November 25th, 2001 (12:00am) - Nintendo, the maker of video games such as Pokemon, lowered the fees it charges software companies that make games for its Game Boy Advance portable system to boost sales, software makers said.
Cutting fees could result in cheaper games and higher software sales, said Brian Farrell, chief executive officer of THQ, the biggest US maker of Game Boy software. The retail price of Game Boy Advance games may fall to between US$29 and $34 in the US by March, compared with $39 now charged for games made by other companies.
Eight months after Game Boy Advance’s debut in Japan, Nintendo is counting on the device’s software to help propel sales during the all-important Christmas season. The fee cut indicates sales of the new games may have lagged company forecasts, analysts said.
"It is very unusual for Nintendo to lower royalty charges for software for a game machine which has been in the market for only a few months," said Soichiro Fukuda, an analyst with Nikko Salomon Smith Barney who rates the stock "neutral". "This may be a sign that the shift of game fans to Game Boy Advance from Game Boy is not as smooth as Nintendo expected."
Nintendo, which controls more than 90 percent of the market for portable video games, makes more than three-fourths of its sales from Game Boy-related products.
Sales of Game Boy Advance software have failed to surpass those of games designed for older versions of the device. Nintendo sold 19.1 million copies of software for the new version of the handheld player in the six months to Sept 30, the same amount sold for the older Game Boy series player in the period.
Nintendo Spokesman Ken Toyoda said he is "not aware of" the fee cuts, though they are "possible and natural considering prices of microchips and electronics components used to make the cartridges are falling," he said.
Sales of software for Nintendo’s Game Boy featuring a color screen, which was released before the Game Boy Advance, are still strong, especially in Europe, Toyoda said.
The Kyoto-based company, known for a cast of game characters such as Mario Bros and Donkey Kong, on Wednesday said fiscal first- half profit rose 14 percent to 34.3 billion yen on higher software sales.
Nintendo shares fell 40 yen to 20,930 yen in recent trading.
Lower fees will help increase sales of Game Boy Advance software, THQ’s Farrell said.
"You can move a lot more volume at the lower price point," Farrell said. "We applaud the move."
Nintendo manufactures the cartridges that contains Game Boy Advance software and collects fees from software makers for each unit sold.
The company lowered its licensing fees by about two dollars for a series of Game Boy products made by outside companies, including memory and batteries, Farrell said.
Game Boy Advance, which was introduced five months ago in the US, has more complex graphics and a bigger screen than older versions of the Game Boy. Nintendo sold 8.5 million Game Boy Advance players in the six months to Sept 30, bringing total sales since its debut in March to 9.58 million units.
Sales of video-game software for the handheld machine totaled 19.1 million copies in the first half, bringing overall sales to 21.8 million.
Nintendo plans to sell 21 million units by the end of March.
