Nintendo to Spend $200 Million on Wii Marketing to Battle Sony

By Michael White and Jonathan Thaw

Nov. 13 (Bloomberg) -- Nintendo Co., loser of the last video- game console war, said it will spend more than $200 million to market its new Wii in a bid to wrest sales away from Sony Corp.' s PlayStation 3 and Microsoft Corp.' s Xbox 360.

The advertising campaign is the biggest ever for Kyoto-based Nintendo, which begins selling Wii in the U.S. on Nov. 19., two days after Sony releases the PlayStation. Television ads beginning tomorrow will focus on Wii' s ease of use and library of family- friendly games.

Nintendo and Sony are fighting to increase their share of the $20 billion worldwide video-game market. Microsoft has a head start this round after releasing its Xbox last year. Nintendo' s campaign positions it in contrast to PlayStation 3, which Sony introduced Nov. 11 in Japan stressing the machine' s advanced graphics and Blu-ray DVD drive that plays movies as well as games.

``Eighteen months ago most people did not expect Nintendo to be competitive in this next generation of consoles,' ' said John Broady, an analyst at GameSpot.com, a unit of Cnet Networks Entertainment that tracks video-game sales.

Nintendo and Microsoft are getting some help from Tokyo-based Sony' s difficulties. Sony in September said it would delay the PlayStation 3' s debut in Europe until March because of parts shortages for the Blu-ray drive that have slowed production.

In Tokyo, demand for the new PlayStation outstripped supply store because Sony limited initial deliveries in Japan to 100,000. The company last month cut the machine' s price to 49,980 yen ($425) from 59,800 yen after complaints from gamers.

Price Difference

At $250, the Wii also will appeal to price-conscious buyers. Sony' s PlayStation 3 is aimed at serious game players, selling for $500 to $600. Xbox sells for $300 to $400.

Nintendo probably will sell about 1.5 million Wii consoles in the U.S. through the end of this year, according to Jeetil Patel, an analyst at Deutsche Bank Securities in San Francisco. He forecasts about 500,000 U.S. sales of PlayStation 3. Microsoft probably will sell 2.28 million Xbox 360s in November and December, he said.

Redmond, Washington-based Microsoft has sold more than 6 million Xbox' s since its launch and estimates that will climb to 10 million by June 30.

``They' re severely constrained,' ' Van Baker, an analyst at market researcher Gartner Inc., said in an interview. ``The chance of getting a PS3 this holiday is pretty much non-existent.' '

Targeting Adults

About 80 percent of advertising for Wii will target adults in an attempt to expand the video-game market beyond children and teens that have been Nintendo' s traditional market, said George Harrison, the company' s senior vice president for marketing. Nintendo will spend the $200 million during the next 12 months.

Nintendo adopted the strategy after its GameCube console lost the competition with Sony' s PlayStation 2 five years ago.

Both companies plan rollouts for their new consoles that include midnight sales parties at retailers in cities including New York, San Francisco and Los Angeles.

The advertising campaign is Nintendo' s most expensive, costing about 20 percent more than the rollout of GameCube in 2001, Harrison said. Nintendo came out the loser in the battle between GameCube and PlayStation 2, an experience that convinced the company to avoid trying to challenge Sony and Microsoft for the hard-core audience in the current console war, Harrison said.

GameCube

By the end of this year, Nintendo will have sold about 11.7 million GameCubes in the U.S., compared with 35.6 million units of PlayStation 2, according to Michael Pachter, an analyst at Wedbush Morgan Securities in Los Angeles. Pachter anticipates Nintendo will sell about 2 million Wii consoles by year end.

``GameCube didn' t meet out expectations,' ' Harrison said in an interview. ``There were lessons in there for us that led us to the Wii. The first lesson was that just trying to be like the others in the marketplace wasn' t the answer.' '

Pachter estimates Sony will sell about 1.5 million PlayStation 3s.

Television ads, which begin running Wednesday, will include a two-minute ``documentary' ' that features grandparents and parents playing with their children.

The television ads will be the first broad-based advertising Nintendo has done. The company started pushing the console over the summer with a campaign that included parties in which consumers were asked to invite friends to their homes to play the console.

Among those asked was Bill Weatherford, who invited relatives to play in his home in Tonganoxie, Kansas. Weatherford, who had purchased an Xbox 360 weeks earlier, said he probably will buy a Wii to play with his wife and 3-year-old son.

``It had a lot more family friendly games, sports games that actually had some physical activities,' ' Weatherford said in an interview. ``I just felt like you were more involved, doing more together.' '

Wii features a wireless controller that enables players to control a game by waving their hands. The controller can be used as a baseball bat, tennis racquet or sword for action games.

To contact the reporter on this story: Michael White in Los Angeles at Mwhite8@bloomberg.net ; Jonathan Thaw in San Francisco at jthaw@bloomberg.net
Last Updated: November 12, 2006 18:22 EST