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Nintendo (OTC: NTDOY) is stuck in the past.
The iconic video game maker has long relied on milking its classic franchises for decades, reinventing them over and over again in an attempt to breathe new life into characters that date back to the '80s. Today, the company announced its newest batch of old faces coming to its troubled 3DS.
The roster includes familiar names in new titles like Super Mario 3D Land and Kid Icarus. On top of that, the company also desperately seeks to entice female gamers with a pink version of the handheld device alongside female-targeted titles like Girls' RPG: Cinderella Life. Nintendo President Satoru Iwata called the lineup for the holidays "stronger than any in the past."
Unfortunately, investors are not impressed as shares are down 5% on the announcements. Even before today's drop, shares were already down 42% this year alone. Companies need to innovate and adapt as consumers and technology evolves, yet Nintendo remains fastened to its old ways: incremental hardware improvements and rehashed franchise titles.
This explains why first-quarter revenue fell by a disastrous 50% while gross profit plunged a terrifying 84%. Amazingly, the company's net loss hardly changed from last year because of the absence of foreign exchange losses incurred last year.
The company continues to ignore the potential in explosive mobile gaming platforms like Apple (Nasdaq: AAPL ) iOS and Google (Nasdaq: GOOG ) Android and the trend toward social gaming that Zynga is riding. Game maker Activision Blizzard (Nasdaq: ATVI ) is joining the party by including social networking elements in Call of Duty Elite later this year.
Nintendo has a lot riding on the 3DS, and the recent price cuts aren't an encouraging sign for the company. Iwata has been Nintendo's president since 2002, so he's no newbie to the industry. If he continues to stick to his guns and only allow the company to develop for its own struggling hardware, then it could be "game over" for investors.