Yesterday, Nintendo stock tumbled 12% after the company posted a quarterly loss of $324 million and a 50% decline in sales. Along with the losses, Nintendo responded to poor sales of their latest flagship mobile gaming device, the 3DS, by cutting its price from $250 to $170. For a company that a few years ago was setting the world on fire with incredible sales of the Nintendo Wii, DS and its variants, this has to be a huge hit to morale.
But where did Nintendo go wrong?
I think the answer is quite simple: the iPhone. Nintendo completely failed to envision the impact that the new generation of mobile phones would have on their bottom line. And no, it’s not just because people prefer and iPhone to a 3DS, or even DS Lite. The rise in the iPhone doesn’t alone account for troubles with the future of the Wii and the utterly confusing Wii U, which Nintendo unveiled at this year’s E3 expo. No, the iPhone is simply the device that proved Nintendo fallible; Nintendo’s was a self-inflicted wound right from the start.
When the DS and Wii first came out, a lot of hardcore gamers scoffed that the way Nintendo was so blatantly going after the casual gaming market. But Nintendo was the one scoffing right back when the money was rolling in. Sales of consoles were unprecedented. Nintendo seized on a market of gamers that other companies had mostly ignored.
But then they lost it. Why? How could they lose that core market of casual gamers? Well, it’s simple. Those gamers are CASUAL! This means that they were never really interested in buying consoles to begin with. They wanted easy access to simple games. Your mom doesn’t want to go out and buy a new DS, she just want’s a device to play Sudoku or Brain Training on. Your mom doesn’t care about the Wii, or the technology behind it, or the potential it can have for the future of gaming. She just wants to pretend to work out with Wii Fit, and maybe pretend to play some tennis every now and then.
And guess what, the iPhone and it’s other smartphone ilk have now satiated the need for simple, casual games, and they’ve done so on a device that’s smaller, more unified and much more comfortable to carry around. These phones, through their app stores, also provide an incredibly simple and cheap way to get new games so that when one gets boring a replacement is easily available. That, of course, was one of the problems with the Wii and DS. Once those couple games were played out the systems felt useless. That is something Nintendo could not reasonably fix without getting into the unified device market, which would mean making phones.
But Nintendo also shot themselves in the foot by ignoring those hardcore gamers for all these years. Those players have now long ago moved on to the Xbox 360 and the PS3. Those are the players that truly drive the market, and they actually buy games as well. And instead of trying to re-capture that market with a set of quality next-generation devices, Nintendo has doubled down on the casual market by introducing gimmicks and playing to fads. The Wii U takes the simplicity of the Wii and then complicates it in an effort to… make it more fun for casual players? Or is it for people who want to play games 24/7? But it’s still for parties? But it only works for one person? Wait, what? The 3DS is less confusing, but in some ways more idiotic. They took the great DS Lite, made the battery last fewer hours, gave it a glasses-less 3D screen that nobody wanted and made it extremely expensive. Now they have cut the price, but the damage is already done.
It’s clear that Nintendo, a company that looked to be on the rebound after the mistakes of the Gamecube, it now headed to gaming niche and obscurity once again. They innovated the gaming industry, but failed to have the foresight and broad approach that would have allowed for sustained success. The future does not look bright for the house that Mario built. for at least one more generation, Nintendo will be falling behind. This is at the same time that Sony is working to make the PS3 and eventual PS4 a true home theatre media hub and Microsoft is planning on unifying its post-Windows 8 OS on all devices, including the next Xbox. That is where true game console innovation is headed. Casual gaming is the realm of the smartphone and social network, not the dedicated console. The future of consoles, both home and mobile, is in unifying the full gaming experience with other media, including video streaming. This is where Nintendo will be left behind.
It is truly the end of a vibrant Nintendo era.