Why Nintendo Will Never Be Great Again

Nintendo Wii WalmartI grew up as a Nintendo kid. The day Nintendo's (NTDOY) 8-bit console hit the market was the day I handed over my old Atari and ColecoVision systems. The gameplay was rudimentary in retrospect, but I didn't care as I guided Mario and Link through their rendered worlds.

The games and graphics ultimately got better. The stakes grew higher. Nintendo survived the onslaught of disc-based consoles. Even today, the Wii is the only one among the three major consoles to not play DVDs. It didn't matter at first, as Nintendo's whimsical motion-based controller overcame what the platform lacked in specs.

It matters now, though.

Shares of Nintendo hit a five-year low this summer, wiping away any gains made during the Wii era and through the last couple of handheld DS introductions. Net revenue fell by more than half in Nintendo's latest quarter, with a steep operating loss to boot.

Nintendo went on to shave its full-year fiscal profit target by 82% this summer, after announcing a 32% price cut on the 3DS portable gaming device that it had introduced in March. All this came on the heels of a 25% price cut on its Wii console back in May.

How optimistic can anyone be for next year's Wii U rollout when Nintendo can't move its gadgetry even at fire-sale prices?
The funk is real, and it's not getting better.

Mario Brothers

Wii Will Rock You

We're now a week away from a Nintendo event in Tokyo, where the Japanese gaming giant is expected to showcase upcoming 3DS games and perhaps even new 3DS peripherals. Some bloggers have posited that a radical redesign is in the works, but that's largely wishful thinking. Besides, it's not as if Nintendo is a makeover away from revisiting its glory years.

Consumers have moved on, even if Nintendo has yet to realize why it wasn't given a forwarding address. Nintendo can be clueless.

In an interview with video game website Kotaku last year, Nintendo of America president Reggie Fils-Aime dismissed the threat of Apple's (AAPL) App Store and the iPad, iPod Touch and iPhone lines it feeds.

"If our games represent a range between snacks of entertainment and full meals depending on the type of game, [Apple's] aren't even a mouthful, in terms of the gaming experience you get," Fils-Aime said.

He also suggested that the platform isn't a viable profit platform for developers because there are so many free games available and the premium downloads are too cheap.

Well, there were fewer than 100 million devices running Apple's iOS platform at the time. There are more than 200 million iOS devices now. Google's (GOOG) Android is also taking off, at least on the smartphone front.

It doesn't matter if developers don't like swapping a handful of games being sold at $30 for a ton of them at $0.99. It's the consumers calling for free -- or nearly free -- casual games that can be played on Facebook or on a smartphone.
Nintendo just isn't where the gamers are.

Paying the Price for Aiming Young

Sony (SNE) and Microsoft (MSFT) have cornered the diehard gamer market, and that hasn't been exactly a picnic, either. However, Nintendo's emphasis on low-tech titles that appeal to younger gamers, retro purists, and multigenerational families playing together is at the very heart of the App and Android games that continue to flood the market.

If you don't think that gamers are warming up to Nintendo-less apps, check out GameStop (GME).

"Did you know that GameStop now buys your old iPod, iPhone and iPad devices," reads GameStop's website. "Trade them in at GameStop for in-store credit."

It's not just about buying back iOS gear, GameStop is likely to begin selling it, too. Apple-watcher 9to5Mac is reporting that GameStop recently told dealers at a trade show that it's about to begin offering iPads, iPods, and iPhones through its stores.

Nintendo is in a quandary. Will it simply settle for thinner and thinner slices of the gaming pie, or will it go the Sega route and begin licensing its proprietary games and characters on rival platforms? The former is a recipe for a slow-death casserole. The latter simply speeds up the process, but with a little more licensing revenue on the way out.

I would love to see Nintendo pull a Yoshi out of its hat next week, but it's just not going to happen. Nintendo's best days are a replay screen of the past.

Longtime Motley Fool contributor Rick Munarriz does not own shares in any of the stocks in this article. The Motley Fool owns shares of Microsoft, Apple, GameStop, and Google. Motley Fool newsletter services have recommended buying shares of Apple, Google, Nintendo, and Microsoft.




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17 Comments

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Daryan Crescend

**** Fear Mongering Xbox 360 fanboys. Stop posting **** designed to worry people who enjoy the Wii. The Wii is the greatest console, in my opinion, and if you like the Xbox 360 over it, that's yours. But do not create articles that blatantly paaints Nintendo as a dying company. Douchebag.

September 25 2011 at 12:11 AM Report abuse rate up rate down Reply
Mrleelongi

You're article is so biased that even fox news looks better than you. That's saying a lot in the gamer world. To call iOS users and Andriod users gamers, ha what a joke. They know nothing and buy games from a saturated market that should have crashed by now, 92% games download from Apple are FREE. Not sutainable. Oh and come on people are complaining about the 3DS battery life, the iTouch doesnl't last two hours playing demanding games. Come get me when you realized you where wrong and Nintendo is kicking ass with it's Wii U and 3DS along with it's Super Smash Bros for the two new systems.

I bet the rotten Apple paid you and your company to write crap about Nintendo.

September 11 2011 at 3:33 AM Report abuse rate up rate down Reply
Patrick

Nintendo Wii was a very nice experiment (of course people jumped on to buy it, because it was a new gaming system that never been done before), but they failed in all areas. ... and 3DS and HD wii will FAIL too.
My 8bit NES is still kicking and I enjoy playing any of my 120games i own for it. The Wii remote will never replace the ultimate poor-responsive POWERGLOVE or the Nintendo Zapper!!!! When my friends come over to party and we have to choose between 8bit NES or Wii **** games. We choose the 8bit NES (I have the four player adapeter!) The only good game on the Wii i have seen is the New Super Mario Bros and the Wii Sports Bowling that came with the system.

September 09 2011 at 1:31 PM Report abuse +1 rate up rate down Reply
1 reply to Patrick's comment
Mrleelongi

Hahaha, you know nothing Patrick. Nintendo innovates, something the two other companies, Sony and MS, fail to even do. Kinect= Eye Toy on steriods and Move= ***** wiimote with special glowing ball on top. Then you have smartphones and the itouch or ipads trying to call themselves game handhelds, sure yeah cause gaming consists of downloading a game playing for 15 minutes and then deleting it.
Nintendo has it's funny actions that confuses everyone but they have franchises that everyone loves. Pokemon is its own gerne on it's own, and then they have Mario, Zelda, Metroid, etc.
If anything FAILS it was your comment. Not saying that NES is bad, I have my childhood mems but saying 3DS and Wii U will fail is a fail.

September 11 2011 at 3:40 AM Report abuse rate up rate down Reply
Mauricio Rivero

Never say never...

September 08 2011 at 11:09 PM Report abuse rate up rate down Reply
Jeff Easton

http://www.gamasutra.com/view/news/37126/NPD_Nintendo_3DS_Hardware_Sales_Jump_260_Percent_After_Price_Cut.php

So what were you saying about the price drop not doing anything only hours before sales actually came out?

September 08 2011 at 8:47 PM Report abuse rate up rate down Reply
Jeff Easton

What a completely embarrassing article. I always find it funny when "journalists" blatantly lie (i.e. saying the 3DS price cut did nothing) and base an entire hyperbolic article around it.

September 08 2011 at 7:01 PM Report abuse +1 rate up rate down Reply
Denty One

Every time these guys come along with their "Nintendo is dooooomed!" articles, Nintendo gives them a flying kick to the neocortex. Prepare to either pretend you never wrote this article or find a nice recipe for uninformed diatribes. Either way, you will be eating your words. Nintendo's been here for over a hundred years. I think they know what they're doing.

September 08 2011 at 6:48 PM Report abuse +1 rate up rate down Reply
Etts

This guy is obviously out of orbit. The Wii sold far better than the XBox 360 and PSP. Its sales are going down now because of the product's natural process of maturity. It happens all the time after 5 or 6 years of the console's release. Sony PS had to copy its controllers because they realized it was not selling as well as the Wii (adding another chapter to their copycats story). Xbox didn't even make enough hype with its lame kinnect motion sensors. Plus Nintendo's franchise games, more often than not, beat the hell out of third party games developed for Microsoft and Sony consoles. There's always a Zelda, Mario or Metroid at the top of a "top 100 games of all times". And now the Nintendo 3DS is cannibalizing every other consoles in Japan. This is because they are pioneers in technology for games. And iPad, iPods are they really good for casual games? Seriously, the only good game to play in those things is Angry Birds wich Wii Sports and Wii Fit is much more fun than launching little birds. Even hot girls prefer to play that rather than angry birds. Nintendo's got the majority of casual gamers wich is a bigger set of people than hardcore gamers, they got whole families involved in one single room and they got the hotties. This guy's mouth was bought either by Sony, Microsoft or Apple. My guess is Apple...

September 08 2011 at 6:45 PM Report abuse +1 rate up rate down Reply
1 reply to Etts's comment
Mrleelongi

You mean the rotten Apple.

Get it right Kinect= Eye Toy on steriods (that is my own term for it.)

September 11 2011 at 3:42 AM Report abuse rate up rate down Reply
saqualitycontrol

*looks at thread about this on neogaf*
*notices everyone has a nitnendo avatar*
*notices they are all vapid*
*laughs*

September 08 2011 at 6:41 PM Report abuse rate up rate down Reply
Peter

I'm guessing you're not much of a gamer. While placating themselves on cheap Apps from Apple and Android, they're still looking for the full sensory experience that can only come from a video game system attached to an HD Plasma preferably with surround sound. (You'll never see Deus Ex on a cell phone.)

Begin to realize, that gaming is becoming more ubiquitious and occupying more time in an individual's life. Cell phone apps are not canablizing traditional system gaming, they're just occupying gamers when they don't have a system nearby. The whole market is expanding. There are plenty of gains to be had on all fronts.

I do agree that Nintendo has some work to do in order to become more competitive with Microsoft and Sony, for starters an HD system would be nice; however, their stock price is not indictive of much, like the rest of the market. Stock price doesn't define anything in terms of the operations of a company. It's just a barometer of how much confidence stockholders have in the company: NOTHING to do with actual ops. or revenue. Last I checked the current market trend is a lack of confidence in equity securities. It's kind of the theme of the year.

September 08 2011 at 4:39 PM Report abuse rate up rate down Reply