Nintendo preaches next-gen strategy to analysts

LOS ANGELES--Nintendo executives George Harrison, Reggie Fils-Aime, and PR chief Perrin Kaplan delivered the company's E3 briefing for financial analysts at LA's Biltmore Hotel this morning.

The agenda focused on the company's expectations for its upcoming releases, with a few interesting facts and figures along the way.

Harrison kicked off the meeting by emphasizing that Nintendo will maintain its focus on games in the next generation of consoles, rather than producing a multipurpose media tool that directly competes with Microsoft and Sony's offerings.

To some extent, Nintendo is ceding a corner of the living room. On the other hand, this approach should give Nintendo significant savings on its next-gen console development, allowing the company to devote more resources to marketing and development.

Though Nintendo's focus on single-purpose game consoles is nothing new, its current emphasis on wireless connectivity and networked gaming breaks with tradition. The most visible sign of this change in strategy is the company's plans for a free Wi-Fi gaming service on the DS, and the company is now in negotiations with partners to create a nationwide network of DS hot spots.

As previously announced, Nintendo will use technology to provide matching, friends lists, and other functions when its service goes online.

It makes sense to cater to DS users because it's been a strong seller for Nintendo. According to Harrison, the DS has sold 5 million units worldwide since launch--about twice as many as the PSP. Clearly, Nintendo has high hopes for the device, and the title of the moment is Nintendogs. The digital pet software has sold 400,000 units in Japan in less than four weeks. What's even better from Nintendo's viewpoint, is that about a quarter of those sales were associated with a fresh DS purchase.

The company expanded its handheld stable on Tuesday with the announcement of the Game Boy Micro, and Harrison and Fils-Aime spent some time discussing this new offering. Holding up one of the units to show attendees how small it is, Harrison said, "It's about two-thirds the size of an iPod mini." He then explained that its small size and sleek design make it ideal as a "fashion item."

Clearly, Nintendo is aiming squarely at the "lifestyle technology" market that devices like the iPod and PSP have addressed so well. The already-announced interchangeable faceplates for the Micro are a natural and attractive offering for this market, and Harrison said that strong positive buzz in online chat rooms and forums shows that Nintendo has hit the mark.

Fils-Aime took the stage next. He gave the analysts what they wanted: his take on the top games for the next few months. Nintendo has high expectations for both Legend of Zelda: Twilight Princess, a holiday 2005 title, and Pokemon XD: Gale of Darkness, which will launch this fall.

Looking further ahead, Fils-Aime spoke briefly of the decision to offer a game-download service for the Revolution that will include a "huge part" of Nintendo's library all the way back to the NES. Nintendo has been aggressive and outspoken in its efforts to protect the IP embodied in these games. Maybe the next generation will bring the company some returns on those efforts.

All in all, the briefing didn't reveal any new information for professional Nintendo watchers. There were no sprints to the door or furtive cell phone calls to head offices during the briefing. If we were to sum up the mood, it was "wait and see." In the next console generation, Kyoto-based Nintendo's path will continue to diverge from its competitors in Tokyo and Redmond. Analysts were left wondering if it's made the right decision.