Nintendo has made millions off of this generation's hardware, selling over 41 million Wii consoles in America alone- an estimated profit of $246 million. And that's just from console sales. The Wii and DS, as the Internet saying goes, have been printing money for Nintendo. But now everyone is questioning what's been going wrong: how can the 3DS be doing so poorly? Will the Wii U catch on? Is Nintendo on the brink of self-destruction? With all the rumors going on, I decided to look into all the talk myself.
Nintendo is losing money, fast
The first claim is that Nintendo, with their stocks plummeting from a high, are on the brink of closure and going the way of Sega. Nintendo has lost millions in the quarter, and they will have no other choice than to go third party and make games on other platforms.
Apparently the people who are making these claims don't follow the stock market very well.
Nintendo has had a huge growth since December 2005, after showing the Wii controller and the idea of motion gaming. But before that? Nintendo stock actually was at a low during the Gamecube/Game Boy Advance era. Despite the fact the Game Boy Advance had little to no competition and sold millions worldwide, we see Nintendo's stock at average lows of $8. It was only until after the DS was released in 2004 that we begin to see stock prices rise, and only after the announcement of the Wii controller that we really begin to see the company rise to it's highest point of $76 in December 2007 before beginning its drop.
The company has actually stayed fairly steady, trading around $30, and seeing positive growth in March 2010, the same month the 3DS was announced. But since the 3DS launch, stock has continued to fall, now currently on the rise and selling around $20 a share. Does this spell doom and gloom for Nintendo?
Not really, considering Nintendo existed in their profitable GBA days trading at only $8. On top of that, the top 3 selling titles for 2011 so far are all in Nintendo's name: Pokemon Black/White, Wii Sports, and Wii Sports Resort. Could Nintendo even go the way of Sega?
Sega is a bit different, as they had a lot more problems. In 1997, they began to have losses for the next five years. It was only after two years of losses that the company launched the Dreamcast, to have sales not reach expectations and developers abandon it for the PlayStation 2- riding off of Sony's success with the PlayStation. Their stock, which only goes back to 2000, saw a huge dip before the merger- down to almost $4 trading. With substantial loss in the market, and nowhere to go with their Dreamcast console- Sega was forced to go third party. But would Nintendo?
Is Nintendo in a similar position?
Sega went third party after a total of four years of losses in the market, and two years after the launch of the Dreamcast failed to bring publishers on board. Nintendo is in somewhat of a similar problem: companies are not sure they want to touch the 3DS and- as EA has openly stated- think the PlayStation Vita will do better in the marketplace. Sales figures of the 3DS were not as high as Nintendo had hoped for the launch, and despite selling millions quickly took to a price cut in order to get more people to buy the system. So far, the strategy seems to have at least brought their stock up some- but with no one talking about games being released- the 3DS has few killer titles for people to purchase- similar again to problems Sega had with the Dreamcast.
But Nintendo is in a different position than Sega: they have money they can use with the success of the Wii and DS to take more chances and still remain profitable. The question is if Nintendo can compete on the same level with Sony and Microsoft as the next round of consoles heats up- including rumors about a new Xbox shown at next year's E3. Add the fact that systems like the DS continue to sell and 3D isn't as much of a selling point to people as Nintendo thought- and you have a lot of business tactics Nintendo needs to take into consideration.
Nintendo's Overhaul: Part One
The first thing Nintendo needs to do is overhaul their entire system. First start with third parties- which they are somewhat doing now. As they finally have money to throw around, they're doing so. But let's not stop there.
Help out with marketing the games too, and not just working with third parties to make the games but to sell them to people. Nintendo makes great family games, but it doesn't do so well with M-rated titles. They are going to need third parties to work on those, and not just create another Geist game.
Overhaul: Online
People like having a username, being able to redownload their software easily, and really like online gaming. I'd love to be able to sign on, see my friend is online and send him a quick message to play some Smash Bros. U- and I'm sure others would do the same thing. Especially if I can sit there and talk to him while we're playing the game too without the entire room hearing our conversation. While Nintendo is incredibly worried about children being abducted, they should know it's very rare for this to happen- and Microsoft and Sony have never had a problem with child abductors due to parental controls implemented into the system.
And while overhauling the online experience, add a better store than what we have now. The store seems cluttered on the TV screen, and doesn't flow as well as it could. And let's be honest, we can tone down that music to be something smoother and not feel like we're trying to shop at a weird circus.
Nintendo doesn't want to copy competitors, but it needs an overhaul on what works. For once Nintendo, get your act together and do something similar. There's a reason why iTunes is popular, because it is easy to navigate- same with Xbox LIVE. Easier to navigate, easier to use, more profitable.
Overhaul: Games
Not that Nintendo doesn't have awesome games, it just isn't selling any of them. The 3DS is "failing" not because of hardware, but because of games and the price point of them. Sure, the PSP did OK with selling games at $40 a pop- but you're Nintendo, you're supposed to be selling games at a cheaper price point.
But the main issue is getting games on the console. It's understandable, third parties were meant to supply games for the system but backed off and now you're scrambling to do something. You now have to convince everyone that the 3DS is worth developing for. How do you do that?
Indie developers. You're the first device that has 3D implemented without the need for glasses, let indie developers create games for it like iOS and Android. Let them port games from those devices if they want. You're making it easy to port Xbox 360 games to the Wii U, now make it easy to port iOS and Android based games to the 3DS. And have them sell for 99 cents. You get Angry Birds 3D on the device, and you'll make a killing Nintendo. Enough money grubbing, you've got competition to worry about and if you can release a PC tool to make portable games- every Nintendo fan around is going to try to make the next best title.
And if you're really inclined to, take those titles and work with them. Take good ideas and make them better. Add some Nintendo magic. Yeah, you'll have to do a pretty good job at quickly approving games- but if you're so worried about it then team up with Apple or Google. I'm sure one of them would love to have their market available on the 3DS and make money off of it even more.
And where are my Wii U titles? You haven't announced much for the Wii, might as well start showing off some things for the Wii U.
Overhaul: Marketing
This one is more for the current strategies. The 3DS marketing isn't great. It doesn't show 3D, it doesn't get the point of the 3DS across to consumers. And honestly, parents probably are thinking it's just another small upgrade. You need a nice, catchy way to get people to know about the 3DS much like the "Wii would like to play" commercials that go to be so popular. The current Apple-esque way of presenting things isn't working, you need to do a little better than that. And when you release the Wii U, you might wanna do an even better marketing campaign to garner in both the casual and hardcore market.
Just, refine everything else before you start marketing.
Conclusion
Nintendo is in somewhat of a similar position that Sega was back in the late 90s, but only with the position of their newest console. If Nintendo can get third party developers to jump on board and start releasing games that take advantage of the hardware, the train will be unstoppable. Both casual and hardcore gamers will eventually have to upgrade to play the newest games, and though we'll unlikely see the success of the Wii again- we'll see a lot more people interested in gaming in years to come. Nintendo can prepare for this by creating competitive pricing and games to go along with their own, or team up with companies like Apple or Google- and creating a joint venture into the future of gaming.
With potentially new information coming in only 2 weeks, Nintendo's stocks are at their whim and the right choices need to be made now in order to truly garner an experience people want in the entertainment industry.
James Gabbard is a journalist and owner of A Simple Letter, if interested in contacting him about writing articles, check out the contact us tabs at the top of the web page.
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