Nintendo 'a lemon' in NZ
by Egor (2/07/08)
The New Zealand distributor for Nintendo (and Activision) went bust last month. We take an inside look at what the future holds for Nintendo fans in this country.
WHILE NINTENDO'S WII CONSOLE and DS handheld dominate sales charts around the rest of the world, in the New Zealand market the company has struggled to make headway, and its future here is unclear.
Globally, Nintendo has racked up some 28 million Wii sales, compared with 19.5 million for Microsoft's Xbox 360 and 13.8 million for Sony's PlayStation 3 (according to ********.com).
Industry data for New Zealand however, shows Nintendo firmly at the back of the pack - recording approximately 16,000 Wii sales, compared with 34,000 for the PlayStation 3 and 45,000 for the Xbox 360.
Wii takes only a small slice of the NZ market.
Whereas the Wii's tremendous success in Japan, America and Europe has come from targeting the wider, mainstream or 'casual' gaming market, which Sony and Microsoft have struggled to attract with their next-generation hardware, in New Zealand the Wii has lacked the marketing blitz necessary to break out of niche status. It's sold largely to hardcore Nintendo fans.
While Sony, Microsoft, EA, Atari and Take 2 all have their own local offices representing them in New Zealand, the other game companies are represented here by a handful of third-party distribution agents.
The New Zealand distributor for Nintendo and Activision products, SPI, went into receivership last month, leaving retailers and consumers in the lurch. Two major Wii releases, Mario Kart Wii and Wii Fit, incurred long delays and stock shortages as a result.
No replacement distributor has yet been determined for either Nintendo or Activision. Both are currently being supported from across the ditch by Australian company All Interactive Distribution (AID), which has set up a local office and is supplying most retailers with Nintendo stock.
The original founder of SPI, Bruce Miller, who left before it fell over, is establishing a new company called Phoenix Distribution which is rumoured to be pushing for the rights to distribute Activision. However, anonymous sources have advised Gameplanet that Phoenix is not showing any interest whatsoever in Nintendo. "Nintendo is a lemon", said one source.
Nintendo Wii's "Citrus" flavour is exclusive to NZ.
Insufficient margins
SPI took over distribution of Nintendo from former agent Monaco Corporation in mid-2006, before the local launch of the Wii in December that year. Monaco had been Nintendo's agent since 1995. When it announced the handover, Monaco cited "insufficient margins in the local business model" as its main reason for ceasing its agency.
Looking at the Wii's poor sales performance, and SPI's subsequent demise, it seems fair to assume SPI also struggled to make money from Nintendo.
Nintendo has long been, and still is, the only major console maker not to have its own local office in New Zealand. Both Monaco and SPI relied upon Nintendo Australia to supply them with stock and assist with marketing. Apparently neither agent could ever get the support they needed to make Nintendo a success here.
Where to from here?
Nintendo has several options available as it weighs up what to do in this forgotten little corner of the globe. It can either set up, at long last, its own office here, or it can select a new agent. And it can either supply that office or that agent with the budget they need to make a renewed push for market share, or it can continue with the status quo and accept third place.
In selecting a new agent, Nintendo's options are limited. The distributors already involved in the games market from which Nintendo might choose are:
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* All Interactive Distribution (AID)
Already acting as Nintendo's temporary supply partner since SPI collapsed, AID is the frontrunner. A large distributor based in Australia, they supply all the major brands in the Australian market and work with most of the major retailers there. They have recently set up a New Zealand office.
* Madman
Distributor for Disney Interactive games, as well as a range of DVD/movie brands. Headed by Wilf Robinson, who led the original Xbox launch in New Zealand for Microsoft; they have the experience needed, and Nintendo could fit well in their lineup. They are rumoured to be making a bid.
* Total Interactive
Currently the distributor for Vivendi Games, and sub-distributor for Microsoft. Their Vivendi license is up in the air due to the Activision-Vivendi merger, so they may want to diversify, although any deal with Nintendo might jeopardise their relationship with Microsoft. Rumoured to be chasing Sony sub-distribution rights, however. Likely to bid for Activision, but a representative from Total has told Gameplanet they will not be making a bid for Nintendo.
* Phoenix
New distributor set up by former SPI staff. Known to be making a bid for Activision, but understood to have ruled out any interest in Nintendo.
* GameWizz
Distributor for Capcom, Midway and Red Ant (plus the Saitek and Razer hardware brands), and sub-distributor for Sony. Highly unlikely to take an interest in Nintendo as they would lose Sony.
* Monaco Corporation
Distributor for Sega, THQ, Ubisoft and several major electronics brands. Former distributor of Nintendo for 11 years, they probably wouldn't be interested in trying again.
* Left field...
There will undoubtedly be other bids from companies not already involved in the games market. Software, hardware and DVD/movie distributors are top picks. Renaissance, the local agent for Apple, has been suggested by fans as a possibility.
Activision moot
Activision is a different story. They have experienced just as much success here recently as they have around the world, with popular franchises including Guitar Hero and Call of Duty. They would be a valuable addition to any agent's portfolio, but the opportunity might not even arise.
At the end of last year, Activision announced plans to merge with Vivendi Games, creating a combined publishing powerhouse called Activision Blizzard that would rival EA for the top spot as #1 game maker. Shareholders are due to meet on 14th July to vote on the proposal, which is likely to proceed.
They will be aiming to compete head-on against EA, and EA has an NZ office looking after the local market - so you can expect Activision Blizzard to seriously consider doing the same once the merger is completed. This could spell trouble for current Vivendi distributor Total Interactive, and may mean that any question about who would distribute Activision becomes moot.
But the big question remains: how important is our little island downunder, with its measly few thousands sales, to Nintendo? Do they care enough to spend the money and get the Wii performing at the level set by the rest of the world, or will it remain a lemon?
