TOKYO, Feb 7 (Reuters) - Nintendo Co Ltd's 7974.OS hot-selling Wii game console may be a major headache for main rivals like Sony Corp 6758.T, but for operators of game arcades the pain is proving just as, if not more, intense.

In a shock downward revision to its earnings outlook, toy and amusement arcade firm Namco Bandai Holdings 7832.T said it would close between 50 and 60, or roughly one-fifth of its arcades, causing its shares to plummet for a second consecutive session on Thursday.

“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 Wii, which has gained worldwide popularity, offers an innovative motion-sensing controller that can be swung like a bat or sword. 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.

Many Japanese kids 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.

Sky-high oil prices have also done their damage, as Japanese families, eager to save on gasoline, cut back on trips to big shopping malls where many of the company’s family-oriented arcades are located, he added.

Namco Bandai is the second arcade operator to announce a major overhaul. Sega Sammy Holdings 6460.T also plans to close around 100 of its arcades.

Namco Bandai, perhaps best known for its virtual pet toy Tamagotchi, slashed its full-year net profit outlook by 38 percent from an earlier estimate to 16.5 billion yen ($155 million).

Its shares were down by their daily limit again Thursday afternoon at 1,095 yen, set to put in a 27 percent slide since Tuesday’s close. Sega Sammy shares were down 5.0 percent at 1,102 yen. (Reporting by Edwina Gibbs)