Gaming and Culture

Correction at 4:50 a.m. PDT November 18: Cammie Dunaway incorrectly described Wii's October sales figures compared with other next-generation game consoles. Wii sales were nearly the total of its rivals combined.

Stung by lower Wii sales and a couple of down quarters, Nintendo may be a bit off its game this year. But Cammie Dunaway, Nintendo of America's executive vice president of sales and marketing, keeps focused on the company's strengths and positive numbers.

The recession and a paucity of blockbuster titles have taken a bite out of the overall video game industry this year, with revenue down from record levels in 2008. Nintendo certainly hasn't been immune. For the first half of the year, earnings fell about 50 percent from 2008, while Will sales dipped.

Cammie Dunaway, Nintendo of America's
executive VP of sales and marketing

(Credit: Nintendo)

In the midst of this atmosphere, I spoke on Thursday with Dunaway, known to many video game buffs for her high-spirited appearances at E3.

Though I asked Dunaway about the company's revenue decline, lower console sales, and potential competition, she continually championed Nintendo's assets, including its Wii and DS consoles and recent popular games like Wii Sports Resort and Wii Fit Plus, as well as new titles like Super Mario Bros.

Dunaway's optimism about Nintendo may have been borne out by the latest results. Though overall video game revenue fell in October, the Wii bounced back to recover its spot as the top selling console, according to NPD.

Last month, Nintendo sold 507,000 Wiis, compared with 320,600 Sony PlayStation 3s and 249,700 Microsoft Xbox 360s. Coming in second in video game hardware sales was Nintendo's portable DSi and DS Lite, with gamers scooping up 457,000 units.

Four of Nintendo's titles also did well in October, finishing in the top 10. The company sold 232,000 copies of Wii Fit Plus alone, and 209,000 of Wii Fit Plus bundled with the Balance Board. Wii Sports Resort scored with 179,000 copies sold, while Kingdom Hearts 358/2 Days for the DS found 169,000 new customers.

I spoke with Dunaway by phone before before NPD released the October sales figures. But she certainly knew ahead of time that the numbers would look good for Nintendo.

Q: The question on everyone's mind is Nintendo's performance this year. For the first half, earnings were down about 50 percent. Sales for the Wii have dropped. Your president, [Satoru] Iwata, recently admitted that sales of the Wii have stalled. What do you pin as the reasons for this downturn, both for the company and for the Wii itself?
Dunaway: Let's talk about the U.S., and let's break it down into the separate platforms. So, speaking first about the Wii--what's important to understand is that in 2008, we sold 10 million units of the Wii, which was a record for any console ever in history. And so it's a high mark.

What's also important to understand is that the pacing of our software this year was quite different than it was in 2008. In 2008, our big titles were released early in the year. And this year's huge title, released a few weeks ago in October, Wii Fit Plus, is doing quite well. And then arguably, the largest title of the year, New Super Mario Bros. for the Wii, only releases Sunday [November 15]. So we believe that going into the holiday season, consumers will continue to look for the products they see as representing the best value and the most fun.

Now on DS, we also had a record setting year last year, selling over 10 million units, and we are actually 16 percent above that pace year-to-date in 2009. So the combination of DS Lite and our new product DSi is really resonating with consumers.

Then on software, here in the U.S., our software for both Wii and Nintendo DS is actually up over a year ago. So despite the fact that our big titles are yet to come, we still have had a good year overlapping a tremendous year with our software.

Can you talk about some of the new titles Nintendo has in store for the holidays and next year? You mentioned Super Mario Bros. is a key title for the holidays. Are there others?
Dunaway: Looking to some of the additional titles for the holidays, New Super Mario Bros., for the first time enables four people to play a Mario game together. And it is going to be something that provides tremendous challenge to experienced gamers, and something a brand new gamer can jump in with their friends and family and enjoy. So that one will be a monster hit.

We also on the DS side have a new Zelda title--Zelda Spirit Tracks--coming on December 7. And Zelda titles are always strong performers, and it's a franchise that loyalists look forward to, line up to get copies of. And it's a title that we also think expanded market consumers will enjoy because of its heart. It's really about solving puzzles and going on an adventure, which is something that really anyone can have a good time doing.

Then as we go into next year, while we haven't announced timing, we have announced that we'll be launching a new Pokemon Gold and Silver, which has broken all records on its launch in Japan. [We're also launching] a title that will be great for loyalists called Sin & Punishment and a title called Endless Ocean that really provides a wonderful family experience on the Wii.

The Wii isn't living up to its expectations.

(Credit: Nintendo)

Electronic Arts CEO John Riccitiello didn't pull any punches when he spoke at a quarterly earnings call earlier this week. As he discussed some of the issues his company faces in today's gaming market, he singled out Nintendo and its Wii as contributing factors.

According to Riccitiello, third-party games on the Wii just aren't performing nearly as well as EA had expected. And as the Wii's sales start to slip, it doesn't seem likely that that will be changing anytime soon.

"To be honest with you, I think the Wii platform has been a little weaker than we had certainly anticipated," Riccitiello said, according to a transcript of the call published by Seeking Alpha on Monday. "And there is no lack of frustration (about this coming out) at precisely the time where we have the strongest third-party share."

But Riccitiello didn't stop there. He said EA is "reaching out to Nintendo to find ways to partner to push third-party software harder." He contended that in order for the Wii to perform up to Nintendo's own expectations, the platform needs help from third parties.

Riccitiello continued on that theme. He said his company is providing high-quality titles for the Wii, but it's Nintendo that needs to do more.

"Wii is where we are missing it," Riccitiello said on the call. "And so I really do think that the opportunity exists to find different ways to partner with (Nintendo) in this case, to sort of help establish in the minds of the consumer legitimacy of some of these other brands, when they are going out multiplatform."

But it was Riccitiello's next statement that might send the most shockwaves through the Nintendo world. The EA chief said "very, very few multiplatform titles are succeeding on the Wii so far, and collectively, Electronic Arts and Nintendo need to tackle that."

Perhaps now the question is, then, how will those two major forces in the gaming industry achieve what Riccitiello wants? Nintendo's platform has enjoyed strong sales since its debut, but the Wii is slipping. Worst of all, during the most successful periods for Nintendo, it was first-party titles, not third-party games that performed best at retail. Whether Nintendo can help change that, making it more profitable for third parties to develop games for the Wii, is very much in doubt.

What do you think? Is Nintendo really in bad shape? Is Riccitiello overstating the Wii's shortcomings? Let us know in the comments below.

Video game developer Electronic Arts announced on Monday that it has acquired social-gaming company Playfish, paying $275 million in cash and $25 million in "equity-retention arrangements." Playfish also is entitled to up to $100 million if it meets performance milestones by December 31, 2011.

EA also announced later Monday that it planned to eliminate 1,500 jobs, or about 17 percent of its workforce, as part of a plan to reduce annual costs by about $100 million.

The acquisition of Playfish falls in line with EA's desire to be more than just a developer for traditional gaming platforms, like consoles and the PC. The company said in a statement that the acquisition "strengthens its focus on the transition to digital and social gaming."

Thanks to the explosive growth of social networks and games made for those platforms, Playfish is enjoying strong performance in the social-gaming space. The company has more than 150 million games installed on several platforms, including Facebook, MySpace, the iPhone, and Android-based devices. According to Playfish, more than 60 million active players per month are playing titles. Its Facebook titles include Pet Society, Restaurant City, and Country Story--all three are among the most-popular games on the social network.

The EA Interactive division, which Playfish will join, has done a fine job of capitalizing on the trend of online and mobile gaming. That division includes Pogo, one of the top casual-gaming sites on the Web. The Mobile side of EA Interactive has captured 34 percent market share in the U.S. with the help of Madden NFL 10, The Sims, and Tetris.

Updated at 10:20 p.m. with details of job cuts.

Though it once appeared to be a tiny sales juggernaut, Nintendo's top-selling Wii console has struggled in 2009. In July, the Japanese publisher reported April-June revenues that slid 40 percent from a year prior to 253 billion yen ($2.81 billion). Nintendo didn't fare much better during its July-September quarter, saying Thursday that sales fell 34.5 percent to 548 billion yen ($6.09 billion) during the first half of its fiscal year.

Nintendo's slipping performance has not gone unnoticed by the publisher's president. As reported by Japan's Mainichi Newspaper and translated by GameSpot, Nintendo executive Satoru Iwata told analysts and investors as part of a post-earnings Q&A that a weak software lineup has contributed to the Wii's sluggish performance.

(Credit: Nintendo)

"The Wii has stalled," Iwata said. "Games of high demand could not be continuously released and the good mood has chilled." Iwata went on to note that it will be difficult to recover from "the slowdown in demand," but he also expressed optimism over Nintendo's ability to continue selling Wiis.

According to Japan's Nikkan Sports (also translated by GameSpot), Iwata said during the conference that Nintendo misjudged market conditions as they pertained to the publisher's sales strategy.

"The mood of the market got colder than expected, and there was a difference in expectations," he said. "Now, we are preparing for next year and thinking about what to do the year after next." Iwata reportedly went on to note that Nintendo is optimistic about its chance to right the Wii's downward sales trend going forward.

Notably, reports have emerged that Nintendo is planning a number of enhancements to its console. Earlier this week, reports surfaced that Nintendo would be introducing Netflix's online video-streaming service to the console, functionality that is already available for the Xbox 360 and will soon be introduced to the PlayStation 3.

Analysts and industry insiders also expect the publisher to launch an HD version of the Wii or an all-new system in 2010 or 2011 to better compete with Microsoft and Sony's consoles.

As for Nintendo's other hit hardware, Nikkan Sports reports that Iwata downplayed suggestions that the DS was losing ground to Apple's increasingly ubiquitous iPhone. "Our presence in the marketplace is growing," he succinctly stated.

Thursday, Nintendo also took the lid off its fourth DS hardware iteration, the DSi XL. The jumbo-size DSi, which features 4.2-inch screens, increased battery life, and a larger stylus, is expected to launch in Japan later this year for 20,000 yen ($220.50). The device's North American and European launch is expected to follow during the first part of 2010.

Tom Magrino reported for GameSpot.

A simple phrase and pin code may be all you need the next time you pay for that book or CD at Amazon.

The online retailer on Thursday debuted a new feature called Amazon PayPhrase, designed to let busy shoppers store their name, address, and payment information in a single phrase and pin code. Instead of entering all that data at the online checkout counter, you type your phrase and pin number when it's time to cough up the cash.

PayPhrase doesn't just work at Amazon--it can be used at any online retailer that lets you pay via Amazon Payments. That covers a range of cyberstores, including Buy.com, J&R Electronics, DKNY, and Car Toys.

PayPhrase also omits the need for a user name and password to store your personal info on every shopping site that uses Amazon Payments. However, you will need an Amazon.com account to set up and maintain your phrase.

Amazon sees PayPhrase as a benefit to consumers trying to juggle different accounts at different retail sites.

"PayPhrase solves the headache of trying to keep track of all the different user names and passwords people use to shop on various sites across the Web," said Matt Williams, general manager of Amazon PayPhrase, in a statement. "With PayPhrase all you need is one phrase and one PIN to pay online."

Here's how the process works:

1. You first set up your PayPhrase. The phrase can be two or more words, and the entire phrase must be at least four characters but no more than 100. Amazon provides a list of suggested phrases, or you can create your own. (With Amazon's suggested phrases of "Unusually Obese," "Contraceptive Cream," and "Bush's Education Department," you might want to create your own.) Since everyone's PayPhrase must be unique, Amazon will tell you whether or not your phrase is taken.
2. You set up your four-digit pin number.
3. You enter your Amazon.com user name and password.
4. You either confirm or enter your mailing address and credit card information.
5. After your PayPhrase is set up, you'll receive an e-mail from Amazon confirming the details.
6. The next time you check out to buy an item on Amazon or an Amazon Payment retailer, a field for PayPhrase Express Checkout will appear. You enter your phrase. You then review your order details and total cost and finally enter your pin number to submit the purchase.

Of course, a feature like this always shouts out one question: Is it secure? Amazon naturally believes so.

Though Amazon stores your credit card information, the company points out that your payment information is not shared with other online retailers. And to modify your PayPhrase settings, you have to log in to the PayPhrase site with your Amazon.com username and password.

You can establish monthly cash limits on your account ranging from $10 to $500. Finally, you can opt to receive an approval request by e-mail or cell phone for all orders that are placed.

Check out Amazon's promo video page for a brief tour of PayPhrase.

Sinking sales and a price cut for the Wii knocked Nintendo's first-half earnings by 52 percent.

On Thursday, the game maker reported a profit of 69.5 billion yen ($767.8 million) for the six-month period ended September 30, compared with 144.83 billion yen for the same period last year.

Sales for the period also tumbled, falling 34 percent to 548 billion yen.

Nintendo blamed the shortfall on weak sales of its Wii combined with its recent price cut for the game console. In September, the company trimmed the cost of the Wii in the U.S. by $50 to $199.99. Nintendo said it sold 5.75 million Wii machines globally during the first half of its fiscal 2009, a huge decline from the 10 million units that flew off the shelves for the same period last year.

The Wii continues to face competitive pressure from both Sony's PlayStation and Microsoft's Xbox, which have benefited from their own price cuts.

Nintendo was also hurt by a lack of hot new games for the Wii and portable DS game console. For the Wii, the company's only major releases were Wii Sports Resort in July and Wii Fit Plus in early September. As one of the few bright spots, Wii Sports Resort has enjoyed brisk sales.

The weak earnings fell short of Nintendo's earlier estimate of a 100 billion yen profit for the first half and prompted the company to lower its forecast for fiscal 2009. Nintendo now expects annual earnings to fall to 230 billion yen, lower than its May estimate of 300 billion yen, and down from the 279.1 billion yen it earned in 2008. This would mark the first annual earnings decline in six years.

Nintendo also slashed its sales forecast for the full year, now expecting revenue of 1.5 trillion yen, down from its prior estimate of 1.8 trillion yen, an 18.4 percent drop from 2008.

The game maker is hoping for a brighter holiday season when gift-seeking shoppers may take advantage of the Wii's lower price. Nintendo is also eager to see whether its upcoming New Super Mario Bros. Wii game proves to be a hot seller.

Reports have even surfaced that the Wii may follow in the footsteps of Sony's PlayStation 3 by offering a Netflix streaming option.

Social networking is on the rise, both on and off the job, leaving companies uncertain how to monitor their use by employees, reports new survey.

More than 50 percent of companies questioned said they have no policy to address the use of social networking by employees outside the workplace, according to a survey released Wednesday by the Society of Corporate Compliance and Ethics and the Health Care Compliance Association.

Typically, companies shy away from restricting an employee's actions off the job. But businesses are concerned about employees who use social networking and reveal private details or post inappropriate pictures that could embarrass the company.

Some organizations, such as the U.S. Marines, have already banned their recruits from using Facebook and Twitter. But the survey found that many businesses aren't sure what to do to restrict or monitor such usage.

Of the companies questioned in the survey, 34 percent said they have a general employee policy that addresses all online activity, including the use of social networking, both on and off the job. Only 10 percent said they have a policy specifically geared toward social networks.

(Credit: Society of Corporate Compliance and Ethics)

More than half of the individuals said their company has no active system to monitor employees using social-networking sites. Around 32 percent said their company acts only when an issue is discovered.

(Credit: Society of Corporate Compliance and Ethics)

Of all those surveyed, 24 percent said an employee in their company had been disciplined for inappropriate behavior on a social network, while 37 percent did not know. The percentage was higher in the nonprofit sector, noted the survey, with 33 percent reporting an employee incident versus only 13 percent in the for-profit sector.

"Business clearly hasn't caught up with what its employees are doing online," said Roy Snell, CEO of the Society of Corporate Compliance and Ethics. "The risks are twofold. First there remains the business risk of employees doing things online that may reflect badly on the company. The second is that, as business develops policies and procedures in this area, there are going to be a lot of people finding that what they have long done is no longer acceptable at work. During the adjustment period there is likely to be a great deal of friction created."

To conduct the survey in late August, the Society of Corporate Compliance and Ethics and the Health Care Compliance compiled responses from 798 people in both profit and nonprofit organizations, as well as government agencies.

Omniture and ComScore, two Web-tracking powerhouses, are combining forces to launch a new system for measuring online audiences, the companies said Monday.

Teasing out online traffic figures has been a constant challenge for both advertisers and publishers. The two companies' goal is better analyze online audiences by teaming Omniture's reliance on Web site analytics with ComScore's approach of following patterns of Internet users.

Web sites tend to rely on either analytics or audience measurement to determine traffic patterns, which can often lead to conflicting results. By merging the two methods, Omniture and ComScore hope to give customers a more unified and more accurate view.

"Since the rise of digital advertising, advertisers and publishers alike have sought ways to reconcile their Web analytics and panel-based measurement data to establish a unified measure of online audiences," Omniture CEO Josh James said in a statement. "With this relationship, Omniture and ComScore will enable publishers who have rich, highly targeted audience segments to reliably demonstrate their value to advertisers and also help advertisers find these attractive consumer segments."

ComScore's new Media Metrix 360 system will play a leading role in the service. Launched in June, Media Metrix 360 already uses a hybrid approach, supplementing audience measurement with Web site analytics. The company had been criticized in the past for relying on too small a segment of the online audience to provide accurate data on traffic patterns.

Through this partnership, ComScore will also be working with Adobe Systems, which last week signed an agreement to acquire Omniture for $1.8 billion.

One year and three months ago, Phil Spencer was appointed general manager of Microsoft Game Studios. On Tuesday, Microsoft announced that the executive has once again been promoted, this time to corporate vice president of Microsoft Game Studios. The first-party publishing label has been responsible for such Xbox 360 exclusives as Gears of War 2 and Fable II, and will distribute the forthcoming Halo 3: ODST and Alan Wake.

Historically, Microsoft Game Studios has also published PC titles such as the discontinued Age of Empires and Microsoft Flight Simulator. Its last corporate vice president, John Schappert, left Microsoft in June to become chief operating officer of Electronic Arts.

Microsoft Game Studios is part of Microsoft's Interactive Entertainment Business, which itself saw some executive changes Tuesday. Shane Kim, corporate vice president of IEB's strategy and business development, has announced he will retire this fall after 19 years at Microsoft. A spokesperson confirmed that the move was completely voluntary, with Kim saying a desire to spend more time with his friends and family was behind the decision.

Shane Kim welcomes journalists to Microsoft's Spring Showcase last year. Kim is retiring this fall.

(Credit: Daniel Terdiman/CNET)

In other IEB news, Dennis Durkin, the current head of the division's financial operations, is to become its chief operating officer, a newly created position. A Microsoft representative said Durkin's duties would be to "lead the charge" and "to continue and focus the business."

Tor Thorsen reported for GameSpot.