July 30 (Bloomberg) -- Nintendo Co.’s sales of the Wii console fell for the first time and Sony Corp.’s PlayStation 3 shipments tumbled to a two-year low, raising pressure on the world’s two largest makers of game players to cut prices.

Sales of the motion-sensing Wii plunged 57 percent, leading the Kyoto-based company to report a 61 percent decline in quarterly profit today. Sony posted a 31 percent drop in PlayStation 3 shipments, driving the Tokyo-based company to a second straight quarterly loss. Microsoft Corp., maker of the Xbox 360, said last week it sold 1.2 million Xbox 360 consoles in its latest quarter, the lowest in two years.

Nintendo President Satoru Iwata and Sony Chief Executive Officer Howard Stringer have spurned calls by game publishers and retailers to cut prices as the global recession drives down consumer spending. The stronger yen is also eroding earnings at Japanese electronics makers, making them less competitive relative to overseas rivals such as Samsung Electronics Co.

“Sony and Nintendo need to cut prices for the PlayStation and the Wii or those products won’t sell,” said Mitsushige Akino, who oversees the equivalent of $631 million at Tokyo- based Ichiyoshi Investment Management Co. “Investors are fearful consumers will cut spending even further.”

Nintendo, down more than 60 percent from its 2007 peak, advanced 2.6 percent to close at 26,810 yen in Osaka trading before the company reported earnings. Sony rose 6.8 percent to close at 2,505 yen in Tokyo before the results were announced.

Sales Miss Estimates

Revenue at Nintendo, the world’s largest maker of video- game players, tumbled 40 percent to 253.5 billion yen ($2.7 billion) in the quarter ended June, or a fifth below the median estimate of five analysts surveyed by Bloomberg. Nintendo blamed the drop on a lack of “blockbuster” software titles.

Sony Chief Financial Officer Nobuyuki Oneda and Nintendo’s Iwata said today they’re confident their companies will meet their targets for hardware sales for the year. Oneda, who declined to comment on price cuts, said sales will pick up after the release of “big titles” in the fall and Iwata said he expects new titles to boost sales.

‘Novel’ Announcement

“There hasn’t been a novel announcement by Nintendo lately,” said Koki Shiraishi, an analyst at Daiwa Institute of Research Ltd. “My attention is on whether Nintendo can make the most of its uniqueness to release a strong product before the year-end shopping season.”

Sony’s business unit that makes the PlayStation game machines posted a 39.7 billion yen operating loss in the quarter ended June 30, compared with profit of 4.6 billion yen a year earlier. The Networked Products & Services Group, led by Kazuo Hirai, 48, posted the biggest deficit among Sony’s divisions. Its sales fell 37 percent.

Nintendo stuck with a May forecast it will sell 26 million Wii consoles in the 12 months ending March 2010, little changed from the previous year. Sony also kept its projection PS3 shipments will rise 29 percent to 13 million this year.

“Continuously churning out good titles is the crux of the game business to keep users hooked up to the same old game machines,” said Makoto Haga, president of Tokyo-based Wing Asset Management Co. “It’s pretty much a boom or bust business.”

Software Sales

Nintendo’s gaming software sales fell 34 percent to 105.5 billion yen and hardware revenue declined 44 percent, it said. The lineup of Nintendo’s game titles has weakened from last year, when “Mario Kart” and “Wii Fit” were introduced, according to Daiwa’s Shiraishi.

At Sony, combined software sales for the PS3, PlayStation Portable handheld console and PlayStation 2 plunged 41 percent in the latest quarter, it said.

Stringer, 67, earlier this month rebuffed calls by Activision Blizzard Inc., the world’s largest video-game publisher, to cut prices. Activision Chief Executive Officer Bobby Kotick said last month the publisher of the “Guitar Hero” and “World of Warcraft” games may shift away from developing products for Sony’s machines. Iwata, who’s kept the price of the Wii at $250 since the product’s debut, said in June he wasn’t considering a price cut.

Losing Money

“I lose money on every PlayStation I make,” Stringer said on July 7 in an interview at a conference Sun Valley, Idaho.

Daniel Dematteo, head of GameStop Corp., the world’s largest video-game retailer, said during a company earnings call in May that console prices are “too high,” given the economic environment.

Sony last month led the U.S. video-game market to its biggest monthly sales drop in nine years as a lack of new hit titles discouraged game shoppers. June sales PlayStation 3 plunged 59 percent, while the total revenue in the U.S. game market tumbled 31 percent, NPD Group Inc. said in July.

Redmond, Washington-based Microsoft last week reported revenue in the unit that includes the Xbox video-game machines slumped 25 percent.

Microsoft plans to release a motion-activated video-game device called “Natal” to replace hand-held controllers “late next year,” Brian Farrell, chief executive officer of game publisher THQ Inc., said on July 28, without elaborating. Sony has also announced plans for a new motion-sensing controller to be released next year.

To contact the reporters on this story: Mariko Yasu in Tokyo at myasu@bloomberg.net; Masaki Kondo in Tokyo at mkondo3@bloomberg.net.

Last Updated: July 30, 2009 07:28 EDT