Bleak outlook highlights the need for a Revolution...

Drawing parallels between the videogame industry and Hollywood, Nintendo's Reggie Fils-Aime Vice President Sales and Marketing continued to illustrate the Japanese giant's forward thinking direction and the reasons behind it at the 33rd Annual UBS Global Media Conference.

Describing the popularisation of special effects amongst Hollywood during the 1980's and the subsequent bread-and-butter nature of the big-budget blockbusters, Reggie attributed the recent struggles of Hollywood to the single-minded approach and highlighted recent comments from Jim Gianopulos, Co-Chairman of Fox Filmed Entertainment, "It makes no sense to continue aiming all your films at the same demographic quadrant, eventually they all become stale." Nintendo believes the same.

The downward spiral of the Japanese videogame market has been well documented, with software sales showing year-on-year declines for the last eight years. Despite this the general consensus is that videogames are thriving within the United States and Europe, however Reggie's sobering figures painted an industry that may have grown, but whose penetration has remained largely the same for the United States at least.

Four years' sales data split across half year increments depicted a downward trend in each first-half, turned around this year only by the launch of the Sony PSP and Nintendo DS. Typically the first half of the year is a weak and barren time propped up by the Christmas blockbusters; however a look at the critical second-half highlighted Nintendo's projections of a decline in 2005, despite the Xbox 360 being accounted for.

The troubling data signals a need for the industry to change according to Nintendo however Reggie continued to portray a bleak outlook. Looking back across the last four generations of hardware figures shows an increase in the number of consoles sold across America, however taking into account the increase in the number of consoles per household, reveals that penetration has remained largely the same increasing from 31% during the NES heyday to 33% from the current generation. Reggie moved onto suggest that hardware sales might have actually slumped across North America, comparing expectations of 53 million units in total this year with 60 million predicted during 2004.

The sobering news continued with the claim that the videogame industry can no longer count on overall population growth, with startling figures used to demonstrate the fact that younger children are no longer playing games as much. For the first time in 20 years census data from North America suggests that the primary feeder 10-14 male demographic is down on a year-to-year basis, with those playing weekly now picking up a joypad on a monthly basis.

Whether or not the factor of a rising introductory age comes into the equation is hard to tell; could it be that videogames are in a transitional state at present, as developers come to terms with creating games for a maturing audience.

Highlighting W. Chan Kim and Renée Mauborgne "Blue Ocean Strategy" and Clayton M. Christensen's "The Innovators Dilemma", Reggie discussed the need for disruptive technologies, a strategy voiced by Nintendo's President Satoru Iwata in previous years to successfully target new audiences and in the process shake up the market in a similar manner to Apple's iPod and the Nintendo DS.

It's easy for somebody who's played Nintendo titles for all their life to begin worrying a little about Nintendo's newly found focus, however Reggie's closing comments of "...returning gaming back to everyone, from the hardest of the hardcore as well as new consumers" provides some relief that Miyamoto-san and co won't turn their backs entirely.