The last time a new videogame console was released was six years ago. That’s when Nintendo (NasdaqOTH: NTDOY.PK) debuted its Wii, a revolutionary system that would come to dominate the gaming landscape with its family-friendly titles and never-before-seen motion controls. Since then the company’s competitors have struggled to catch up, with Microsoft (Nasdaq: MSFT ) debuting the motion-controlled Kinect a few years ago and Sony (NYSE: SNE ) coming out with its Move system for Playstation 3 shortly thereafter. But after today, it looks like Nintendo will once again take the lead in a new generation of console wars.
Nintendo and U
This morning, Nintendo unveiled its Wii U, a next-generation console that comes complete with a touchscreen controller. The controller, called a GamePad, brings a different dynamic to console gaming, with players able to view what’s happening on their TV along with details on the controller’s screen. Nintendo is hopeful that this new feature will warrant the starting price of $300 for the basic system, with a more deluxe version that comes with additional memory space costing $350.
Speaking of hope, you can be sure that executives at Nintendo have their fingers crossed that the launch of the Wii U goes smoother than that of its 3DS. The handheld system did well in the beginning, with the duel screens and 3D technology enough to warrant a $250 price tag. But sales quickly dried up, and Nintendo was forced to cut the price of the system to $170. That’s only one of the reasons that the company suffered its first annual loss in more than 30 years.
The other reason Nintendo is hoping for big returns from its new system is out of fear of the dramatic growth of casual gaming in the last few years. Companies like Zynga have been cropping up across the industry to create games for mobile phones and Facebook. Even with Zynga’s recent series of setbacks, you’d better believe that Nintendo (and all classic console developers) view casual gaming companies as the biggest threat to their industry. After all, while the nearly 40 million Wiis sold in the U.S. is impressive, that’s nothing compared with the 85 million Apple iPhones sold in the U.S. since 2007.
So what’s an investor to do with this news? Keep in mind that Nintendo’s biggest competitors, Microsoft and Sony, are releasing their new consoles as well within the next few years. Rest assured that both companies have learned their lesson from underestimating Nintendo in the past and will not make the same mistake twice.
Meanwhile, iPhones continue to sell well, a trend that will probably continue with the newly announced iPhone 5. And finally, new games and apps are constantly being developed by companies and creators across the globe, giving Nintendo more competition than ever before.