Nintendo's DS Lite redesign has proved a tremendous success, regularly topping hardware sales charts around the world since it was first released in Japan in March 2006. Despite the system's success, Pacific Crest Securities analyst Evan Wilson believes Nintendo has already finished work on its successor.
"Our contacts indicate that a refreshed DS is complete," Wilson said today in his holiday preview investor's note. "It is thinner (it has no GBA port), has on-board storage, and larger screens. However, we do not expect a revamped Wii or DS until sales begin to tail off in all three major geographies." As of press time, a Nintendo of America representative had not responded to GameSpot's request for comment.
In addition to dropping hints on a redesigned handheld, Wilson addressed the challenges publishers are facing during the jam-packed holiday retail season. Specifically, Wilson said Nintendo is placing publishers in a "difficult spot." With reorders for third-party DS and Wii games taking three to six weeks to fill, Wilson said publishers have a harder time adjusting if they underestimate sales and also risk having to take products back from retailers if their initial orders are too optimistic.
The holiday release torrent is also having adverse effects at retail chains. According to Wilson, the influx of Nintendo-platform releases, as well as bulky Guitar Hero and Rock Band packaging and a resurgence of sales for summer blockbuster game tie-ins due to holiday DVD releases, are contributing most significantly to retail real estate becoming a hot commodity.
Wilson notes that not all games will be affected by insufficient retail space. "Clearly, the end-of-year squeeze creates limited space at retail, which limits the size of initial orders of games with less publicity and reorders of games with lower quality." He anticipates games with high preorder rates, such as Guitar Hero III, Call of Duty 4, Assassins' Creed, Mass Effect, WWE, and Rock Band, to be less affected by insufficient retail space. "Titles that could be at risk of getting squeezed," he continues, "include Haze, Kane & Lynch, and Uncharted."
The influx of original games is also having a negative effect on publishers' annualized offerings, according to Wilson. "It appears that when they are offered increased choice, consumers pass on games that they purchased the previous year or know that they can purchase the following year." Wilson notes that 2007 is shaping up much like 2004, with sports franchises, such as NCAA Football, Madden NFL, and NBA Live, all shifting significantly fewer units than the year before.
"According to NPD, Madden sales are tracking down 6.4 percent in August and September versus the same period last year, with unit sales down 8.9 percent. NCAA Football sales are down 20.7 percent this year versus last year," Wilson said.