UPDATE 1-Japan arcade firm stung by success of Nintendo Wii

(Recasts, adds closing share prices)

By Edwina Gibbs

TOKYO, Feb 7 (Reuters) - Shares in Japanese toy and amusement arcade firm Namco Bandai Holdings (7832.T: Quote, Profile, Research, Stock Buzz) fell for a second day on Thursday after it issued a shock downward revision to its earnings outlook and said it would close 50 to 60 arcades, about one-fifth of the total.

"A lot of the types of games that people played at an arcade can now be done at home," company spokesman Yuji Machida said.

The move reflects the popularity of Nintendo Co Ltd's (7974.OS: Quote, Profile, Research, Stock Buzz) hot-selling Wii game console.

Many Japanese children got a Wii last year, particularly over the holiday season, and it seems as if much of their pocket money is now being saved to buy more hardware or software for the console, Machida said.

The Wii, which has gained worldwide popularity, has a motion-sensing controller that can be swung like a bat or sword, and the addition of "Wii Fit", which features a pressure sensing board that players can use to simulate ski jumps or surfing, has also propelled sales.

Machida also blamed high gasoline prices that have prompted families to cut back on trips to big shopping malls where many of the company's family-oriented arcades are located.

Namco Bandai is the second arcade operator to announce a major overhaul after Sega Sammy Holdings (6460.T: Quote, Profile, Research, Stock Buzz), which plans to close around 100 of its arcades.