Nintendo (OTC BB: NTDOY.PK) thinks it's time for another revolution in the video game industry. The Wii U system, as introduced on the big stage of trade show E3 yesterday, adds a few expected spices to the old Wii recipe and a couple of dramatic changes.

So why is the stock setting new multiyear lows today, more than 6% below Tuesday's closing prices? Nintendo stock can be had for prices not seen since the fall of 2006, when consumers had yet to get their hands on the original Wii.

What's the deal?
Equipped with full-fledged 1080p high-def graphics powered by another custom chip from Advanced Micro Devices (NYSE: AMD) and a next-generation Power processor from IBM (NYSE: IBM), the Wii U has all the horsepower it needs in order to pass the previous grunt leaders, the Sony (NYSE: SNE) PlayStation 3 and Microsoft (Nasdaq: MSFT) Xbox 360. The new high-def tablet controller adds a new dimension to gameplay alongside all the wands and whatnot brought along from the old Wii. So there's something old and something new, high-def borrowed from the competition -- and yet the market is blue.

This is where we investors must pick a side anew in the eternal console wars, because the landscape is changing again. You could bet that:

  • The Wii U proves irresistible to hard-core and casual gamers alike, vaulting Nintendo back atop the industry after a brief Xbox Kinect stint on the throne.
  • The new system is too little, too late or too much, too early -- the original Wii fades into irrelevance as Sony and Microsoft battle for leadership position, the Wii U relegated to a footnote the size of the Sega Dreamcast.
  • All these expensive consoles become increasingly irrelevant as gamers move to the Apple (Nasdaq: AAPL) iPad and Android alternatives en masse. Casual app-style or online gaming rules the next generation as the consoles fail to latch onto the social revolution.

... or any combination thereof. History is rarely made in black-and-white, after all.

Place your bets!
Here's how I see the Wii U playing out. Nintendo is not ignoring social gaming at all, touting "deeper online capabilities" and a richer digital delivery system for upcoming games. If the future is more social and casual, this thing looks set to play a large part in that evolution.

Nintendo doesn't hit home runs in every at-bat -- the DSi XL hardly improved on the previous handheld model, for example, and the company basically sat out the PlayStation 2-versus-original-Xbox battle with an underwhelming GameCube. But it's a savvy company with a staggered market approach that I think beats the decadelong lifespan of the PS3 and Xbox 360. And while Mario and Zelda will make up a large part of Wii U's software catalog, Nintendo has announced support from more hardcore third-party gaming houses led by Electronic Arts (Nasdaq: ERTS). This console won't be all cute and cuddly like the last one was.

The real battle in my eyes is between casual-gaming champs and Nintendo, with a side bet on between the Wiis and Microsoft's Kinect for some market niches.

Call me crazy, but I see Nintendo doing very well in an environment like that. Today's depressed prices look like a terrific buy-in opportunity in that light. Siding with 97% of nearly 2,000 CAPS members, I'm staking my all-star CAPS reputation on Nintendo beating the market over the next few years. You're welcome to follow my lead or voice your opposition by clicking here.

And if even that risk-free leap is too daunting, you could just add Nintendo to My Watchlist and follow the stock until you've made up your mind. It's a free service that keeps your finger on the pulse of any ticker you'd care to watch -- or large batches of 'em. Click here to get started.