Nintendo's Success is Bad for Publishers

In one of his recent notes to investors on Nintendo's success with the DS and the Wii "taking the videogame industry by storm," Todd Mitchell of Kaufman Bros. Equity Research, believes that Nintendo has created a vicious circle, mostly affecting video game publishers. Mitchell wrote, as posted on NextGeneration: "Nintendo has not only increased the size of the market, but it has also re-segmented it in its own favor, in our view. Nintendo is dominating software sales on its popular hardware platforms, leaving the publishers with a smaller slice of an only somewhat incrementally larger pie."

More than that, Mitchell feels that "shorter product cycles of Nintendo's platforms puts the publishers in a permanent catch-up mode. We think the upcoming releases of Super Mario Galaxy and Metroid Prime 3: Corruption will highlight this phenomena [sic] this holiday season."

Remember my article on Nintendo's raising its own sales bar? I made it sound like Nintendo was happy about it. And I sincerely thought they were, until I heard this, that is. A Reuters report said that the company making the Wii and DS had just raised sales expectations and profit forecasts for the 06/07 fiscal year.

Guess it's not only bad for third party publishers, but for themselves too. Imagine that. Sony doesn't have to worry about experiencing the same issues with their PS3 though. Lucky them!