[BreakABone]

Nintendo cuts royalty rates to woo game developers
Thursday April 10, 3:46 pm ET
By Franklin Paul

NEW YORK, April 10 (Reuters) - Nintendo Co. Ltd. (7974.OS) on
Thursday said it has trimmed the royalty rates it charges outside
game developers, in an effort beef up the roster of hit titles
available on its flagging GameCube console.

Japan's Nintendo, third behind Sony Corp.'s (Tokyo:6758.T - News)
PlayStation 2 and Microsoft Corp.'s (NasdaqNM:MSFT - News) Xbox game
console, said that in March it adjusted its royalty rate structure
for all licencees to make it competitive with its rivals.

"Before our royalty rate was a little more aggressive so to the third
party publisher it was a little less attractive to make games for
GameCube," George Harrison, senior vice president of marketing for
Nintendo of America, told Reuters.

Software is a catalyst for the gaming industry, with hit titles
spurring sales of boxes on which they are exclusively available. In
turn, consumers then seek to buy more games for the particular
machine they own.

What is more, games developed by console makers are a profit engine,
while major third-party publishers typically pay a royalty to the
console maker and keep the lion's share of profits for themselves.

Nintendo earlier this week blamed a slump in profits on GameCube,
whose sales fell short of its target of 10 million by 44 percent for
2002.

The company admitted that new titles in its long-running 'Mario'
and 'Metroid' series were overshadowed by blockbuster demand
for "Grand Theft Auto" (GTA) games, developed for the PlayStation 2
by publisher Take-Two Interactive Software Inc. (NasdaqNM:TTWO - News)

"Grand Theft Auto: Vice City," released in the United States last
October, was the best-selling game of 2002 and has sold about five
million units worldwide.

"The biggest games of the year last year were games like GTA and they
came from an independent publisher," Harrison said. "We need to make
sure that we have good relationships with all the independent
publishers, because you never know where the next big hit game is
going to come from."

Nintendo intends to place more emphasis on third-party game
developers at the upcoming E3 trade show in Las Vegas in May, the
largest annual exhibition for Gaming industry. Several developers,
who see a large installed base of a game platform as a guarantee that
audience exists for their titles, have complained about GameCube
slack sales.

"Games from Namco Ltd. (Tokyo:9752.T - News) and Sega Corp.
(Tokyo:7964.T - News) and Capcom Co. Ltd. (Tokyo:9697.T - News) ...
we think are going to be just as important in helping to sell our
hardware system this year as much as our own games," he said. "We are
going to sell a lot of GameCube and its our job to convince them that
we are."

So they are finally realizing they need big games other than their own to sell systems, I wonder if they will start to see more 3rd party games or is it too late?