Is This Nintendo's Next Move?

It's becoming increasingly difficult to disagree with the assertion that Nintendo's (NASDAQOTH: NTDOY  ) (NASDAQOTH: NTDOY  ) (NASDAQOTH: NTDOY  ) Wii U console is a failure. The system's sales have become a recurring punch line, and there is little reason to believe that a price drop and Zelda bundle will provide the type of momentum the console needs to become successful.

There exists a widely-held belief among consumers that the Wii U is simply an add-on for the 2006 Wii hardware that Nintendo has been incapable of counteracting. Short of dropping the system's expensive Gamepad controller and relaunching at a much lower price ($149 or $199), there doesn't look to be much that Nintendo can do to create a thriving ecosystem on the device.

Third party publishers have already been spooked by the system's abysmal sales and lagging online infrastructure. With Sony's (NYSE: SNE  ) (NYSE: SNE  ) (NYSE: SNE  ) PlayStation 4 and Microsoft's (NASDAQ: MSFT  ) (NASDAQ: MSFT  ) (NASDAQ: MSFT  ) Xbox One looming on the horizon, the situation looks dire for the Wii U. What will Nintendo do to ensure that its next foray into the console business does not meet the same fate?

Third party exodus
Nintendo is in a rough spot when it comes to planning its next gaming hardware. Given the substandard sales for major series on the Wii U, third parties will be cautious about devoting resources to any future Nintendo consoles. Even the highly successful Wii console was dominated by Nintendo's own publishing entries, but major publishers managed to find varying degrees of success.

The Wii U has been a graveyard by comparison. With that in mind, Nintendo will have to rely more on its first party output. Unfortunately, its transition into HD development has been anything but smooth,and it has not demonstrated that Nintendo is capable of supporting two concurrent platforms. The company's decision to unify its handheld and console divisionsindicates that it may pursue some type of hybrid in an attempt to stay relevant in both spaces.

To get a sense of one of the avenues Nintendo could pursue, take a look at Sony's recently unveiled PS Vita TV platform. The device plays compatible software from Sony's struggling Vita handheld but can also download games from the PSP and PSOne, combining to create a launch lineup of over 1,300 games.

It will also be able to stream PlayStation 3 games when Sony's Gaikai service launches in 2014and will be able to remotely play almost any game streamed from the upcoming PlayStation 4. Given that Nintendo's next console is likely to garner even less third party support than the Wii U, it seems likely that the company will have to rely on the strength of its back catalogue. Luckily for Nintendo, it has the strongest back-looking portfolio in gaming.

Growing pains
Nintendo's documented struggles in adapting to HD development and profit oriented business means that the company is unlikely to pursue high performance hardware. Still, in two years time, it could feasibly release a handheld with hardware slightly more power than the Wii U. In turn, it could release a PS Vita TV-like box for the home that would feature the same, or slightly more powerful, tech.

In doing so, Nintendo could continue to compete in both spaces, while broadening the addressable market for its software releases and building a device ecosystem that would be comparable to what Sony is doing. Nintendo does not have Sony's content streaming infrastructure, but it has already invested in streaming technologies with the Wii U, so connectivity and content sharing are safe bets for its next devices.

Not the only one
It's worth noting that Microsoft's Xbox One could face a Wii U-esque problem after it launches this November. While the device is all but guaranteed to receive solid third party support throughout its lifecycle, there are certain comparisons to be drawn between the Kinect 2.0 and the Wii U's Gamepad. Both input devices account for a substantial portion of their respective build costsand each device was intended to provide the features that would define the coming console cycle.

Now, in light of market realities, both the new Kinect and the Gamepad are being de-emphasized. Microsoft and Nintendo would both be in better positions to compete against the PlayStation 4 if they launched SKUs of their respective consoles without the gimmicks.

The future is in the past
If Nintendo does not undertake drastic measures to resuscitate the Wii U, it's going to find itself limping into the next round of console hardware. Third parties have learned their lesson, and Nintendo is not equipped to sustain two sets of hardware in the age of HD development. Accordingly, the company's best chance may be to replicate what we're seeing from Sony with the PS Vita TV. 

The Motley Fool's chief investment officer has selected his No. 1 stock for this year. Find out which stock it is in the special free report: "The Motley Fool's Top Stock for 2013." Just click here to access the report and find out the name of this under-the-radar company.


Read/Post Comments (9) | Recommend This Article (2)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On September 24, 2013, at 1:58 AM, bmprsvz777 wrote:

    Did Mr. Keith Noonan ever play Wii U ? I don't think so, because otherwise he might realise it's not such a bad product at all. Didn't you write the same about 3DS console when it started? Why do you all hate Nintendo so much? What will our children play when people like you kill Big N? Will they play GTA 10 or Farcry 10?

  • Report this Comment On September 24, 2013, at 1:44 PM, magnet4friends wrote:

    This guy clearly has never played wii u. A lot of people overlook it because of Xbox one/ Ps4. If people would actually TRY it, maybe it would be different

  • Report this Comment On September 24, 2013, at 2:07 PM, LexPro4 wrote:

    If you had any sense, you would try out the console before writing about it, and actually look at the graph. Nintendo is gradually going up as of this week. There is nothing wrong with the Wii U. You are the motley fool. Wii U aims for the softcore gamers, which is the vast majority of the population. Why on Earth would they drop the GamePad, if you say in your article that that's all they see in the Wii U? Why don't we get rid of the Apple App Store? And the cushions on sofas? Think.

  • Report this Comment On September 24, 2013, at 3:35 PM, mitchellrcole82 wrote:

    here's the thing. I love NINTENDO. I have all three systems and my PS4 as well. Guess what you motley idiots??? I love my WII U!!! I am an invested gamer on all systems and you are obviously some noob who multiplays like a little nerd-boy. Give me Zelda over Gears of War ANYDAY!!!!! HALO??? Trash!!! COD??? Trash!!!!! I even have some of these titles just because I was curious about what the big deal was. NOTHING!! Just a bunch of jobless wonders, kids, or trash-talking mod junkies. Pikmin 3 was absolutely AWESOME! I even transferred my reserves of AC 4 and Batman Arkham Origins from PS3 to Wii U just because it is such a great system and needs our support. There are millions of us out there who remember what a real gaming company looks like. Xbox and Playstation are only departments or divisions of much bigger companies.

  • Report this Comment On September 24, 2013, at 4:37 PM, joshexdirad wrote:

    Dear Nintendo,

    it's not just what this article says, it's the fact that your games are constantly changing into different game play styles and atospheres, it's like you're an ADHD child with a room full of connector blocks, one minte you're building a tower the next you're building a ship and finally the ship becomes a person then a dog. then you throw out the connector blacks and start playing with playdough...

    it's too chaotic, a little change here and there that makes one game slightly different from it's predecessor is fine, but alot of change every time is way too much change.

    also remember, if a game play style has been unused for even 4 years you have 4 new generations who have yet to experience it. also after arond 7-10 years former fans will be looking for more of the old style.

    present the old style every 4-7 years and you'll have sales.

    what does this mean? no nintendo it doesn't mean take the old games and supply them for download. non nintendo it definitely doesn;t meant to remake the game in a new age style, a new age style has nothing to do with and doesn;t belong with an old style game play and atmosphere.

    Also, you don't necesarily have to do remakes but becareful not to retcon while moving forwards as that destroys contingencies, and yes that does matter quite alot, a destroyed contingency is a destroyed atmosphere. and make sure that each game idea is as incredible as possible.

    if you can't understand what I'm saying here, then I suggest you contact me, I can help. I ahve game design skills and knowledge and am a videogame historian. honestly don;t be pighead stubborn thinking you can handle this on your own.

    You have proven to the worold that you can create new game series, but have also proven that you have terrible skills at mixing marketing with continuational game ideas.

  • Report this Comment On September 24, 2013, at 7:13 PM, Unitearica wrote:

    Once again, it's obviously that the Fool has yet again written an article without understanding the in & outs of what they are writing.

    The Wii-U DOES have 3rd party support, lots of it actually. As previously posted, there are MANY games in the Wii-U library that are from the supposed 3rd party pubs that aren't doing games from them. These 3rd party pubs ARE doing games they are just not making exclusive Wii-U titles which fully take advantage of the Wii-U Tablet.

    I love my Wii-U. As well, I have had the other game consoles as well from Sony, MS, and Sega (back in the day). I just have never progressed past the first gen of the other systems as Nintendo has always offered me and my family plenty of the latest gaming that we enjoy playing over and over.

    Why does the Fool always insist on putting up these articles which are borderline ignorant of the actual stats and opinion of technology users and instead feeds the "fanboy" thoughts and opinions with nothing more than mere editorial speculation without proof?

    It's shocking and amazing that such articles can continue to perpetuate the negativity of opinion rather than supportive of facts; such a waste. One day I hope to read that they have to eat their words and apologize for their opinions, not just about articles on the Wii-U, but the MANY other articles dealing with the ranges of irrelevant and poorly researched editorials they have published.

  • Report this Comment On September 25, 2013, at 3:06 AM, chrismireya wrote:

    SOLUTION:

    Nintendo should do one of two things...

    1.) Come up with a NEW console called the "Wii 3" or "Super Wii" that is based upon the same architecture, improves the graphics and power but drops the touch pad and sell it at a $199 price.

    OR

    2.) Create a NEW console that drops the "Wii" name altogether, improves the power and graphics, includes a Blu Ray drive and focuses upon traditional Nintendo gaming, entertainment and can play ALL classic games from previous Nintendo consoles. All peripherals should be "add on" devices.

  • Report this Comment On September 25, 2013, at 10:05 AM, Nocturneking wrote:

    I understand that sales for the wii u have been dismal what i don't understand is how anyone can determine that it is a failure since the system has been out for less than a year and many of the games that Nintendo has in store have yet to be released.I think that people should wait at least a year before saying or commenting about how a system is a failure.I currently do not own a wii u but have interest in possibly purchasing one in the near future depending on what comes out for it,i never purchase any system as soon as it comes out i always wait at least a year so that a good amount of games come out for the system and also to see if there are any bugs/problems that need to be worked out with the system..With that said i will end by saying this: I think that Nintendo needs to stop with all of the gimmicks they have implemented in the wii and wii u and focus on coming out with a system in the future that has a decent amount of good games available at launch,includes a dvd or blu ray player (Isn't it about time Nintendo?) and that uses a gamepad.

  • Report this Comment On September 26, 2013, at 2:31 PM, JedMerrill wrote:

    I am betting on Xbox One doing best in the US, mainly due to little touches that will not be apparent until people play it. PS4 will suffer from a lack of launch titles. Remember that Wii U started with 23 retail launch games and was lambasted. Xbox One will launch with 22, and Sony with 13! I don't see downloadable indie games making up the gap, especially since Nintendo had downloadable indie games, too, and VC games!

    My preference in a perfect world for Console King is Nintendo, because they are innovators. Sony specifically failed to innovate going into the next gen, other than to remake their image as a company that supposedly actually listens to game developers and customers. (That's what you do when you are in third place globally until six months before the end of the console cycle!) The PS4 console is the safest bet they could make, which is not a good thing if you are trying to differentiate your console.

    Because I am involved with the industry, I will have one of each console, but I really don't see a good reason to own a PS4 at launch. I am sure by the end of five to seven years there will be many good reasons, but the same can be said for Xbox One and Wii U.

    Titanfall will be a killer app for Xbox One. The billion dollars Microsoft is spending on AAA development in the first couple of years will also turn into a major advantage, as will making every Xbox a dev kit. Can they overcome the initial console feature announcement fallout and the $100 higher price point? Yes, but not until people play both consoles. MS/Xbox will probably be stronger for the adversity.

    Nintendo has many advantages, including back catalog and integration with the 3DS. I do think they need to innovate with new franchises as well and focus on making development easy for third parties and indies. That is increasingly the battlefield.

    If I were Nintendo, I would integrate the Wii Virtual Console and Wii U shops more closely. The back catalog is not easily accessible, since you have to enter the Wii VC to get to the Wii game versions. I'd also make Wii games downloadable, especially Xenoblade Chronicles... If you can play every Wii disc on Wii U, you can also play every downloadable version.

    PS4 and Xbox One are NOT backward compatible. That's a MAJOR flaw that Nintendo is perfectly poised to take advantage of, if they take the opportunity.

Add your comment.

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 2649782, ~/Articles/ArticleHandler.aspx, 10/24/2014 3:57:54 AM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...


Advertisement