Nintendo GameCube Japan Launch Comes at Crucial Time

Nintendo GameCube Japan Launch Comes at Crucial Time

Nintendo's new video game box, the GameCube, launched in Japan on Friday without the hoopla of previous console launches, raises a question over its prospects in the U.S. at a sensitive time for the industry.

Sales in Japan on Friday were described by retailers as strong for Nintendo Co. Ltd.'s (7974.OS) new console, but nothing like the frenzy that surrounded the launch of Sony Corp's (6758.T) PlayStation 2 console, which also plays DVDs.

Nintendo said it is pleased with the first day sales performance of the new machine, but other industry watchers were cautious about the fortunes of game publishers ahead of the U.S. launch due Nov. 18.

One analyst said video game publishers, which have seen their share prices rally amid a slump in the broader market, could have a harder time meeting the optimistic sales targets many had set for the crucial year-end period.

Part of the uncertainty is over how consumer behavior changes after this week's devastating attacks on the World Trade Center and the Pentagon. Some analysts have said they expect a new tone of restraint to take hold, with consumers shying away from extravagance and entertainment.

The terrorist attacks have been all over the news in Japan and it's really affecting people over there,'' said Dan Hsu, editor of Electronic Gaming Monthly, a leading game magazine.

The attacks though targeted at the United States have lead to expressions of support worldwide from U.S. allies, including Japan, and triggered a sharp decline in Tokyo's share market while the U.S. market was closed.

I don't think it's bad news for Nintendo, it's just bad timing,'' Hsu said. He also attributed the first-day sales to the lineup of available games, none of which, he said, are killer apps'' that would make game-players want to buy the console.

Actually everybody's quite pleased'' with the sales performance, said Perrin Kaplan, vice president of corporate communications for Nintendo of America.

She said 80 percent or more of the GameCube units had been presold, accounting for the relative calm at Tokyo stores Friday. On-hand inventories there would dwindle sometime between Sunday and Tuesday, she said.

As for the parallels with the PS2 launch, Nintendo's strong push for pre-sales made comparisons difficult, Kaplan said, adding that the market of eager gamers has not gone away.

Some of the same people who were in line for GameCube will probably be in line for XBox too,'' she said.

But others were more cautious. Hsu said consumer attitude in Japan toward the GameCube launch will be mirrored here.

I don't think you're going to see the kind of rush you saw for the launch of PS2,'' he said.

Nintendo expects to ship 1.1 million GameCube units this year in the U.S., including 700,000 at launch, spending an estimated $75 million on marketing in the process. The company will soon begin holding Cube Clubs'' in cities across the U.S. to show off the 128-bit console.

Nintendo said this week that promotional campaign will go forward as planned.

Separately, brokerage Wedbush Morgan Securities issued a research note on Friday saying consumer confidence would be weakened by Tuesday's attacks, hurting game sales.

The note cited particular concerns for major GameCube publishers like Electronic Arts Inc. and Midway Games Inc., which has two new titles launching soon.

The new caution for video game publishers comes after massive rallies in the share prices of many in the industry. EA, the leading game publisher, was up 27 percent in the year to Monday, the last day of trading this week.

- LOS ANGELES (Reuters)