Nintendo's DS Player Emerges as Tickle Me Elmo of 2004
By Joseph Pereira and Phred Dvorak
13 December 2004
The Wall Street Journal
FOR TWO WEEKS, Kate Murray has been on a desperate hunt for a Nintendo DS hand-held videogame player. Actually, she needs two. She has visited a half-dozen stores near her Canton, Mass., home, checked with online retailers and even called relatives in other states to ask for help. "My kids want it so bad I'll just die if I can't find one," says Ms. Murray, whose children are 8 and 11.
Midway through the holiday shopping season, the Nintendo DS is emerging as this year's must-buy item, the Tickle Me Elmo of 2004. Nintendo Co., of Japan, released the $149 portable game player -- which features a dual screen and wireless capability allowing up to 16 players to compete against each other -- in the U.S. on Nov. 21, and the entire 800,000-unit shipment sold out by Thanksgiving, retailers say. In the weeks since, eager fans have been forking over more than $300 for the devices on eBay and other online auction sites.
Nintendo's U.S. base in Redmond, Wash., has been flooded with DS-seeking callers. Among them, the company says, was actor Dustin Hoffman, ex-prize fighter Sugar Ray Leonard and Leah Remini, star of the CBS comedy show "King of Queens." "No one, including retailers, anticipated this kind of demand," says George Harrison, senior vice president of marketing for Nintendo's U.S. unit.
Last week, Nintendo said it will airlift an additional 400,000 units to the U.S. by year end. Under a ramped-up manufacturing schedule, Nintendo is aiming to nearly double world-wide DS shipments to five million units, half of them U.S.-bound, by the end of March, when the company's fiscal year ends.
The unexpected DS craze is a true gift for Nintendo, which has been losing a battle against rivals Sony Corp. and Microsoft Corp. in the much larger market for home videogame consoles. But Nintendo, long the king in hand-held games, had hoped the DS machine would stand up well against an expected new entrant from Sony, the company's first hand-held player. Sony launched the $199 PlayStation Portable yesterday in Japan, but it isn't expected to hit the U.S. market until spring. Dubbed PSP, the Sony machine will play movie discs as well as games.
DS's success is one piece of a broader comeback for videogames this year. After declining by 3% last year, sales of videogames and associated hardware rose about 11% through the first 10 months of 2004, according to NPD Group Inc., which tracks sales. Brisk holiday sales are expected to accelerate 2004 growth even further, analysts say. Helping drive the market are two hot game titles: a sequel to the Grand Theft Auto game designed for Sony's PlayStation2 system and Halo 2, a popular shoot-em-up thriller for Microsoft's Xbox system.
Hand-held game hardware will ring up more than $800 million in sales in the U.S. this year, up almost 9% from $735 million in 2003, estimates John Taylor, analyst for Arcadia Investments Inc., of Portland, Ore. Mr. Taylor pegs U.S. sales, including game cartridges, at $1.75 billion, up 9.5% from $1.6 billion a year ago. "The DS clearly is a big reason for the gains," he says.
Videogames' resurgence may be casting a holiday shadow over the traditional toy industry, which so far hasn't produced a breakout, must-have toy. Traditionally, videogames have appealed primarily to older children and young adults. But DS machine has a broad appeal, including to children as young as 5: The $150 price tag may leave little room in parents' budgets for many more-traditional toys under the tree.
The DS system is the latest incarnation in Nintendo's long line of hand-held systems, which can be easily carried in a pocket. The name stands for "dual screen": Using the two screens, players can view, say, a map of a battlefield on one screen while engaging in combat on the other. Wireless capabilities handle up to 16 players competing and exchanging messages. The DS also has a voice-recognition component, for which Nintendo is trying to design games.
Nintendo is targeting the DS system at an older customer than the preteens who are the biggest enthusiasts for its Game Boy hand-helds. It may be in part an attempt to pre-empt Sony's PSP. Game Boy cartridges can be played on the DS, but Nintendo has chosen not to play up that capability or even use the Game Boy brand on the new system.
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