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Smells Like Wii-U

January 21st, 2014 - 11:45 am

Ouch:

Nintendo Co. (7974) President Satoru Iwata said the maker of video-game machines is considering a new business model after forecasting a surprise 25 billion-yen ($240 million) annual loss because of tepid demand for the Wii U.

“We are thinking about a new business structure,” Iwata said at a press conference yesterday in Osaka, Japan. “Given the expansion of smart devices, we are naturally studying how smart devices can be used to grow the game-player business. It’s not as simple as enabling Mario to move on a smartphone.”

Iwata has to stop thinking about a new business structure, and get moving on one before it’s too late.

Nintendo proved with the original Wii that it has the ability to conceive and execute on new ways of playing games, of interacting with beloved characters. The failed Wii-U (you can no longer claim it’s “merely struggling”) was the sad result of Nintendo pursuing a spaghetti-against-the-wall tactic against Sony and Microsoft’s technological advantages. And Wii, for all its strengths, never moved enough games off of store shelves to generate the cash Nintendo needed if it was to ever catch up in the specs race.

But Nintendo can (I think) still execute on software and they have a stable of franchises which is the envy of the gaming world. All they need to do is to produce engaging games for the platforms people actually still buy. Yes, I know the DS handheld is still doing OK, but handhelds will turn out to be another hardware race Nintendo will lose, this time to phones produced by Apple and Samsung.

Nintendo had an amazing heyday as a hardware developer, but that day is done.

And I hate to say I told you so, but I did — way back in October of 2011, before the Wii U had even been released.

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All Comments   (2)
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Not sure handhelds are a total loss. They're not as sensitive to specsmanship, they're more of a kids' market, it's more palatable to the parents to lock the hardware to your available software titles. So, it's easier to build a moat around your cash flow.

They're also more price-sensitive, but what isn't these days?
44 weeks ago
44 weeks ago Link To Comment
I'm less certain about the handheld market, too. If Nintendo is going to continue as a hardware concern, that's where it will be.

On the other hand, my kids are quite happy with my wife and my old iPhone 4S phones, which they use as iPod Touches (iPods Touch?). Before that, they got along great for two years with our old iPhone 3GS models.

And talk about price sensitive -- the phones (and most of the games) were already paid for.
44 weeks ago
44 weeks ago Link To Comment
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