Nintendo (PINX: NTDOY) Breaking New Ground

NintendoWhen people familiar with the history of the video game industry hear the name ‘Nintendo’, the first thing that comes to mind are the ground-breaking systems and iconic characters of the 1980s and 1990s. Games like Mario, Zelda, Super Smash Bros., Mario Kart, and a handful of others that made Nintendo successful in the past, are still the life blood of the company today.Unfortunately for Nintendo, however, these familiar titles are not attracting the attention they once did, with competitors like Sony (NYSE: SNE) and Microsoft (NASDAQ: MSFT) pushing the limits of graphics, story lines, and gameplay, Nintendo is doing all they can to stay competitive.

Flash forward 20 years to Nintendo’s latest console releases, the Wii and the Wii U. The Wii received some attention because of the novel use of the motion controllers, the popular Nintendo titles, and the low price point. However, with the lack of a traditional controller, poor graphics, and mediocre gameplay, it had a hard time attracting the hardcore gamer demographic. While Nintendo tried to bring on titles like Call of Duty, Red Steel, and a variety of other games, they were not seamless with the platform Nintendo had chosen to develop. The Wii U was vastly unchanged from the previous console and was considered a disappointment throughout the industry. Nintendo has always been known for their creative and out of the box thinking and not following in the steps of Sony or Microsoft. However, everything from the name of the console to the uninspired gameplay was generally seen as a failure on Nintendo’s part. This is where I think Nintendo could have made some huge strides in the industry and where I hope they will move towards with their next gen system.

The Wii U controller not only had the motion control capabilities like the Wii, but had it’s own interactive screen to add a unique feature. The first time I saw this controller, I said to myself “that looks like a handheld device.” And this is where Nintendo’s thinking fell short of their past successes. As mobile gaming has become more popular, Sony has attempted to integrate games from their Playstation Consoles with their PS Vita handheld device. Nintendo could have executed this perfectly with the Wii U system, but they did not. They could have made a plug and play style system where you are playing Mario Kart at home on your console and when it’s time to leave, you unplug the controller/handheld device and continue your game on the go. Similarly, Nintendo could have used their ever popular 3DS to have the same functions as the Wii U controller and saved time and money. This was the Wii U’s biggest design strength, yet they failed to play off of it. Whether it was a lack of imagination or a rush to beat the competition to the market, I feel Nintendo failed to execute on their biggest advantages, having games that are hugely popular and the ability to synchronize them across multiple platforms with little to no loss in quality. I hope Nintendo, as they are announcing some major changes to their strategy, won’t make these mistakes again.

Nintendo announced recently that they will be working with DeNA to create new games for
smart devices. This is a huge step for Nintendo, because while being creative, they have also remained very traditional to their roots. Bringing their popular titles to smart devices, I think, will be hugely successful for the company. They already have the name recognition and cult following that is nearly unrivaled by other franchises and the gameplay and graphics both lend themselves perfectly to smart devices. It will allow the fans of these popular titles to play new versions of their favorite games without having to pay for the console. Historically, the margins on game consoles for Nintendo has always been very small and they have instead focused on creating revenue through their games. So by reducing the need for the low margin consoles, we should see higher profit margins in this new mobile segment for Nintendo.

Nintendo also made an announcement that they are working on their next gen console, which is currently being referred to as the “NX.” There is still very limited information about the new hardware, but they are already learning from their previous mistakes, because at least the name is different. There is a lot of speculation around the new hardware, some of which include that the NX will be a service that can be used on a variety of devices, both handheld and console or that it is going to disrupt the console industry as we know it. Only time will tell what Nintendo will deliver to us in the near future, but if they don’t take some risks and challenge the industry, their business will continue to spiral downwards. How do you think Nintendo can reclaim their place at the time of the video game industry?

The author has no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. The author wrote this article themselves, and it expresses their own opinions. The author is not receiving compensation for it. The author has no business relationship with any company whose stock is mentioned in this article.

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