Nintendo's Grim Future

With the release of several new video game consoles recently, as well as the broad trend toward digital distribution of gaming titles rather than purchasing hard copies, many businesses in and related to the video game space are struggling to redefine themselves and find new footing in the new gaming landscape. And no company seems to be struggling with more difficulty than Nintendo (NASDAQOTH: NTDOY  ) . The company recently slashed its global Wii U sales forecast for the year to March 31 by almost 70% to 2.8 million units, and it cut its sales forecast of its handheld 3DS device down from 18 million to 13.5 million units.

In this video from Thursday's Consumer Countdown, Motley Fool consumer goods analysts Mark Reeth and Mike Finarelli look deeper into Nintendo and its struggles. Mark sees the problems in the company's hardware division as being emblematic of its troubles overall. He paraphrases Wedbush securities analyst Michael Pachter on the subject, who said that Nintendo is ultimately a hardware company, looking to sell its software with the goal of increasing hardware sales. That could be the reason Nintendo is reluctant to release its software properties onto other platforms, such as tablets, but it may be this short-sighted attitude and failure to adjust its business model that ultimately dooms the legendary gaming brand.

Nintendo, sadly, may not have much time left. These businesses do.
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  • Report this Comment On February 07, 2014, at 11:46 PM, crymsonkyng wrote:

    All you analysts CONTINUOUSLY try to push the idea that Nintendo would be better off getting out TERRIBLE idea long term. They have another cycle minimum before they have to throw in the hardware towel

  • Report this Comment On February 07, 2014, at 11:48 PM, crymsonkyng wrote:

    hhhmmm some of my comment is gone...I was saying great idea short term, terrible long term

  • Report this Comment On February 08, 2014, at 12:59 AM, TreSelor wrote:

    not really accurate analyst articles, don't really understand all the negative articles from this company towards Nintendo. At least Nintendo hasn't reported a loss the last 10 years as Sony has totaling $7.6B. No article mentions of Sony going under but tons about Nintendo? Why?

    Nintendo records a loss only 2 years in a row, of only 500-900M and its like "Throw in the towel, get out of the hardware market, make games for Phones" - Motley Fool. But NOOO advice for Sony who is losing BILLIONS?

  • Report this Comment On February 08, 2014, at 1:52 AM, sypoth wrote:

    @Crymsonkyng you ARE aware they've been doing horrible in the home console market since the N64 right? The Wii Recouped some of their losses over the decade before it's release but it didn't rebuild any of their depleted "war chest" as fans like to call it and if the Wii had not been a success in it's first year it Nintendo would have left the home console market shortly after, that is straight form their mouths not mine nor anyone elses. The Wii also had a horrible second half of it's life mostly because there was no good games anyone wanted it was all literally shovelware garbage that is still sitting on the shelves unopened and unsold despite it being moved into the discount game section. People don't want another system that promises them so much and delivers so little and that has upset allot of people is Nintendo lures them in with a gimmick and promise of years of fun and deliver a gimmick and one or two games on it's release that are any good. It also hurts that the majority of the gaming community think of the Wii U as a 7th gen console and the fact there are no 8th gen cross platform or even cross gen games for it says that it was outdated before it was released. Please take off the nostalgic glasses and take a look at reality, Nintendo isn't the company that made the NES, I should know I played the NES when it came out, they weren't even the company you and the fans of theirs make them out to be even then.

    Nintendo wants to think of themselves as an all that company but in all reality they are not all that nor have they been for a long LONG time, pretty much ever since they stopped being able to rip off other hardware developers such as Sega a long time ago. And yes they have ripped off Sega, the GBA and the Wii U controller are both stolen from the GG and Dreamcast respectively. They need a major overhaul to keep their heads afloat and become relevant once again, the fact that they are not doing so only spell their doom, they have less than a year to become profitable once again and trust me they are nowhere near profitable, if they stopped making Wii U consoles today they would still not sell them all in four years.

    Sure their mobile market is still profitable but not enough to support both itself and the home console market, not with the ever encroaching handheld devices that can play games. In fact the Home Console market is such a drain on them that if they were to drop it entirely and focus on mobile gaming they would instantly be turning a profit yet again, not much of a profit but still a profit. The competition is just too tough for them to be fighting multiple battles on multiple fronts like they are and their over reliance on their name to sell stuff is their biggest downfall because their name has become synonymous with useless gimmicks and one or two good games.

    Speaking of games their development team needs to stop making the same game over and over again, not to mention they need to punish divisions that make bad games by getting rid of those responsible for making bad games rather than just not making games in that franchise again like they have been. Or are you wondering what happened to Metroid, Star Fox, and Donky Kong? They are almost as bad as SEGA is who refuses to let individuals known for making good games make good games simply because they are not Japanese and reward them with slaps across the wrist and reward those who make cruddy games for making cruddy games because they are Japanese(seriously SEGA does that, just ask anyone who worked at STI which is where all the good Sonic games were made).

    In the end if Nintendon't change on many many levels then Nintenwon't be around in a year or two.

  • Report this Comment On February 08, 2014, at 3:50 PM, wizardaeon wrote:

    Motley Fool continues to write negative ads towards Nintendo- and they are probably the main reason Nintendo has been doing so poorly- because people read this garbage.

    Nintendo is doing poorly with the CURRENT console. It is not their first flop, and BTW Sypoth, FACT the Wii was one of the most successful consoles of all times- they actually did extremely well for the first 3 years it was out.

    Also, Nintendo has always and still DOMINATES the handheld market. Not everybody wants to buy a phone for a 11 year old boy so they get them a cheap console or a handheld. Sales are sales.

    Please, Motley fool, knock off the Nintendo bashing. If there was a way for me to block all of your articles from my yahoo news I would. I am really sick of the bias.

  • Report this Comment On February 08, 2014, at 8:38 PM, puppybone69 wrote:

    I'll be glad when Nintendo finally abandons hardware, just so all the stupid fanboys will shut up denying the truth about the fact that Nintendo is destined to do so because their old school buisness models stubbornly refuse to evolve into what the market demands. Even their new reformation plans are still out of touch with the current reality, and all the silly fanboys defending them just sound as clueless as Nintendo itself does.

  • Report this Comment On February 08, 2014, at 9:41 PM, targeyone wrote:

    @sypoth Your half-page essay is so off-base on every topic you touch upon it only makes sense if you don't actually know anything about Nintendo. You do know a western developer is about to release the next Donkey Kong this month, and has already proven it can hold its own against (and perhaps surpass) Rareware's defining iteration of the series?

    I'd continue, but I don't want my comment to end up as long-winded as yours. Do some research.

    @motleyfool and motleyfool contributors: Everyone and their uncle has played armchair analyst on this already. And everyone has already proven their as clueless as sypoth when it comes to it.

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