HOLLYWOOD -- Nintendo and Microsoft confirmed in recent days that sales of their vidgame consoles weren't quite as strong as they'd hoped in their first full years on the market.
Both have largely abandoned the effort to catch up to Sony's PlayStation 2, which sold 50 million units worldwide by year's end, but each hopes to establish itself in the No. 2 slot to ensure that developers keep making games for their machines.
Microsoft said its Xbox came in at the low end of its sales forecasts for 2002, despite such incentives as bundling two $50 games with the machine during a holiday promotion. In a recent Securities & Exchange Commission filing, the company reported an operating loss of $348 million on $1.28 billion in revenue for the division that includes the Xbox; loss was double that of the previous year.
Nonetheless, the company claimed the No. 2 spot in sales in North America and Europe. Xbox has, however, done very poorly in Japan, the second-largest vidgame market.
Though Nintendo did far better in Japan with its GameCube, it also reported some disappointments, falling 10% short of the 10 million in worldwide sales it hoped to record last year.
All three console companies are likely to cut hardware prices later this year to stimulate sales, expecting to make back their money by selling more games.
In the meantime, Microsoft has moved to ease a bit of its financial discomfort, announcing that it has settled a dispute with nVidia, which makes the Xbox graphics chip. With Microsoft losing an estimated $100 per machine it sells (it makes up the loss on software sales and license fees), the company sought to renegotiate chip prices. The two companies declined to release deal terms.
Microsoft and Nintendo have announced several other moves to spur sales. New GameCube buyers will get a free copy of one of four top games.
And Microsoft and Nintendo are using greatest-hits programs to wring more dollars out of aging software titles. By naming popular older titles to such a program, cutting prices substantially and doing special marketing, they often can sell hundreds of thousands of more copies of a game.
Thus, Microsoft just announced a Platinum series of older bestsellers that will cost $19.95. Nintendo added three more titles to its equivalent Players Choice program, under which games that originally sold for $49.95 go for $29.95.
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