Nintendo and the Wii U disaster

Screen Shot 2014-01-30 at 3.23.28 PMThere’s no sugar coating it: The Wii U has been a disaster for Nintendo, and if they don’t do something to turn it around it may sink the good ship Mario.

Consider this: The company planned on selling 9 million consoles in this fiscal year, but has only sold about 2.8 million. They’ve sold less than half a million in the most recent quarter.

Of course, game consoles are a volume business, where the company needs to sell a certain amount of consoles to amortize their investments in R&D, silicon, and game development.  Problem is, the Wii U missed so big and it looks like the company may never regain momentum with the launch of the Xbox One and PS4, you have to ask what their options are.

The company talked about some of those today, and as Ars detailed, it’s not clear management has any idea of how to right the ship. They talked about the changing definition of mobile devices, but made it clear they didn’t want to just push their software onto iOS and Android devices.  They also talked about an increased focus on healthcare as an opportunity, but were fairly vague about what that meant.

The bottom line is with the company not having the financial cushion to absorb a price cut (as they’ve so much as said), they’re running out of options. Unlike Microsoft and Sony they company is not diversified, meaning there is no alternative revenue stream when their core platforms do so poorly.

Let’s hope these vague plans the company discussed today shape up into a more concrete strategy. Mobile will continue to rule casual gaming market, so unless the company figures out a way to re-energize their core fans while also tapping into smartphone and tablet gaming, the future may be even darker for Nintendo.

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Michael Wolf

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