|
Nintendo recently announced
at Space World that the highly anticipated launch of their GameCube
console in North America would be delayed until Sunday, November
18th. Moments after news of GameCube’s delay made it across the
wires, Nintendo Co Ltd’s stock declined sharply and gamers across
the Internet expressed their strong feelings on the subject. After
some time to consider the situation, we offer this collection of
known facts and evaluation of the delay.
GameCube’s recent delay provides time for Nintendo to deliver
700,000 systems on launch day - nearly a quarter more than expected
for the original November 5th launch. Software availability will
also be improved. Existing sales forecasts of 1.1 million units sold
in North America by year’s end have been reaffirmed. Peter Caruso,
a Merrill Lynch VP commented, "It is not a case of sales being
lost during the quarter."
Senior VP of Marketing and Corporate Communications for Nintendo of
America, George Harrison explained Nintendo’s reasoning to
Reuters, “We looked at the available quantity that we had… we
felt that it's more important to have sufficient quantity for
Thanksgiving weekend and we thought that was a better day to go on
sale.”
Further commenting on Nintendo’s move, Peter Main, NOA's Executive
VP of Sales and Marketing explained, “Our industry has learned the
dangers of arriving at a launch party without enough gifts.”
Referring to Sony's PlayStation 2 launch. Console launches are an
incredible source of free press and Sony even benefited from this
for a short while as images of crowded retail stores and stories of
$1,000 PS2s on eBay filled the news. However, the great lack in
supply backfired just weeks later when the company was swamped in
bad press. Nintendo stands to profit from the massive launch with
free news coverage that money cannot buy. Peter Main coined the
phrase, “GameCube Sunday in America."
Delayed ## Days?
Though this development could be Nintendo attempting to a shine a
light on the GameCube delay, it now seems as though November 5th was
never intended to be the true launch date of Nintendo GameCube.
According to statements by the company, November 5th was only the
ship date for the system in North America. The "street
date" (when systems become available at retailers) was intended
to take place on the 8th or 9th of November. In contrast, the
current November 18th launch date is in fact the street date as well
- making the actual delay only nine days. Nintendo’s GameCube
should begin arriving at retailers on November 15th.
Financial Analysis
As Nintendo made waves in the media with Space World 2001, Nintendo
Co Ltd's stock was dropping in Japanese trading. The stock ended
down 880 yen or 4.55% minutes after the news of GameCube’s delay
was released. This just days after being punished by the yen’s
sudden appreciation against the dollar. The rash reaction of
investors was much like that of Nintendo fans jumping to judgment.
The financial community soon commented on the delay and the stock
climbed 3.68%.
The delayed ship date, “really doesn't mean anything,” said Mike
Wallace, an analyst at UBS Warburg, in an interview. “The initial
ship is before Thanksgiving, that's all that really matters.”
Heath Terry, an analyst at Credit Suisse First Boston upped the
anti, commenting, “Even if it comes out on Dec. 24, they'll still
sell 1.1 million units on Dec. 24.” Such reports from the
financial community were enough to help Nintendo Co Ltd. recover on
day one of Space World.
The XBOX Launch
Is an XBOX delay soon to come? “Basically, we're not concerning
ourselves with their launch date,” was the reaction of Microsoft
spokesman, James Bernard. However, news that Microsoft is currently
not as far along with XBOX hardware and software production as they
would have liked to be for the November 8th launch coupled with
GameCube’s delay makes the possibility of at least a one week XBOX
delay very plausible.
If Microsoft doesn’t delay XBOX and GameCube launches upward of
ten days later, could that affect GameCube sales? Not in any
significant manner is the answer. GameCube marketing will have been
in full force for weeks by that time and any gamers that have
decided to purchase a sell-out GameCube launch unit would likely not
sway in their decision. Peter Main noted during Nintendo’s
teleconference that Nintendo 64 launched a full year after Sony’s
PlayStation and still managed to initially surpass Sony’s console
in installed base for a period of time. A few days difference in
launch will not impact sales.
As stated above, free press coverage is very important to game
console manufacturers. Nintendo does not want to share headlines
with Microsoft come launch day. The good chance that American media
will center their Thanksgiving week retail stories on Nintendo
alone, may well help improve long term sales.
Retailers & Consumers
It’s been established that the delay in no significant way would
harm the gaming company. In fact, from a variety of perspectives,
positives can be found. The remaining question is how the general
gaming public and retailers will be affected.
One of the largest toy retailers in North America, Toys R Us has
publicly commended Nintendo’s move. "We strongly applaud
Nintendo's move to reduce the anxiety of customers who can't find
the video game products they want," says Wayne Yodzio, Vice
President, Divisional Merchandise Manager, Toys R Us, Inc. I
contacted smaller retailers for comment so the voice of the industry
is not restricted to TRU… hopefully, I’ll edit in their comments
in soon.
From the consumer perspective, we know many Nintendo fans are
outraged by the story while others are not bothered in the least. As
word of the delay's intricate details and actual day count make it
out to the gaming community, GameCubicle expects the discontent to
disappear.
|
