Since Nintendo Co. began selling its “family computer” in 1983, the company and other manufacturers have sold millions of home video-game machines, including portable versions, not to mention several hundred million units of software.

But due to diversified leisure time, the long-lasting recession and a declining birthrate, machine sales have peaked and software is not selling fast enough to offset development costs, industry sources say.

The manufacturers have been forced to review their conventional growth model, in which new software drives demand for hardware. They are now trying to depart from convention by producing items that can link to audiovisual equipment or by cultivating markets overseas.

According to a survey by Enterbrain Inc., a Tokyo-based game magazine publisher, sales of family game machines in fiscal 2002 came to 8.76 million units, down about 20 percent from fiscal 2001, when sales jumped 30 percent over the year before.

Sales of some machines slow within two years of being put on the market, and sources said the market is turning from one of growth to one in which new machines are sold into a more mature market where manufacturers compete with each other to get a bigger share.

There are also concerns about Sony Corp.’s PlayStation 2, whose sales are said to be favorable. Domestic sales of software for the machine hit 29.45 million units in fiscal 2002, up about 25 percent from a year earlier, but per-title sales dropped 25 percent to around 63,000.

Nintendo posted lower sales and profits in the business year that ended in March, the first slowdown in three years and largely because sales of new software for the Nintendo Gamecube were sluggish.

“Our software has not been widely accepted by consumers,” said Ken Toyoda, head of Nintendo’s public relations section, pointing to the difficulty in developing software that can satisfy both beginners and expert users.

Ryosuke Tanaka, chief of the general affairs team at Capcom Co., said, “The software we have marketed with confidence and those priced lower are selling well, but medium-rank programs are not.”

Nintendo is going to sell many new kinds of software for its Gamecube, both at home and abroad, including programs that link to portable game machines, whose sales are favorable.

On the other hand, Capcom is paying much attention to the European and North American markets — four times larger than the Japanese market and with greater purchasing power.

Company officials said that due to the cultural differences of Europe, North America and Japan, software that sells well in Japan is not necessarily successful overseas. Therefore, the company will try to develop software specifically targeted at overseas markets, they said.

Enterbrain President Hirokazu Hamamura said, “There is still room for growth with measures for the Internet and expanded software for overseas markets.”

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