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Nintendo Claims Credit For 99 Percent Of 2008 Revenue Growth

Nintendo Claims Credit For 99 Percent Of 2008 Revenue Growth

January 16, 2009 | By Eric Caoili

January 16, 2009 | By Eric Caoili
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More: Console/PC

Nintendo celebrated record-setting U.S. hardware sales in December, selling a new monthly high of 2.15 million Wii consoles. The Nintendo DS sold 3.04 million units, breaking all previous records for system sales in any single month.

Furthermore, the company says that with 10.17 million units sold in 2008, Wii is the first console to have been purchased by 10 million Americans in a single year.

The Nintendo DS nearly reached that goal as well, selling 9.95 million handhelds during the same period. The previous record holder for the most hardware sold in a single year was the Nintendo DS in 2007, which moved 8.52 million units.

Wii numbers, however, were below analyst expectations, with Wedbush Morgan analyst Michael Pachter predicting 3.25 million systems sold, while EEDAR's (Electronic Entertainment Design and Research) Jesse Divnich estimated 3.2 million for the Wii in December 2008.

"Projections are always a complex task; one significant factor for the Wii in our December calculations was examining previous hardware trends," says Divnich. "These indicated that the Wii, particularly in lieu of the holiday season and historical December trends, would outperform its November number [2.04 million] by a significant margin. Clearly, that did not actually turn out to be the case."

Divnich is quick to point out, however, that the Wii's lower-than-predicted performance is not due to waning appetites, but supply constraints.

"These Wii figures are not any indication that is demand slowing down," says Divnich. "The Nintendo Wii is going through supply just as quick as they have before, and these numbers merely reflect the large disparity between supply and demand."

"We still believe the Nintendo Wii would have sold north of 4 million units have supply and demand been in equilibrium."

According to Nintendo, Wii represented 55 percent of all current generation home console sales in 2008, while the Nintendo DS made up 72 percent of portable system sales in the same year.

The company also claims that while annual game industry revenues jumped 19 percent in 2008 over the previous year, Nintendo products were responsible for 99 percent of that additional revenue.

Divnich agrees that Nintendo carried the industry despite the current economic downturn, commenting, "We still believe that Nintendo, with its Wii and DS install base, were the main catalysts behind protecting our industry from seeing the full wrath of the recession in late 2008."

As for software, over 132 million games were sold in the U.S. for Nintendo systems during 2008. Nintendo says that games for its consoles made up 20 of the top 30 titles on The NPD Group's best-selling software list for the month.

The four top titles were all Nintendo-published games for the Wii -- Wii Play at No. 1, with Mario Kart Wii, Wii Fit, and Super Smash Bros. Brawl Following.

Disclosing software numbers, Nintendo pointed out that Wii Music has sold 865,000 units since its release in October 2008. Mario Kart DS, which surprisingly sold 540,000 copies in December 2008 and was the eighth top-selling game during the month, despite having been released in 2005, has sold a total of 4.3 million units 38 months after launch.

The company also noted that more third party units were sold for Wii than for any other home console for the second consecutive month. Additionally, it revealed that Guitar Hero III: Legends of Rock, Guitar Hero World Tour, and the Rock Band Special Edition Bundle sold more on Nintendo platforms than on any other consoles in 2008.

Cammie Dunaway, EVP of sales and marketing at Nintendo of America, comments: "Our type of entertainment has now moved to the point where there is no longer a question that if you offer consumers an expanded definition of what a video game can be, and deliver that idea with quality and affordability in mind, millions of new people will start playing video games."

She adds, "Concepts like Wii Fit, Guitar Hero, and Rock Band never would have seemed feasible just a few years ago, and now they’re driving growth for our the entire industry."

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