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Lazard: Nintendo To Increase Wii Supply To North America?

Lazard: Nintendo To Increase Wii Supply To North America?

April 7, 2008 | By Chris Remo

April 7, 2008 | By Chris Remo
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More: Console/PC

In his latest note to investors, Lazard analyst Colin Sebastian has remained bullish on Wii sales, expecting Nintendo to re-balance worldwide production or distribution of the seemingly evergreen seller as the release of Wii Fit approaches.

Sebastian noted the continued demand for Nintendo's motion-sensing console, calling Lazard's existing 6-7 million North American sell-through estimate "conservative."

He indicates Nintendo may "may consider incremental production and/or shifting of regional unit allocation" to help manage supply, potentially boosting North American inventory. Exercise aid Wii Fit, widely projected to be a strong seller, is due out in May.

Recent Wii flagship release Super Smash Bros. Brawl has seen sales in excess of 1.4 million, with Nintendo claiming it is the fastest-selling title in the company's history. Sebastian expects the Wii's upcoming Mario Kart title to further bolstering the platform.

On other systems, the analyst pointed to the success of Rainbow Six Vegas 2, and Army of Two, as well as the continuing sales of Call of Duty 4 and Rock Band, expecting a 35% growth in software sales for March. An upward trend in PlayStation 3 sales is also said to contribute to the projected growth.

Despite a weakening U.S. economy that some have argued is heading towards recession, analyst Colin Sebastian of Lazard Capital Markets claims the video game industry is largely weathering the economic storm.

Looking forward, the analyst sees "more modest growth rates" in the second half of 2008, following a number of strong titles earlier in the summer. Marquee titles for all three major home consoles are due out throughout the year, with Metal Gear Solid 4 and Gran Turismo 5: Prologue on PS3, Grand Theft Auto IV on Sony and Microsoft's machines, and Spore likely to be multiplatform.

"We believe there is little spillover into the video game market from overall consumer spending weakness," said Sebastian in an analyst note. "Shares in the interactive entertainment sector are down approximately 4% over the last six months vs. the Nasdaq down 15%." Publishers Activision, Electronic Arts, and THQ, as well as retailer GameStop were highlighted as strong performers with positive outlook.

The analyst also noted the EU has imposed an April 16 deadline for its inquiry into the acquisition of U.S. publisher Activision by French publisher Vivendi. The merged Activision Blizzard is said to be the largest console game publisher in the world as a result of the move.

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