There are so many Wii games and DS games on store shelves — so many bad ones — that you'd think Majesco CEO Jesse Sutton would like to complain about them. His company focuses on Wii and DS, after all.
And you'd think he might take the opening to talk about the stress of Nintendo first-party sales dominance. Nope!
Asked about the assumed struggles of being a third party on the Wii and DS in an earnings call earlier this month, Sutton said they are not holding Majesco back. Meaty analyst-exec conversation (that just might teach you something) follows...
TODD GREENWALD, ANALYST, SIGNAL HILL: Todd Greenwald. I am just wondering if you can give us an update on the DS marketplace, just given your focus there? Just wondering if we are seeing any kind of a slow down, how tough it is for you to get your products to stand out there, get shelf space, and just given the huge influx of titles being published there, I am just wondering are you facing any challenges from Nintendo as far as getting your titles reviewed, approved, manufactured, on time and in the volumes that you are hoping for?
JESSE SUTTON [Mahesco CEO]: I think there were a few questions you had there. I guess all three of us here, John, Gui and myself, will share the load of it. As far as Nintendo managing the process and continuing to put our games through or our competitor's games through the way they have historically been doing it, that hasn't changed and we don't anticipate that changing, that dynamic. The ability to get products on shelves really remains not much different than it was over the last six months or so. A lot of that is going to be a result of the kind of game you bring to the marketplace relative to that individual retailer and ultimately they will make the decision as to which products to put on which shelves. We have actually had much more success getting product — a product as broadly placed than we have had probably in the last couple of years.
GUI KARYO [EVP of Operations]: To reemphasize the point that Jesse was making in terms of placement, I would say that the largest glut of release of product not just for the DS but also for the Wii was really around holiday of last year. While there still is a healthy amount of product coming out from both platforms, I would say that competitively we have not seen anything that has precluded us from getting a good product from the type of demographic that we go after released and placed broadly. And then in terms of delivery time, we have not seen particularly over the late winter and spring any signs that the Nintendo manufacturing or approval process is being held up by volume.
And on third parties possibly getting stressed about Nintendo first-party sales dominance
JOHN TAYLOR [Analyst from Arcadia Investment]: Follow-up on the retail. So on the one hand, you have got an audience which overlaps pretty directly with the Nintendo audience. You look at the share split between first-party and third-party and the performance of an average Nintendo title versus the performance of an average third-party title on Wii or DS, either one for that matter. It seems like retailers are likely, at some point to start leaning more towards Nintendo and maybe a little away from third parties simply because that's where all the sales are. That's point number 1. I am setting up for a question here. Point number 2 is shelf space is pretty bogarted to some extent by Nintendo lifelong products. There is not a ton of slots out there and that sort of thing. If that is part of the landscape, what does that imply about your need to increase promotional spending or retailer demands on you to put more support behind new product releases in order to get the shelf space for them?
JESSE SUTTON: John, that's a good question. This is not a new dynamic, not a new trend that's just developing regarding Nintendo's market share and the strength of the brands that they own. That's historically been the case. The third-party publishers that have been able to identify what those consumers who are playing games on these platforms want are the ones that have shown success throughout the history of Nintendo's platforms.
That being said, it is very promising, we are learning that there is retailers today because of the growth in the family friendly marketplace or the family friendly audience, there is a lot of growth to their individual placement or their individual retail space that they are going to be offering to the public throughout the rest of this year. You will start seeing more space at all the retailers like Best Buy, Wal-Mart, et cetera, that are offering more space to the family friendly audience. They are not necessarily taking space away from other video game platforms but other areas of entertainment that have not been doing as well and that bodes well for us and all of us that are in this Nintendo space.
Transcripts captured via Nexis.