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Last Updated: Thursday, 15 January, 2004, 09:13 GMT
GameCube fights to stay in the game
By Alfred Hermida
BBC News Online technology editor

The days of Nintendo as a player in the world of console gaming could be numbered, say experts.

Close-up of Nintendo Gamecube, Nintendo
Nintendo needs to power up its games
Its GameCube has been struggling in the face of aggressive competition from Microsoft's Xbox and the supremacy of Sony's PlayStation 2.

Sales of Nintendo's plucky console faltered during 2003, though they picked up towards the end of the year when the GameCube's price tag fell to just 79.

"The most interesting thing of last year was that even with its low price and such a great games bundle, the GameCube did not do as well as I would have expected," said David Cole, an analyst with DFC Intelligence.

One of the problems for Nintendo has been the perception of its GameCube. Some see it as a console aimed at children, with its raft of child-friendly games.

The main market for console games, however, is the 18 to 35-year-old male.

"Nintendo has to figure what it wants to be," said PJ McNealy, a games analyst with American Technology Research.

"Does it want to be in the handheld, the kiddie market or compete more externally in the wider market?"

'Disappointing year'

Overall, sales of consoles have been slowing down, despite the falling cost of owning a games console.

Nintendo GameCube controller
It is very dangerous to underestimate Nintendo. It has been profitable games company for a long time
David Cole, DFC Intelligence
The decline looks set to continue until the end of 2005 when next generation machines are launched.

"2003 was a decent year but not what people had expected," said Mike Wallace, Managing Director of UBS Investment Research.

"I do think it was a disappointing year. People were looking for 10% growth but closer to 5%."

The challenge is for the GameCube is to hold its own in the fierce battle for the wallets of gamers.

"What makes the Xbox different is how it is surrounding itself with a lifestyle," said Richard Ow of games analysts NPD Funworld, referring to Microsoft's push into online gaming.

"On the PS2 side, the hard drive is coming soon and the console has a very strong consumer loyalty."

Next-gen battle

The Sony machine has built up an unassailable position. The PS2 is the undisputed console king, with sales far outstripping those of its rivals.

More than 70 million units have been sold since launch.

"The PS2 has won this generation. But the Xbox and the GameCube have a lot of growth potential as about 50% of this generation has two or more machines," said Mr Cole.

Close-up of Microsoft Xbox, Microsoft
Xbox targets online gamers
The race is now on for the next generation of consoles, with both Microsoft and Nintendo keen to avoid giving Sony another year lead like it had with the PS2.

But even here, Nintendo could have a tough time competing. The company simply does not have the deep pockets of its rivals to throw money into developing the next wave of consoles.

"My understanding is that their next console is going to be a lower-end games machine," said Mr Wallace.

"I don't believe Nintendo is going to survive unless they have five or six exclusive titles.

"If you ask me if they are still going to be in the console business in 2008, I would say no," he said.

While some analysts agree with this prognosis, others warn that Nintendo has been in the games business for a long time.

"It is very dangerous to underestimate Nintendo," said Mr Cole. "It has been profitable games company for a long time. It has had to focus on bottom line while Sony and Microsoft can take short term loss."

Games heritage

The key battleground for future consoles could be games, rather than the hardware and here Nintendo has grounds for optimism.
Screenshot of Mario Kart: Double Dash!
Mario Kart: Double Dash was a hit on the GameCube

Experience has shown the impact a single exclusive title can have on console sales. Just think of what Grand Theft Auto: Vice City did for PS2 sales over 2003.

"Vice City, Halo and Legend of Zelda are platform-defining games and drive consumers to buy a console," said Richard Ow.

"Which console I am going to buy depends on the games. Software is going to be the driver for hardware sales."

Nintendo's legacy of producing unique and innovative games, with many of its veteran titles stretching back to the early 80s.

Indeed its Mario Kart: Double Dash!! proved the resilience of its branded titles. The game was one of the hits of the festive season, selling more than 500,000 units in the US in November alone.

Nintendo's quintessential games heritage could be its ace in the pack as the console makers prepare to do battle with their next-gen machines.

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