24/7 Wall St “compiled a list of companies that are in deep trouble.” Marking down the drop in stock and sales, these analysts ranked Nintendo as one of their eight companies where employees should lose hope.
Here is Nintendo‘s entry:
Nintendo’s once nearly insurmountable lead in the video console sector has been lost, and its sales have fallen further and further behind rivals Microsoft (NASDAQ: MSFT) and Sony (NYSE: SNE). The rise of the Google (NASDAQ: GOOG) Android operating system has also encouraged video game publishers to make more products that run on that platform. The 2010 market share of Nintendo DS fell from 70% in 2009 to 57%. Nintendo’s growth has also been damaged by the rise of the iPad and iPhone. The future is even grimmer. “iSuppli predicts Nintendo will sell 70 million 3DS gaming systems by 2015, a figure that is 21 million less than the 91 million in sales racked up by the original DS at the same point in its sales cycle,” according to the Unofficial Apple Weblog. Nintendo announced an unexpected quarterly loss on July 28 and its shares plunged 20%. The stock is down from a 52-week high of 26,780 yen to 11,850 yen. In late 2007, shares reached 80,000 yen.
The argument seems a little melodramatic, doesn’t it? This is a company that’s absolutely destroyed the hardware and software marketplace on an international level for several years on end. The Nintendo Wii and the Nintendo DS went and earned their makers an inexplicable amount of revenue.
Where 24/7 Wall St is right is with Nintendo’s recent performance. It is definitely on a worrisomely downward trend.
However, Nintendo is apparently trying to right the ship. They’re already working on the lack of software problem with the 3DS. They completely botched the system’s launch with an absence of quality games, but this holiday season’s price cut and release schedule should work to bring the handheld around to more respectable sales numbers.
The only thing that looms large on the horizon as a potential bomb is the Wii U. Will consumers see it as nothing more than a half-baked distraction? Maybe. But, if Nintendo can adapt to the needs of the marketplace by the time the machine comes out, the company will be just fine.
Gamers want games, they want graphics, they want playability and they want to do it over a nice network. The Wii U looks to address all of these things, and it will do it with a Nintendo-like innovation. How it all comes together remains to be seen.
Finally, in this writer’s opinion, the company does not need to worry about smartphone games. While mobile gaming will put a dent in the marketplace, there still exists a need for a dedicated portable gaming solution. I completely recognize that a large portion of the TechnoBuffalo crowd prefers gaming on smartphones over a dedicated platform like the 3DS or PSP. I get that. But I also know that the gaming community at large does not share the same opinion or perspective.
Nintendo should worry about Sony, not about Android or iOS. Sony’s presenting a capable, portable warhorse next year with the PS Vita. If they can bolster the device with an outstanding software catalogue, Nintendo will have strong competition on their hands.
Quite honestly, Sony is poised to decimate the Nintendo 3DS.
If Nintendo employees are losing hope at this stage in the company’s life, one would have to assume that they would work towards correcting the problems. Should Nintendo gain a genuine understanding of what the gaming community wants, they’ll be perfectly fine when they release the Wii U.
However, if the Big N drops their new console and it feels like a Wii with slightly better graphics and a tablet option, they can kiss a lot of their support goodbye.