Wii are the champions

Firm struggles to keep up with demand as unique system attracts new players of all ages

RICHARD BLACKWELL

Globe and Mail Update

When senior citizens are leaping from their couches to mime tennis moves with a little white control stick, you know something's up in the video game business.

Massive sales of Nintendo Co. Ltd.'s Wii console have proven that it's not just basement-dwelling young men who can become addicted gamers, and that runaway success is turning the system into the must-have item for Christmas – this year's Cabbage Patch Kid or Tickle Me Elmo.

Retailers report they are selling out Wii units almost as quickly as they can get them, and Nintendo acknowledges it just can't keep up with demand.

The Wii, launched a year ago this week, is unique in its use of a motion-sensitive handheld controller that forces players to get on their feet to mimic swinging a bat or golf club, or deliver a bowling ball. That feature, and a price under $300, appeals to people who have eschewed video games in the past.

“We are getting weekly shipments and we're selling out each and every week in virtually every store,” said Kevin Groh, director of corporate affairs for Wal-Mart Canada Corp. “We're selling them as fast as they can make them.”

It's the same at other game retailers.

“Since the launch we've seen them selling out continuously,” said Heather Seabrook, a spokeswoman at Best Buy Canada Ltd. “We could sell more, if we had more.”

Nintendo is trying to make the units faster, but can't keep up. It has already sold more than nine million Wiis around the globe, and is now churning out 1.8 million a month.

Twice in the past six months Nintendo has boosted its sales forecast, and it now says it will ship 17.5 million Wii units in the current fiscal year that ends in March.

Ron Bertram, general manager of Nintendo of Canada Ltd., said the company is making more hardware than ever before. “We're shipping boatloads of product [but] the demand has just been extraordinary.”

Most stores in Canada that sell the Wii are getting deliveries weekly, he said, and Nintendo is trying to make sure any retailer that features the game system in a sales flyer will get enough of the units that week.

While supplies are tight, the Wii isn't quite as rare a commodity as last Christmas, Mr. Bertram said. “The product only lasted hours [after each shipment] last year, [but] it seems to be lasting two or three or four days this year.”

Nintendo says that by New Year's Day, it expects the Wii to be the most successful game system in a decade.

In Britain, shortages have been so acute that individuals are selling the game consoles on online sites such as Amazon for close to double the retail price.

The scarcity of units has prompted some debate over whether Nintendo is keeping back product to make the Wii seem even more desirable.

The company denies that, and analysts say such a strategy would make no sense.

There's no point in Nintendo holding back when it can sell everything it produces, said New York-based independent toy analyst Chris Byrne. “You end up leaving money on the table.” He said shortages are no surprise because it is hard to project future demand for a game device, and even harder to quickly ramp up production of a unit that relies on custom-designed electronic components. “[They] have to order the chip, and it's not like they're using an off-the-rack chip.”

Mr. Byrne said the main reason for the Wii's success – and the shortages – is that it has diversified the market for video games so dramatically, and unexpectedly. People who don't normally play video games find it easy to use, and parents like the fact that it forces their kids to get up and move around.

“You've got so many more people getting into this because of what it is,” Mr. Byrne said. “You've got senior citizens buying this.”

Nintendo is clearly delighted at its success. Nintendo of America president Reginald Fils-Aime gleefully told a Bank of Montreal investment conference last week that while the Wii was first bought by core game players, it has now mushroomed far beyond that group. “It's in retirement homes, it's on cruise ships, it's been the No. 1 requested item on bridal registries, it's the source of contests in bars, [and] it's been used as a rehab tool in children's hospitals,” Mr. Fils-Aime said.

According to market research firm NPD Group Inc., Nintendo has sold about 423,000 Wii units in Canada since it was launched a year ago, far outstripping the 138,000 sales of the more expensive Sony PlayStation 3, which was unveiled around the same time. Microsoft's Xbox 360 sold about 306,000 units in Canada over the same period.

Darrel Ryce, director of technology and entertainment at NPD's Canadian operation, said Nintendo has benefited because Wii appeals to the “Nintendo faithful” as well as the burgeoning number of “casual gamers.”

Sales have also been boosted by the release of a very strong range of game software, he said. This week, Nintendo is launching Super Mario Galaxy for Wii, and “there will be huge sales for this [game],” Mr. Ryce predicts.

Next year, there could be another burst when the company releases Wii Fit, software combined with a balance board that allows users to play fitness games such as ski jumping, soccer heading, or hula-hooping, or to hold yoga poses.

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