Nintendo Is in for a Disastrous 2014

Source: nintendo.com

It's no secret that Nintendo (NASDAQOTH: NTDOY  ) is in trouble. Whether or not the company can turn things around is still open for debate, but the future has never looked so bleak for the world's oldest and largest gaming company. The handheld market that Nintendo once had a firm control over is rapidly veering in a different direction and threatens the company's most important source of income. Sales of its 3DS handheld were down in 2013 and sales targets were reduced from 18 million units to 13.5 million units. Meanwhile, the Wii U is on track to go down as one of the biggest failures in the history of the industry.

If 2013 was a bad year for Nintendo, 2014 looks to be much worse. With the 3DS beginning to show its age and the Wii U unlikely to find any notable traction, the company is in for a beating. Here's what Nintendo is up against in this year.

Mario's sunshine
2013 wasn't all doom and gloom for The House that Mario Built. Nintendo reported that 3DS software sales were up an impressive 45%. Given the expansion of the system's user base and the strength of its 2013 lineup, it's easy to see where this growth came from. Games like Luigi's Mansion 2: Dark Moon, Monster Hunter 4, Pokemon X and Y, Animal Crossing: New Leaf, and The Legend of Zelda: A Link Between Worlds all put up great numbers last year. What's more, that list excludes a number of titles that passed the million unit sales mark. If that seems like a lot of big games for one year, it is.

Where are 3DS's 2014 games?
Nintendo's 2014 3DS lineup looks substantially weaker than what was put forth in 2013. The only game scheduled for a 2014 release that looks to have massive sales potential is the upcoming "Super Smash Bros." sequel. The title will be the first in the series to land on a handheld, although a similar version of the game will also be hitting the Wii U. The drop-off in lineup quality and depth is massive and is indicative of the development and management problems Nintendo has suffered in recent years. Even though the installed base will grow substantially this year, 3DS's software numbers are likely to take a sizable hit.

Nintendo can't prop up two platforms simultaneously


Source: pokemonxy.com

If you want to know how the 3DS wound up with such a weak 2014 lineup, it's important to understand why 2013's was so stacked. The 3DS got off to a dismal start, launching at a $250 price point (that the market soundly rejected) with a slew of games that did little to justify the system's existence. After the incredible success of 2004's DS hardware, Nintendo saw its handheld empire beginning to crumble. The company implemented a substantial price cut and shifted its development resources to ensure that the 3DS would succeed. This explains the Wii's poor lineup from 2011 on and was also a factor in Wii U's disappointing first year on the market. After shoring up the stability of the 3DS, Nintendo more fully began its attempts to transition to HD development and prop up the Wii U.

The worst platform to launch a game on
Nintendo's big 2014 games show that it is a console oriented year for the company. It just so happens that the Wii U is the worst place to launch software in the modern console gaming industry. Platform momentum is near non-existent, with the company recently having revised its fiscal year sales target from 9 million units to a 2.8 million unit goal it might still miss.

How is Sony doing?
While the 3DS is suffering from sales drop off in Japan, Sony's (NYSE: SNE  ) PS Vita has quietly been building momentum in the territory. That's not to say that the device isn't a massive disappointment for Sony or that claims of PlayStation 4's release boosting Western Vita sales are anything more than marketing trickery, but Vita is on an upward trajectory in Japan. According to sales tracking from Media Create, Vita's 2014 sales are up approximately 130% over the corresponding period in 2013. Sales of 3DS are down approximately 50%.

Source: playstation.com

Despite a mostly sold out launch, Sony's PlayStation 4 may not wind up being a success in Japan. It will, however, take away what little chance the Wii U has of building momentum in the territory. Things are looking much better for Sony's console in other parts of the world, while Nintendo's Wii U is as good as dead in most territories.

Nintendo's worst year ever?
Based on the currently available information, 2014 looks to be a great year to bet against Nintendo. The company could shock the world with a groundbreaking innovation or a successful endeavor on mobile platforms, but it's in for a rough year on the hardware and software fronts. If you're looking to make an investment in a gaming company, you would be wise to avoid Nintendo for the time being. 

So if Nintendo is a bad play, which gaming company should you be looking at?
Things might be looking rough for Nintendo, but there's still money to be made in the gaming industry. Looking for a pick with explosive growth potential? David Gardner has proved the doubters wrong time, and time, and time again with stock returns like 926%, 2,239%, and 4,371%. In fact, just recently one of his favorite stocks became a 100-bagger. And he's ready to do it again. You can uncover his scientific approach to crushing the market and his carefully chosen six picks for ultimate growth instantly, because he's making this premium report free for you today. Click here now for access.


Read/Post Comments (7) | Recommend This Article (1)

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 March 08, 2014, at 2:51 PM, Njancek wrote:

    Right, because of all the competent places that can make a prediction of a companies future after only the first three months, this would be the perfect place to look for it.

    No.

  • Report this Comment On March 08, 2014, at 3:00 PM, Jv932 wrote:

    Why are these kinds of articles constantly being made? Every time isn't from some know-it-all who doesn't really know anything about the current state of the video game industry. Just because the Wii-U did not soar as wanted, does not mean the company as a whole is on a slope to the ground. Out of the three, being Microsoft, Sony and Nintendo, Nintendo would be the strongest for generations.

  • Report this Comment On March 09, 2014, at 12:10 AM, joe368 wrote:

    Can Motley Fool go out of business please?

  • Report this Comment On March 09, 2014, at 1:41 AM, NBSN wrote:

    Thank you Keith Noonan, once again an article that is very misinforming and not properly researched. I will no longer read any of your "articles" and am amazed you continue to be employed as a writer.

  • Report this Comment On March 10, 2014, at 2:58 AM, Ylem122 wrote:

    as far as the improvement of the Wii U over the Wii, its not much, back when we went from Nintendo to Super Nintendo sure graphics was huge, but going from 480p to 1080p isn't that big of a step considering our current technological level, and other than that the only things you really have are a little bit better interface, and the controller pad.

    It gets you thinking, how little did Nintendo really put into research and development?

    then when you consider news of the Nintendo fusion having a self processing hand held device to connect to the console it gets you thinking about the Wii U's hand held.

    and I don't know about you, but it gets me thinking that maybe the Wii U isn't so much a failure, but a beta test, presented ambitiously, but always destine to do more in the way of research and development for Nintendo's next big thing than Nintendo's profits.

  • Report this Comment On March 10, 2014, at 8:54 AM, targeyone wrote:

    This is Keith's 2nd anti-Nintendo article in ONE DAY.

    He gives % of change in sales trends to make it appear the Vita is beating the 3DS. Hilarious. Post the real numbers, Keith.

    Then asserts 2014 is going to be 'disastrous' for Nintendo, conveniently ignoring a little game known as Mario Kart 8 coming out this May.

    Then downplays the anticipation surrounding the next Smash Bros.

    Keith, You spend a lot of energy saying the same thing every day, sometimes more than once in a 24-hour period.

    Any idiot can see this is nothing but propaganda. Are you really so click-starved that this is all you can think of?

  • Report this Comment On March 14, 2014, at 12:18 PM, Blancamor wrote:

    Nintendo has been bulletproof for so long, people are hedging their bets that this will be THE year! Ignoring the year when they launched that virtual reality console that tanked. Though recent history has not been great, Nintendo always keeps them coming. I don't doubt they have the technology to launch the Fusion, however they are smart enough to withhold that monster until they have it under control. Buisness is not all innovation. It involves timing. Overextending themselves in shakey economic times seems like a bad move. I am all for conservative buisness measures from my games lest I get saddled with novelty controllers and games based on movies (the worst).

Add your comment.

DocumentId: 2869201, ~/Articles/ArticleHandler.aspx, 7/31/2014 12:23:32 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