Nintendo (NTDOY)

Nintendo's DS and DS Lite handheld systems have sold about 14.9 million more units than Sony's PSP and the DS/DS Lite is the fastest selling gaming device in the world.

Women and children spend most disposable income. Nintendo products appeal to both of these demographics because they offer an alternative for of family entertainment and Nintendo can claim that its products make its customers smarter, stronger, and healthier. Slow and secretive as Nintendo management is, right now it owns the portal to the front room.

Nintendo's hardware and software innovation has produced some of the industry’s most successful game franchises and has produced an all new gameplay experience with the technology of the Wii and DS.

The Wii’s raging popularity is evidenced by its sales even in the middle of a recession filled with scared and depressed consumers. Apparently kids - and parents - can do without their Mattel (NYSE: MAT) Hotwheels and Barbies or their Nike (NYSE: NKE) AirMax, but the Wii goes in the necessity category with the groceries and gas money. Or, as Wedbush Morgan Securities analyst Michael Pachter puts it: “…the guys who buy hard-core games have no clue we’re in a recession.”

Just last month, Nintendo’s U.S. sales of Wii rose by 74% thanks to 753,000 new sets flying off the shelf. Those numbers once again landed the company solidly in the lead of fellow tech giants Microsoft Corp. (Nasdaq: MSFT) who sold 391,000 Xboxs and Sony Corp.’s (NYSE: SNE) comparably measly turnover of 276,000 PlayStation 3s.

According to Doug Creutz, an analyst with Cowen & Co. in San Francisco, “The industry continues to perform well despite the overall economic environment,” a claim easily proven by the numbers above… for Nintendo at least.

Despite the global recession, Nintendo products (Wii, DS, Wii Fit, and Wii Music... just naming the key ones) will continue to sell well this holiday season. The Nintendo product line contains suitable gifts for just about anyone.

Nintendo is reducing $50 off the price of its Wii console as it hopes to

1. counter the effects of the recession and
2. expand the market for the popular device

Despite the recession causing the gaming industry revenue to fall by 14% through month of Aug and; Sony and Microsoft's combined revenue is off about 22% over that period. By contrast, Nintendo's is down only about 4%.

Besides cutting price of their console, Nintendo expects "New Super Mario Bros. Wii"--scheduled to go on sale 15 Nov to have a big impact. The game is the first multi-player offering in the popular series, allowing four people to play either against each other or cooperatively.

As a result , I see it a good time to long Nintendo while playing the Wii.

References

"Nintendo Cuts Price of Wii Console " Article from Wall Street Journal

Nintendo's strategy of expanding the video game population with simple and easy game systems has been paying off with the success of the DS and with the Wii outselling the PS3 and Xbox360 in the beginning of 2007.