Most of us have grown up hearing the name Nintendo and associating it with the video game industry. In fact, Nintendo has been around since 1889, back when the entertainment systems it sold were simply packs of cards. Nintendo’s famous creation, Mario, has been around for about three decades now. But even a company that has existed for over a century and is loved by generations of gamers, can still face serious threats from new developments in technology.
At the close of the latest fiscal year, which ended on March 31, Nintendo faced a loss of about $530 million. Even after sharply reducing the price of the Nintendo 3DS, its new portable game console, to encourage sales, Nintendo is still facing the fact that its revenue is only a third of what it was three years ago, when the release of the Wii and Nintendo DS caused massive sales.
The growth of mobile game applications, most of which are free or only cost a few dollars, is threatening the very need for game consoles like the ones Nintendo produces. Many games on the web and Facebook are also played for free. When this is compared to $50 or $60 for a Nintendo game and $200 to $300 for a console, it seems that Nintendo is at a severe disadvantage.
Nintendo is trying to turn things around through the sale of the Wii U, which was sold to stores on Nov. 18. The company hopes to replicate and capitalize on the success of the original Wii, which was considered revolutionary because of the simplicity of its controller. For a while, the Wii was intensely popular and attracted new audiences to gaming. Gradually, its popularity faded, and Nintendo now needs another success.
So far, sales appear to be going well: 3,000 GameStop stores carried Wii U on Black Friday, and almost all of them were sold. However, many industry veterans and game reviewers have their doubts. They think that Wii U isn’t really in demand today, because of the variety of abundant and cheaper mobile games.
However, the remaining wide recognition of the Nintendo brand might provide some impetus for people to purchase them. Also, many cherished characters such as Mario and Zelda can only be encountered on Nintendo systems.
There have been periods in the past when Nintendo was also undergoing hard times. At one such time, the company turned it around through its release of the Wii, which led to a comeback. Since the Wii has been released, Nintendo has shipped about 100 million of them, compared to approximately 70 million consoles that Sony and Microsoft have recently shipped.
One of the biggest business decisions that Nintendo made, landing them in their current position, is their refusal to sell their games for any hardware but their own. This includes the millions of iPods, smartphones, and tablets for which mobile games are targeted.
This could have been a huge missed opportunity for Nintendo, by allowing popular brands like Angry Birds to appear unchallenged on mobile devices. Nintendo executives, however, claim that this strategy allows Nintendo to produce truly unique games.
Nintendo isn’t the only business under siege from new technology. Sony and Microsoft are expected to release new game consoles next year, and both businesses are also facing a future where their gaming products might become unnecessary. The big question isn’t simply what the future holds for Nintendo, but also what will happen in the future to large and expensive ==gaming consoles.
Many people in the industry feel that no one but hard-core gamers are willing to pay hundreds of dollars for new gaming systems. Also, as innovative companies like Amazon, Apple and Google develop, Nintendo might face even more competition. But will the demand for Nintendo products entirely disappear? Right now, it’s difficult to tell.
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