Is the End for Nintendo Nearing?

(Ping! Zine Web Tech Magazine) – Things are not looking great in the Mushroom Kingdom. Nintendo, the most iconic gaming company in the world, has seen major headwinds over the past 3 years, and is now officially in crisis mode.

Much of this pain stems from the weak sales of the Wii U, their latest console.

The Wii U has a lot going for it. A sleek design, an innovative controller/tablet, and that all-important Nintendo reputation for quality games and fun experiences. They upgraded to HD, boosted graphical performance, and attempted to cater more towards core gamers. With a year jump on their competitors, many expected the Wii U to pick up right where its predecessor left off.

Potential only goes so far though, and Nintendo quickly found itself in a tough position. Q3 holiday sales were not terrible (1.95 million Wii U’s sold), but they were still a 36% decrease from a year ago when the console was first released, and nowhere near expectations. In fact, Nintendo originally expected to ship 9 Million units during the full fiscal year ending in March. The revised number: 2.8 million units. Not good.

The outlook is so negative, that CEO Satoru Iwata and other executives, including legendary designer Shigeru Miyamoto, are taking a 50% pay cut for the next five months as recompense for the company’s poor performance.

This marks the most important point in Nintendo’s existence, going all the way back to when the release of the original NES was considered a huge risk.

So how did Nintendo back itself into a corner so quickly? Three primary reasons stand out: Performance (Wii U is much weaker than the PS4 or Xbox One), Marketing (they were unable to articulate the benefits and features of the system), and Content (no new major Zelda or Mario installments.)

The news media is hasn’t either. After several weeks of nearly every major outlet decrying the weak results, Nintendo is not only being weighed down by terrible numbers, but also by the cult of popular opinion, a difficult problem for a publicly traded company.

So, with all of this negativity swirling around, is the end for Nintendo nearing?

Short answer: No.

Even with a system struggling for its life, Nintendo has proven shrewd enough to maneuver out of this mess. They have quality leadership in place, a stellar workforce of creative and skilled individuals, iconic branding, and a large stockpile of cash available.

It seems they are already pivoting in new directions as well. Iwata has just recently outlined the company’s plan to create a third platform to sit alongside the Wii U and the 3DS, which will promote “quality of life” apps. Although details are scarce, this oft-neglected area of interactive entertainment could be a source of profits for Nintendo. Brain Age and Wii Fit were massively successful, and with the increasing relevance of technology on our daily lives, Nintendo can take advantage of the likely demand.

Nintendo has made a name for itself by identifying opportunities that nobody else was thinking of.

Iwata hopes that this move will allow Nintendo to sail into another “blue ocean,” which he defines as an untapped market of consumer who’d never buy a video game console, but who would buy a product focused around health instead of hijinks. If successful, this strategy could move into education and other “lifestyle” pursuits, like cooking.

If Nintendo can take the lead in the quality of life market, the upside is nearly unlimited. Add a smarter Wii U strategy (more compelling titles, better use of the controller), a soon-to-be announced Skylanders competitor, a potential mobile strategy, and a continued focus on the 3DS, and the doomsday scenario becomes much less likely.

There is certainly going to be some short-term pain, and they must expand their revenue streams beyond hardware, but if there is anything we have learned about Nintendo, it’s that they have serious staying power.  Make sure you are set up with the best internet provider so you can keep up with the latest Nintendo updates.