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Games as a Business – The Current and Future Risks Facing Nintendo

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[alert type=”green”]This column is focused on the non-game aspects of the game industry – the business side. I look at specific companies, practices, trends and events that could impact the industry and analyze them critically. For an introduction to this column, please click here.[/alert]

We’ve heard it all before – Nintendo has no idea what they’re doing and this will be their last console. Stock prices take a dive, investors panic, the recently released console performs far below expectations, and everyone begins digging the Big N’s grave. Then, suddenly, something strange happens where they start making exclusive games so amazing that the systems fly off the shelves and all is right in the world again. The circumstances surrounding the Wii U are just like we’ve seen before, but it’s taking quite a while for the last phase of that cycle to kick in. Something feels markedly different this time around – something’s not quite right here. In this edition of Games as a Business, I aim to look at Nintendo’s current and future risks, as well as analyze their decisions and what it could mean for the future of the company.

wii u conference

Analyzing the Wii U

Even the most die-hard Nintendo fans will admit that the Wii U has been anything but a success. Disappointment? Well, that’s arguable depending on who you talk to, but it definitely hasn’t fully lived up to expectations. The fault could lie in poor marketing, lack of quality exclusive titles, cumbersome controls, lower-quality visuals, or any combination of countless other factors. At the end of the day, as much as we would like it to be, business is anything but a science and Nintendo is one of the greatest oddities that we have in gaming today. They revived a dead industry in the 80s by doing what no one else would, they innovated with technology no one thought they wanted, and they continue to push the boundaries in the handheld space. Then why, I ask, is the Wii U so much different?

From the moment it was unveiled at E3, confusion was infectious. What exactly is the Wii U? Is this an HD add-on for the Wii, a hardware upgrade similar to the Genesis’ 32X? Is this just a tablet controller like the UPlay? Wait, it’s a brand new console? Then where is it? These and many other questions were racing through my head, as well as my peers, as we tried to decipher exactly what was going on with the global leader in sales of the previous generation.

Once the reality began to set in – that Nintendo was releasing a new console that was essentially on par with the PS3 and 360 just a year prior to Sony and Microsoft’s latest – confusion ramped up even more. Are they trying to rely on a gimmicky controller again? How will it compete with the PS4 and Xbox One? Are they releasing another console in a couple years to compensate? These questions still remain unanswered, in many ways, as the Wii U moves into its third year on the market. I am hesitant to declare a system that has yet to truly come into its own a failure, but the Wii U is undoubtedly far away from being a success.


Where are the System-Selling Games?

Full disclosure: I still have not purchased a Wii U. A lot of that has to do with the fact that Nintendo has failed to provide me with a truly compelling reason to do so. Sure, Wind Waker HD looks absolutely gorgeous and I truly do ache to sail across that Great Sea again, but as I glance at my shelf of GameCube games and see the original Wind Waker’s golden case looking at me – I’m skeptical to purchase a console just to play a game I already own. Super Mario 3D World looks great – it really does – but haven’t we all played this game before? ZombiU is still on my radar, as are several other exclusives, but I still am searching for that definitive reason to pull the trigger and take the plunge.

Buying a new console is no small investment, not just in terms of money, but in terms of time and emotional capital. Without a system-selling game to point to yet, I’m not sure it’s worth it. In fact, there are so many games that will not be coming to the Wii U, I find it difficult to justify owning a system that won’t have the majority of games other systems will. inFAMOUS: Second Son will likely be that game for me and the PlayStation 4 and the next Super Smash Bros. or the next new Zelda could be that game for the Wii U, but no one quite knows yet.

nintendo system

Should Nintendo Stop Making Consoles?

This is probably the most widespread sentiment the gaming community has heard in recent months. Everyone thinks they know the right answer to Nintendo’s apparent issues – when it’s not your problem, it’s easy to prescribe a solution. However, Nintendo isn’t Sega and despite what some may say about the Wii U, it’s not the Dreamcast…yet. Just because they are facing issues, doesn’t mean they should jump ship just yet. As far as we can tell, 2014 may, in all likelihood, be a landmark year for Nintendo and the Wii U. The success of the 3DS is so tremendous, in fact, that it very well could carry the Wii U for years on end. The recent merging of the console and handheld division show a leaning towards a leaner and more efficient way of doing business, which is never a bad thing.

Let’s take a step back though – truly – and think about what the world would be like without a Nintendo console. The company that single-handedly saved the gaming industry would cease to make hardware? Really? I hardly think that is a very effective way of honoring the memory of Yamauchi and something that is likely the very last thing on the mind of Nintendo’s upper management. Changing plans and reevaluating strategy is one thing, but giving up isn’t really something Nintendo, or Japanese culture for that matter, embraces all that much. Throughout the past several decades, Nintendo has amassed such vast financial reserves and never had to borrow any money, I can’t in right mind believe that they are actually in any trouble. Hope is, as far as I can tell, far from lost.


Where Does Nintendo Go Next?

Maybe they will release a new system in the not-too-distant future to catch up the competition. Maybe they will start capitalizing on the growing mobile market as a way to supplement their core-handheld offerings. Maybe they actually will stop making hardware. Or, maybe, (and most likely) they will find a way to adapt and continue to deliver some of the industry’s most inventive systems and games the world has ever seen. Only time will tell what the future holds for Nintendo, but they are from dead.

Let us know your thoughts on this piece and the column as a whole down in the comments below. What do you think the future holds for Nintendo?

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