You know how Gavin said that Microsoft threw away their advantage gained from Xbox 360? Well, Nintendo has done far worse – after the massive success of the Wii, the Wii U has been a major flop. Now, Nintendo needs to re-evaluate their business.
Nintendo slashed sales expectation for the Wii U, going from a forecast of 9 to 2.8 million units. Wow, that had to hurt. In fact, instead of the advised ¥100B ($9.6 million / R104.5 million) profit, Nintendo has advised investors that it expects to see an operating loss of ¥35B ($33.6 million / R3 64.9 million). Wow, that’s a huge difference. It’s no wonder that Nintendo had to negate rumors that Satoru Iwata would resign:
There will be no major management shake-up in the short term
Iwata should be glad he isn’t working for a Chinese or North Korean organization that would demand more than just his resignation. However, Nintendo does need to change what they’re doing – and they know it. They are considering a new business structure as they “cannot continue a business without winning”:
We must take a skeptical approach whether we can still simply make game players, offer them in the same way as in the past for 20,000 yen or 30,000 yen, and sell titles for a couple of thousand yen each[...] 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.
Things have not been going well for the Wii U – sales turned up towards the end of the year, but still not nearly enough to restore faith in the floundering console. People have been foretelling Nintendo’s demise since the N64; are we seeing the end of Nintendo’s console business, or will this just be yet another bump in the road? I still believe the gaming industry needs Nintendo – it caters to a specific audience and helps bridge the gap between new/casual and hardcore gamers. Plus, some of the games they produce are truly fantastic – just look at Wii U’s Pikmin and Mario offerings. I hope Nintendo finds a way through this that doesn’t see them relegated to pure software developers, especially if that software ends up only being on mobile devices.