Threat of DSi Lowers Best Buy Shares

In one brief statement by Goldman Sachs analyst Matthew J. Fassler, Best Buy saw drops in share value at the mention of the upcoming Nintendo DSi gaming unit and its capability to play downloadable games.

According to BusinessWeek (story), Fassler told investors that the DSi, capable of downloading games straight onto its recordable SD card, is a "tangible early threat" to other portable systems that rely on cartridge-type slots. Of course, Sony’s PSP system already has this capability, allowing players to purchase PSP-specific games and movies via the PlayStation Store.

So why would the looming release of the Nintendo DSi pose any threat to the likes of Best Buy, Circuit City and even Wal-Mart ? Because Nintendo will launch the DSi Store along with the new portable unit, offering games to purchase and download, leaving retail outlets out of the loop. While it’s entirely possible that many future DSi games will be too large to download, currently retail chains depend of revenues generated by consoles using physical media.

"While content will be limited at first, we believe it will likely ramp very quickly," Fassler wrote of the availability of games at the Nintendo store.

While the thought of purchasing and downloading games may be alluring, some fear the worst when it comes to game piracy. Team 17 studio director Martyn Brown (Worms series) confessed his concerns to gamesindustry.biz (story), claiming that the inclusion of the SD card input might amplify piracy issues already running rampant on the DS Lite.

"Adding an SD slot makes a bunch of sense for downloadable content given the way things are going," Brown told the website. "I just hope they’ve done something to counter the mass piracy that exists via the R4 on the Lite. It scares me that with an SD card input, that might leave it even wider open that it was on the original device."

Currently Nintendo aims to launch the new DSi platform in Japan this November 1, costing gamers around $180 bucks (¥18,900). The newest DS system features a 0.3 megapixel camera, an on-board browser (finally), WiiWare compatibility, the additional DSiWare download service and more. nintendo reports that reworked versions of Brain Age and Brain Age 2 will be the first titles to purchase and download via the Dsi Store,

Analyst Michael Pachter (with Wedbush Morgan) speculates that Nintendo needs to bring the price down to the current $129 Nintendo DS price tag in order for it to sell well. "The upgrade is not a ’must have,’ and is instead a ’nice to have,’" he told Edge Magazine (story). "My guess is that we’ll see a discontinuation of the current DS Lite model by 2010, and the DSi will replace it entirely."

Unfortunately, for North American consumers, that won’t happen for quite a while. Nintendo plans to release the DSi console sometime next year. In the meantime, retail outlets may want to consider some type of bargaining ploy in order to get a piece of the DSi pie.