Nintendo (NASDAQOTH: NTDOY ) is in a tough spot. Its Wii U console can be described as a monumental failure that is on track to make the GameCube's performance look great in comparison. While the company's 3DS was the best-selling hardware of 2013, sales of the device are coming in well below original guidance numbers as well. Nintendo is in the midst of losing it handheld breadbasket to mobile. Furthermore, the company's leadership has repeatedly demonstrated a tone deaf approach to the issues at hand.
As Nintendo's hardware faces harsh market realities, the value of its characters and intellectual properties deteriorate. That's not to say that they cannot be restored given the right strategy and conditions, but games launching on the Wii U are all but assured to have a limited audience. Innovative and compelling uses of the system's expensive GamePad controller have been few and far between, and the input device appears to be a flop with consumers. Some have called for Nintendo to ditch the bulky GamePad and ship a cheaper version of its Wii U hardware. Does an upcoming first-party title suggest that such a move is on the horizon?
Donkey Kong hates the GamePad
Donkey Kong Country: Tropical Freeze is the follow up to 2011's highly successful Donkey Kong Country: Returns and is a title that has been touted by Nintendo as a major release for its Wii U console. As one of very few titles currently slated to hit the console in 2014, Nintendo is correct in this assertion. That said, the game is going to underperform its predecessor in a big way. Wii U's installed base is too small and sales momentum too sluggish to believe that the latest adventures of Donkey Kong and company will thrive on the market. It is possible that the title portends broader changes for the console, however.
In promoting the Wii U, Nintendo executives and PR handlers put a great deal of focus on the GamePad. Considering the success that the Wii's motion controls saw back in 2006 and reports that Wii U's chipset makes the system about as powerful as 2005's Microsoft (NASDAQ: MSFT ) Xbox 360, that strategy is hardly surprising. What is surprising is just how poor of a job Nintendo has done in coming up with software that justifies the device. In its current state, Donkey Kong Country: Tropical Freeze ignores many of the GamePad's features.
When the screen goes black
Even games that make very minor uses of the GamePad's screen during gameplay typically display some manner of map, logo, or status display. Tropical Freeze sees the screen kept blank. As a first party title that has received a substantial development cycle and was even delayed from a 2013 release into 2014, there are very few possible excuses or explanations for this. The game is not so graphically intensive as to make rendering images for two screens technically difficult, and Nintendo would seemingly have an interest in ensuring that its games show the value of the Wii U package. Of course, if Nintendo is planning to ship a version of the Wii U sans GamePad, this all starts to make a bit more sense.
Both Microsoft's Xbox One and Sony's PlayStation 4 are trouncing the Wii U when it comes to momentum. Each system could conceivably pass Wii U's LTD sales within a matter of months, despite the fact that Wii U launched a year earlier. In the UK, the PS4 and Xbox One each outsold the Wii U's lifetime total in a matter of days.
Nintendo flirts with irrelevance
While launch numbers are not the best indicators, the PlayStation 4 sold 4.2 million units in 2013, while the Xbox One sold 3 million units. Each console sold more in approximately six weeks time than the 2.8 million Wii Us that Nintendo expects to post in the entirety of its current fiscal year.These systems are offering substantially more robust software lineups and third party support than Wii U can offer. They also offer superior hardware, media capabilities, and online ecosystems. This essentially reduces the Wii U's pitch to two points: 1.) Nintendo games and 2.) the GamePad. Market results suggest that most consumers don't care about the GamePad, so what you're basically left with is a technologically stilted box that plays Nintendo games.
Is it time for a new U?
Nintendo President Satoru Iwata has recently stated that additional price cuts are unlikely to help Wii U. He is likely correct in this assertion. The Wii U faces the task of overcoming both its own fundamental deficiencies and those inherent to Nintendo at large. Ditching the GamePad would give the company a chance to rebrand the Wii U hardware set and attempt some manner of a relaunch. It's a stop-gap strategy, but one that's worth pursuing. The company's 2014 Wii U games look to make minimal use of the once central GamePad. Why should consumers line up to pay for features they don't use or care about?
There's no way Nintendo's the Fool's top stock for 2014...right?
There’s a huge difference between a good stock and a stock that can make you rich. The Motley Fool's chief investment officer has selected his No. 1 stock for 2014, and it’s one of those stocks that could make you rich. You can find out which stock it is in the special free report "The Motley Fool's Top Stock for 2014." Just click here to access the report and find out the name of this under-the-radar company.