They do things just a bit differently in Japan. The game shows are way funnier, and I have yet to find a finer cuisine anywhere than fresh sushi at a hibachi table. Not only that, but Japanese financial reporting also looks kind of strange if you're used to the bombastic American style.
For example, the very headline of Microsoft's (NASDAQ:MSFT) earnings release last night trumpets out "27% revenue growth; fastest first quarter since 1999." In its own latest report, Electronic Arts (NASDAQ:ERTS) made darn tootin' sure we knew how many Harry Potter games it sold in that product's first week on the market. That's just how we roll in the U.S. of A.
Not Nintendo (OTC BB: NTDOY.PK). Though these guys play in the same market, Nintendo prefers to speak softly and carry a big stick.
Its earnings report is modestly titled "Earnings Release: Six Months Ended September 30, 2007." Yet Nintendo hardly lacks for bragging material. Sales for the second quarter more than doubled over the year-ago haul to 695 billion yen, or $6.1 billion, and net profit nearly tripled, at 132 billion yen, or $1.2 billion. And of course, above and beyond the quarter, Nintendo's DS handheld entertainment gadget dominates its space, and the Wii owns the console wars.
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For a couple of weeks after releasing a new PSP and some highly anticipated games, Sony (NYSE:SNE) took the portable crown in the core Japanese market, but that jump was short-lived, and Nintendo is back on top. It's the same story in the console arena, where Microsoft took top honors is September, thanks to Halo 3, but is unlikely to hold that advantage over the Wii for very long. Even with deep price cuts and top-of-the-line game releases, Microsoft and Sony can take only short-lived positions at the top.
I'm always asking around at my local Target (NYSE:TGT), Wal-Mart (NYSE:WMT), and GameStop (NYSE:GME) stores, and every store still tells me that the Wii sells out within hours of a new shipment hitting store shelves. Guess I should get out more. The point is, Nintendo is still selling these boxes as quickly as it can make 'em, nearly a year after the Wii's release.
It looks as though Nintendo is trying to do something about the American supply situation by shifting Wii shipments away from Japan and into America and Europe. Right now, the Japanese market still stands for more than 80% of the company's operating income by geographical location. Operating income from Europe over the past six months was a distant second, 60% higher than the American take. I can't blame the company for not shipping every available piece of hardware over here under those conditions.
Where do we go from here?
Nintendo is a Motley Fool Stock Advisor pick and remains a five-star CAPS stock even after tripling its share price over the past year. This company seems to have figured out what kind of games the global consumer wants, and it also aims to grow gaming into new demographics. That includes casual gamers such as women, older people, and guys who prefer sports.
The famous Wii remote makes for a more active gaming experience than do the old-school button-festooned controllers, and there's a "balance board" accessory -- Wii Fit -- on the way for an even more physical platform. It's a health-conscious marketing angle that the other console makers now hope to emulate with their own motion-detection plug-in gadgets. But Nintendo has the clear first-mover advantage here. The portable DS relies more on mind teasers such as the Brain Age series than on traditional shoot-'em-ups and fighting games.
Mix in a generous helping of Mario and Luigi and a generally cuddly image, and you have a game provider for the whole family. Sony and Microsoft are still going after the hardcore gaming crowd of mostly boys and young men, looking ahead to becoming living-room media hubs in the distant future.
Very different strategies, very different tactics, very different results. As I said, they do things a bit differently in Japan, and I think Nintendo's way is better.
Enjoy these Foolish games:
- Nintendo Hits the Next Level
- Is Better Good Enough at Sony?
- Date Xbox, Marry Wii, Kill PlayStation
- The Best Economic Games
Nintendo, GameStop, and Electronic Arts are all part of David Gardner's gaming keiretsu inside Stock Advisor. Wal-Mart and Microsoft are Motley Fool Inside Value picks. Try either newsletter service free for 30 days to read the original recommendations.
Fool contributor Anders Bylund holds no position in any of the companies discussed here, and his only game console is a DreamCast. He could go for some teppanyaki tonight. You can check out Anders' holdings if you like, and Foolish disclosure is always the tastiest dish on the table.
