front of a TV set and start to use portables more often.

In any case, Wii is tracking slightly below PlayStation 2 when launch aligned, while it is tracking much higher in America and Europe. Therefore, the assumption that it is reaching an expanded audience holds true in America and Europe, but not in Japan.

I don't think increased age equals more time on a portable system. I have a DS but don;t spend as much time on it as did my original GameBoy back in the 80s. I bought my Wii more recently than my DS and barely touch the DS now despite having interesting software for it. I want a big screen and better graphics.