Today’s WSJ reports that Nintendo (OTCPK:NTDOY) still has vocal skeptics:
“The Wii’s popularity is unbeatable at the moment, but it will be facing tough competition in the fall. Some skeptics also say that Wii’s popularity is short term, based largely on the strength of Wii Sports …” (Nintendo on a Roll With Wii, July 5, 2007.)
So long as a group of analysts continue to scare people away from Nintendo shares, the stock still has room to run as these naysayers are proven wrong and their congregation converts to owners of NTDOY.
The risks of competition in the fall and waning Wii Sports popularity are very weak assertions. Regarding competition, the Wii is by far the cheapest console and will continue to appeal to parents worldwide as a more affordable purchase - especially as fuel, food, and energy costs eat into family budgets.
Parents are also well aware that once a console invades the household, demand for new games is as constant as dad’s need for fresh razors. Again, the Wii is more appealing than PS3 and Xbox360 because Wii games are cheaper. If you do not believe me, watch a pack of moms peruse the game isles at your local Target.
The Wii also has advantages over competition because the gameplay is revolutionary and unique. Thus, the Wii appeals to an enormous mainstream that would never consider purchasing another console because these consumers do not consider themselves video game players. Furthermore, based on price, unique gameplay, and brand loyalty from Nintendo DS, the Wii seems to be a much more appealing option for young teens and preteens.
Therefore, analysts who work 100 hours a week in cubicles on Wall Street may talk about blanket business risks such as competition, but those of us who interact with society are well aware that Wii competition is a lot weaker than supposed in theory.
Insofar as Wii popularity somehow being completely dependent on Wii Sports, anyone who takes a moment to talk with an employee at GameStop, EB Games, or Best Buy knows this is nonsense. In fact, when I bought my Wii the salesperson immediately recommended two additional “must have” games that are super fun to play on the Wii.
Honestly, who thinks of these silly risks? I cannot seem to find any sales data that supports these unproven claims. Rather, all sales data objectively points to the contrary — not to mention that when friends congregate at my house, the Wii is the most popular person at the party.
See also: Nintendo: The Charts Don't Lie