Exploring Nintendo's Uncertain Future

Thursday, 28 July 2011 08:37 PM Written by 

In a surprising announcement on Thursday morning, Nintendo declared that their latest handheld, the 3DS, will see an $80 price cut next month.  The 3DS is currently Nintendo’s flagship console, as the company hoped to ride the wave of success left by the DS.  This latest handheld was released in March, which makes the announcement of a price cut unprecedentedly early, and says much more about the company than just a cheaper price point for a handheld.  It says that Nintendo is in for a rough financial road.

According to a recent story from IGN, Nintendo is reporting a loss of 25.5 billion yen, cutting the company’s income projections by a staggering 82 percent.  This is the first time this year that Nintendo has announced its financial woes, but these struggles have been assumed for some time now.

The 3DS was supposed to carry the torch that the DS lit, but thus far the 3DS’s sales haven’t been able to hold a candle to those of its predecessor.  The 3DS began its life with promising numbers, but after the first month, the handheld’s sales have been highly disappointing.  The 3DS’s software lineup hasn't exactly helped boost sales either with an average Metacritic game score of 62%.  The recent price cut suggests that Nintendo fears that there aren't enough 3DS’s out there, which in turn means that there aren't enough games being sold either.  The same can also be said for sales of 3DS peripherals.

The current state of the handheld market should also trouble Nintendo.  With the rise of smartphones and tablets, the handheld market is getting even more competitive.  If they continue to push handhelds, turning a large profit will become increasingly difficult.  The handheld pie isn't getting bigger.  Now there are more people fighting over the same slice of pie.

 

On The Wii Out

On Nintendo’s console front, the Wii’s death knell seems to be rapidly approaching.  Sales for the Wii have been steadily declining, and the company has yet to release a triple-A, first party title this year.  This leaves a barren landscape of games to play while fans eagerly await Legend of Zelda: Skyward Sword, which is slated to hit shelves this holiday season.  It has been hinted that this title will be the Wii’s grand finale.

 

The Wii U Announcement: A Console? A Controller?  What?

Nintendo has high hopes for the Wii U, its new console rumored to come out during the holiday of 2012.  But Nintendo has already faced hurdles for the new console, with the first coming at its unveiling.  The announcement at E3 2011 focused solely on the touch-screen controller and gave virtually no details on the new console itself.  The lack of hard facts about the Wii U makes its release next year almost a total mystery.  The biggest question mark is the new system’s price tag.  Based on the tech of the touch-screen controller, that devise alone could cost more than $100.

Before the Wii U had its name, it was rumored that Nintendo wanted to distance itself from the Wii brand due to its crippled sales and lack of core appeal.  Instead, the company made the unveiling look like it was for a Wii 1.5.

 

Don’t Hold Your Breath for a New Smash Bros. (Despite What Reggie Fils-Aime Said)

Later during the E3 press conference, Nintendo promised a new Super Smash Bros. title, which would arguably be the most anticipated game for the future system.  Nintendo failed to mention key details such as the fact that long-time director of Smash Bros., Masahiro Sakurai, is still hard at work on his prior commitment to Kid Icarus: Uprising for the 3DS.  Later, Sakurai stated that he couldn't even begin working on a new Smash Bros. game until Kid Icarus was complete – and that’s not including a break in-between games.

Super Smash Bros. Brawl was announced in 2005 and was released in 2008.  Assuming that Kid Icarus: Uprising comes out at the end of 2011, that would put a new Super Smash Bros. Brawl game on shelves around early 2015.  That’s not factoring a break for Sakurai and assuming that the development would go at the same pace as Brawl.  I would say that announcing aSuper Smash Bros. game nearly four years early was beyond premature on Nintendo’s part.

 

The Company that Lost Its Way

All of these glaring clues suggest that Nintendo is slightly lost.  What exactly is it that Nintendo wants to do in the gaming industry?  We thought that Nintendo was trying to win back the core audience, yet its next console still has an emphasis on casual gaming gimmicks like motion capturing and carries the stigma of the Wii name.  The 3DS can hardly win back hardcore gamers without a competent lineup of software.  So with Nintendo’s financial woes on top of a convoluted company strategy, where can Nintendo go from here?  What might we see in the not-too-distant future after the Wii U has run its course?

Let's say for argument’s sake that the Wii U follows the same pattern as the Wii and the 3DS: A powerful start, but a lackluster middle and end.  Nintendo can’t stay afloat financially if it stays on its current path.  During the lifespan of the Wii U, Nintendo will need to shell out money for R & D to get the ball rolling on the next big innovation to follow the Wii U.  If the Wii U's performance suffers and the 3DS doesn't spike profit, Nintendo will continue to dwindle.  Then what?  The company will simply lose too much money to remain sustainable.

 

Nintendo’s Options

Nintendo has too much longevity in the industry and is far too talented to completely fold, so that can (hopefully) be ruled out.  If the last five years are any indication, Nintendo continues to shine when it comes to software but lacks the ability to hold on to an audience with its hardware.  Moving from a developer of hardware and software to solely a software company is rare but isn't unheard of.  Sega made the jump more than 10 years ago after fumbling the Sega Saturn and Sega Dreamcast releases.  Today the company remains successful by creating first-rate software for the existing consoles on the market.

Another viable option is combining efforts with another company for a future console.  The video game industry is stuck in this mentality that the big three are sworn enemies.  Nintendo could team up with Sony or Microsoft to build a console of the future.  Nintendo could pair with a company that a newcomer to the gaming world such as Apple.  There have been whispers of Apple throwing its hat into the gaming circle for years now.  What better way to begin than by teaming up with one of the most knowledgeable companies in the business?

 

 

Of course, all of this is conjecture.  This new price drop could be exactly what Nintendo needs to kick-start 3DS sales.  The handheld’s lineup could drastically change in the remaining months of the year and fans could be buying up the software come holiday 2011.  The Wii U could be a rousing success too.  Whether Nintendo’s future sees success or failure, the truth is that it’s crunch time.  The company can’t live through two console generations of financial disappointment.

It's truly upsetting to imagine a gaming world without a Nintendo console, to imagine a company that played such a significant role in making gaming what it is today bowing out to Sony and Microsoft.  This scenario isn't as farfetched as it first seems given the information on Nintendo's financial struggles.

Any gamer who has ever played an early Mario or Zelda game has a soft spot in his or her heart for Nintendo.  I doubt that any true gamer really wants to see Nintendo fail.  A gaming culture without a Nintendo system just seems wrong, but these recent announcements show that such a future could very well be a possibility.

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