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Nintendo's handheld strategy proceeds on a dual track

By Kim Peterson
Seattle Times technology reporter

THE SEATTLE TIMES George Harrison, senior vice president at Nintendo, talks about the company's new two-screen game device.

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The DS will sell for $150, the Redmond-based company said, and will have 10 to 12 games at launch. At yesterday's briefing, the company said that some of its launch games will hail from well-known franchises, including "Super Mario," "Madden NFL" and "The Sims."

Senior Vice President George Harrison sat down with The Seattle Times yesterday during the briefing to talk about the DS launch.

Q. Why did Nintendo pick the $150 price point? There's not a whole lot of room for that to drop in the future.

A. It's hard to say that it won't drop somewhere down the line. We've always believed that mass-market pricing was most important for launching products, and we've typically tried to stay under $200. The Game Boy has always been under $100, and so we wanted to try to get as close to that price point as we could.

	The Nintendo DS will be sold for $150 beginning Nov. 21.

Q. Nintendo said that there might be a shortage in the U.S. this holiday, with only about 1 million units to sell by the end of the year. Why couldn't Nintendo get more supply out there? A supply shortage could be a good or bad thing.

A. A little shortage is a good thing. It creates consumer interest and fury, kind of the Cabbage Patch Doll syndrome, but at the start of any hardware there generally is a period where demand outstrips supply.

We launch on Nov 21 here in North and South America, and in early December they launch in Japan and very quickly will have to build up their own inventory. So we expect that we'll be in great shape by the first quarter of next year.

Q. Will you still ship the Game Boy Advance SP (the current Nintendo handheld console on the market)?

A. Absolutely. We just lowered the price of the Game Boy Advance SP to $79 in early September, really designed to keep that business very healthy. During this calendar year, we'll probably ship 7.5 million to 8 million units of the Game Boy Advance SP, which is more hardware units than even the PlayStation 2 will ship.

Q. So going forward you'll have these two handhelds?

A. Yeah. They'll continue in tandem and there will be software developed for each one. For the software developers themselves, the SP is a very important platform because there are almost 25 million of them already out there and a big audience for which they can develop software and be profitable.

Q. Explain the shift to using more third-party developers. How does that reflect a change in thinking at Nintendo?

A. Certainly, game tastes reflect cultural tastes, and while there are many great games that have come out of Japan, our own including Mario and the Zelda franchise, there has been a huge growth in interest in culturally based games here in the U.S. — things like "Spider-Man" or "Harry Potter" or sports genres. We knew it was important to have a broad range of games available at the launch of the system.

Q. A "Mario" game comes out at the start of about every hardware release. Why is Mario a guaranteed draw?

A. I'm not sure I know why, but it is. If you look at the history for us, Mario helped us launch our original 8-bit Nintendo system in the mid-'80s, and was very instrumental in launching the Nintendo 64. Something about the Mario character is just universal. His popularity seems to span all ages in pretty much every territory of the world.

Q. Nintendo hasn't fully embraced online gaming and yet the DS has this Wi-Fi connectivity. Is there a shift in strategy going on in this area?

A. It's something that we've known that consumers are interested in. It just hasn't grown yet to be a big business, and consumers have been reluctant to maybe pay for that experience. There are two kinds of Wi-Fi. One is the local area network that we talked about today and you saw some examples of those games. The actual games for the Internet (the second kind) won't be coming right at the launch ,but it's a possibility.

We know consumers are interested in it. What we have to do is find a developer who can make a game that says, "This is why I like that and why I'm willing to get involved and pay for it."

Q. How is the handheld market going to shake out between the DS and the upcoming Sony PSP (expected next spring)?

A. For us there are two contenders. The Game Boy Advance SP will continue and the Nintendo DS is really designed to appeal to a wide audience. This is Sony's first challenge to us in this handheld market.

We're not underestimating them because they have been successful in the console area, but we really think we've got the best, broadest appealing system. It has unique features in terms of game development: the two screens and the touch screen.

Sony's taking a different approach in that they're trying to add to what is more common gaming the features of music and movies. We're pretty confident that our games strategy will be the one that will be successful.

Q. How is Nintendo going to differentiate the DS and the PSP to customers?

A. The good news of course is we have a window before they launch, so we get to be there first and define ourselves. Part of the reason for the aggressive pricing is to try to get a big start on building the installed base, get the developers excited and get the momentum going.

We're not going to spend a lot of time trying to consciously compare ourseves to the PSP, but we're aware of it. We're trying to make sure that we appeal not just to the people who love our character-based games but also the people who love the sports games and other genres.

Q. Having 10 to 12 games at launch doesn't seem like a lot. Why is it taking so long to have games ready?

A. It's fairly typical for most any hardware launch to have 10 or slightly under 10. Typically the hardware gets finished and you have maybe a year to develop a game. You can have a choice of waiting an extra year to have more than 10 games or get going. As long as you have enough variety and breadth and coverage of the various gaming genres, 10 is plenty to launch with.

Kim Peterson: 206-464-2360 or kpeterson@seattletimes.com

Copyright © 2004 The Seattle Times Company

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