Nintendo (NASDAQOTH:NTDOY) is a company in crisis. With tablets and smartphones captivating the interest of casual gamers, Nintendo's family-orientated video game systems have faded in popularity. Nintendo's Wii U, in particular, is widely regarded as a failure: It's fallen far short of management's projections, some retailers have stopped selling it, and major third-party video game publishers have all but abandoned it.
Yet, the system remains relatively new (just over 16 months old), and many of Nintendo's most popular franchises have yet to see a Wii U installment. While unlikely, there had remained a possibility that the system could rebound -- that Nintendo could, by releasing a string of quality, exclusive games, revive interest in its struggling platform.
Forget about it.
The next iteration of Super Smash Bros. -- Nintendo's popular fighting franchise -- will be coming to the 3DS, its hand-held video game console. If there was any game that could've saved the struggling Wii U, Super Smash Bros. was it. Ironically, the game could now guarantee the Wii U's demise.
The importance of Smash Bros.
Of Nintendo's many franchises, Super Smash Bros. stands out as one of its most successful. The last entry in the series, 2008's Super Smash Bros. Brawl, sold over 11 million copies, making it one of the top 10 best-selling games in the Wii's history. Its predecessor, Super Smash Bros. Melee (released in 2001), was the top-selling game for Nintendo's prior console, The Gamecube. The original Super Smash Bros., now 15 years old, was one of the best-selling games for Nintendo's N64.
In other words, Super Smash Bros. is one of Nintendo's most popular series, and each iteration has reliably sold millions (It's even played semi-professionally). With more than five years since the last installment, the next entry in the franchise could not only move millions, but entice gamers buy the Wii U itself.
3DS sales will cannibalize Wii U sales
But that's not going to happen now because, for the first time, Nintendo is planning to release the game on multiple consoles. Prior iterations in the Super Smash Bros. franchise had been confined to Nintendo's then-current living room console: If you wanted to play Super Smash Bros. Brawl, for instance, you needed to own a Wii -- the game simply wasn't available for any other video game console.
But this Super Smash Bros. release is different. In addition to launching on the Wii U, Nintendo is also shipping the game for its handheld console, the 3DS. The games won't be precisely the same, but the differences will be minimal, with the same cast available in both versions.
While some Smash Bros. fans may run out and buy a Wii U, more are likely to purchase the version released on the 3DS. That game will launch several months ahead of the Wii U version, retail for less, and likely have a larger install base -- extremely important for a multiplayer game with online matchmaking.
There's a good chance most Super Smash Bros. fans already own a 3DS, given that it's far outsold the Wii U to date (almost 50 million consoles compared to just 6 million). Even if they don't, it's more affordable to go get one, as the entry-level 3DS retails for just a fraction ($125) of the Wii U's price ($299).
It's not just the Wii U
Of course, while the 3DS version of the game may devastate sales of the Wii U, it could give a boost to the 3DS, which, while not as disappointing as the Wii U, has still fallen far short of expectations.
At this point in its life, the 3DS has underperformed its predecessor, Nintendo's DS. If Nintendo's January projections prove accurate, it will have sold fewer of the 3DS in 2013 than it did in 2012. That's pretty disturbing, given that the system is only three years old. The DS, in contrast, saw sales growth well into its fourth year.
While its console competitors have branched out, shipping full-featured media boxes that play the most advanced games, Nintendo has kept it simple, focusing on dedicated gaming hardware aimed at a more casual audience. Before the rise of mobile games, that was unquestionably a recipe for success -- today, it's far less clear.
Nintendo has big plans for the future: It's working on a radical new product it calls its QoL platform. Details are scant, but investors in the company should hope it succeeds -- with its consoles struggling, its current gaming-focused business model appears unsustainable.