What Nintendo needs to do to make a comeback
In October 2007, less than a year after the release of its blockbuster Wii console, Nintendo was worth $78.50 per share. That equated to a market cap of $85 billion -- double the value of Sony at the time.
However, Nintendo's fortunes have only gone south since then. With Wii sales cooling and mobile apps the hot trend in gaming, Nintendo's stock collapsed this month to $14.50 per share, leaving it with a market cap of just $14.8 billion, a fifth of its value in 2007.
Super Mario just isn't so super anymore.
What happened to Nintendo, a company that has been around for 123 years? A variety of trends have dramatically changed the gaming industry over the last 5 years:
Mobile gaming is growing. Nearly half of smartphone users say they play a mobile game daily. That's great for Apple, but not so great for Nintendo, which has yet to release a game for iOS or Android.
Social gaming has grown into a multibillion dollar industry, though its growth is slowing.
Console gaming sales have collapsed across the board.
The Nintendo 3DS, the company's most recent handheld gaming device, failed to meet expectations, forcing Nintendo to cut its price to boost sales. Sales are now picking up, but it's simply not generating as much revenue as Nintendo had hoped.
The end result? Nintendo posted its first ever annual loss, losing $533 million during its last fiscal year.
Nintendo needs a 1 Up Mushroom
It's clear Nintendo is suffering, but how does it regain its mojo?
The company's first priority is the Wii U, its next-generation console due sometime during the holidays. It's an innovative device that includes a lot of unique game play, thanks to its iPad-like controller. I've tried it several times now, and I've come away impressed by its potential.
However, a hardcore gaming console simply isn't enough in a market that demands streaming video and greater connectivity. Microsoft has done the best job of expanding the Xbox 360 beyond gaming. The tech giant no longer considers its console a gaming device, but an entertainment platform. It streams Netflix, plays music, and even has ESPN (my favorite feature of the Xbox during college football season).
Microsoft doubled down on this strategy recently with the announcement of SmartGlass, a suite of mobile apps that lets you interact with the Xbox through a second screen. The result has been 29 percent year over year growth.
It's this type of strategy that Nintendo needs to learn from if it's going to make a comeback.
The Wii U cannot just be a gaming console -- it has to be an entertainment hub that can make money off of subscriptions as well as games. The Wii U GamePad has huge potential, but it needs to expand beyond Samus Aran (the protagonist of the Metroid games) and become the center of a home's entertainment universe if it's going to catch on. Most people can get their gaming fix from their iPhones, but the additional functionality will help push people over the edge and buy the console (depending on its price).
The other part of a Nintendo comeback has to come from mobile. The gaming giant recently announced the 3DS XL, complete with a bigger screen, better battery life, and more memory. It's an impressive device that should generate some movement on the company's struggling bottom line.
The bigger trend is clear though: dedicated handheld consoles are a dying breed. The Nintendo 3DS has sold only 17 million units, far less than the 150 million Nintendo DS units or 81 million Game Boy Advance units the company has sold. Meanwhile, mobile gaming is expected to become an $18 billion industry by 2014, driven by cheap, casual games available on smartphone app stores.
Nintendo has a few choices for its mobile strategy. It can try to convince more people in the market to become hardcore mobile gamers. It can add unique features to its handhelds that go beyond gaming (making them complementary devices to smartphones). Or it can embrace the mobile gaming trend and build games for Apple's and Google's platforms.
The harsh reality is that Nintendo has to do all these things if it is to survive. It needs compelling casual games on smartphones that can turn consumers into dedicated Nintendo gamers, and it needs to bring more entertainment features to its flagship consoles. The company must find a way to grow beyond its gaming roots and become an entertainment company of the future.
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Source: http://news.cnet.com/8301-33617_3-57458512-276/what-nintendo-needs-to-do-to-make-a-comeback/?tag=mncol
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Comments
RavePosted:
They need to target younger kids/ families cause most gamers have a 360 or ps3. Most gamers won't return to a Nintendo console with the Xbox 720 and such coming
SalaryPosted:
I haven't touched my DS, Wii or DSi in months ! Nintendo is going to get out of business unless they come out with something the community will love !
KramaticPosted:
This sucks lol. I never use Nintendo consoles or products anymore, as I have moved onto big boy consoles such as the Playstation 3 and 360, but when I was younger my gaming consisted of the SNES, Nintendo 64, Gameboy Advance, Gamecube, and the DS. Nowadays I already broke my GBA, Gamecube, and DS lol, but it's what I grew up with, so I hope they hang in there.
BritishColumbiaPosted:
Boston-Bruins The stats suprised me, I don't care for Nintendo but it would suck for them to "drop out" if you know what I'm saying
same i don't really care for Nintendo, but i want them to compete with Microsoft and Sony to see if they can make something better than they do.
MrModz1999_LobbiesPosted:
The stats suprised me, I don't care for Nintendo but it would suck for them to "drop out" if you know what I'm saying
FuttBuckerPosted:
BoxxyPlus They just need to make more games that aren't for kids. They should also be Nintendo exclusive like halo is for the Xbox...
And just kill Mario and ssb.... It's about time don't you think Nintendo?
Mario & SSB are Nintendo exclusives, and pokemon is another great nintendo exclusive.
SeanR917Posted:
Nintendo And All Come From So So Far Away In These Past Few Years, They Better Have Had Not Ruined This The Game,
AnyPosted:
It honestly kind of irks me. I hate it how the developer NEVER LISTENS to the reviewer.
Say we all want them to remake all of the GREAT NINTENDO GAMES, ex. Pokemon Colosseum, Super Mario 64, etc!
If they would get their head out of the gutter and listen, they might succeed!
Say we all want them to remake all of the GREAT NINTENDO GAMES, ex. Pokemon Colosseum, Super Mario 64, etc!
If they would get their head out of the gutter and listen, they might succeed!
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