Nintendo survived the 1990s economy of Japan, I surmise they will survive an extended downturn of 5 that was officially recognized by the US Federal Government in mid-September 2008. If anyone is to fail or leave the videogame market, I would place my bets on Sony due to the spectacular failure of the PS3 in comparison to the PS2 and the very point that Sony is showing a tendency to invest in the cutting edge technologies for their consoles effectively pricing themselves out of most consumers as evidenced by the PS3 having an entry level price of $400 from 2006 until early 2009.
Any economics majors here who can correct me?
If a country's currency devalues then the local market will have a hard time buying products because they are paying more or the same, while having less disposable income to spend on nonessential luxury goods such as videogames. Conversely, a devalued currency makes exports cheaper (see China) because US based multinationals can get more for less meaning it is cheaper for them to set up Nike factories because their dollar gets a lot more in a country with a devalued currency.
In Japan's case, Japan, and I would suspect Nintendo, imports all the raw and manufactured products it uses to physically create Wiis and DS handhelds. Henceforth, with the Yen devaluing, the production costs for Nintendo will skyrocket forcing Nintendo to charge more their product in overseas markets.
Conversely, a highly valued currency is a sign that the local market is doing well, thus you have more local consumers purchasing your product. A highly valued yen for Nintendo would result in lower manufacturing costs, thus cheaper consumer prices overseas. On the negative, countries with highly valued currencies tend to scare away multinational manufacturers because workers are more expensive and countries with highly valued currencies tend to have strict labor laws regarding a 40 hour work week, limited child labor, unionization, and on.
