Yesterday was a dark day for the company that Mario built. Nintendo was finally faced with the fact that their projection to sell 9 million Wii Us by the end of the fiscal new year was completely unrealistic. This forced them to drop their forecast to less than a third – 2.8 million. To make matters worse, the 3DS didn’t meet expectations either and they had to drop forecasts from 18 to 12 million sole by the end of the fiscal year. This announcement led to Nintendo’s stock prices dropping, though not to the lows of 2012. More importantly, for this post, the news sparked a whole new slew of Nintendoomed posts throughout the internet. Today, I want to answer the question whether Nintendo is, in fact, doomed both in general and in the console market.
Firstly, let’s start with Nintendo’s general fortunes. With the Wii U haemorrhaging money, it’s easy to lose track that Nintendo is a large company with deep reserves to pull upon. The last financial report I could find listed Nintendo’s reserves as over 10 billion dollars. As pointed out by several professional sites, this is enough money to keep Nintendo afloat despite failure for decades. The importance of this factor is obvious. No matter how the Wii U does, Nintendo isn’t going to collapse. Sony, on the other hand desperately needs the Playstation 4 to be the juggernaut it is quickly becoming. Nintendo, if it were ridiculously stupid, could sit back and make failure after failure without regard for a very long time before they got put in a pinch situation. This paragraph could, technically, be the end of the article, but that’s a pretty big cop out. When people talk about Nintendo being doomed, they aren’t referring to solvency, generally. What they are referring to is Nintendo’s relevance in today’s market.
Because everyone wants to talk about the Wii U, I’m going to go through the 3DS section first to get it out of the way. In short, the 3DS is a money making monster. Ignoring the mobile phone market, which I steadfastly hold as a separate market, the 3DS is the dominant handheld by a massive margin. It’s true that Nintendo was forced to lower projections for the system, but the now conservative 12 million figure is still a huge number for any console or handheld. Its only competition is the flagging Vita, and it has a steady stream of high quality games coming from Nintendo themselves and third parties. The 3DS is so successful that I fully expect it to top the DS as the best selling handheld console ever made. This is especially funny considering, in its first year, the 3DS was struggling and everyone was talking about how doomed Nintendo was.
Then there’s the Wii U. It’s no secret that the Wii U isn’t the powerhouse the original Wii was. The Wii was, in my opinion, a fluke. It was cheap and brought in a massive new market due to a combination of becoming the hot Christmas toy and being very difficult to find for a long time. The Wii itself was not a very good system, probably Nintendo’s worst if we’re not counting the horror that is the Virtual Boy. That was a problem, though one that Nintendo may have been unaware of due to the stacks of money rolling into their offices. What the Wii did was shake confidence in Nintendo from the core base. When Nintendo finally noticed this and promised to change with the Wii U, much of the damage had already been done. Many complaints against Nintendo’s quality stem from the Wii. It was 7 years of a system, which ran out of steam in 5. There are beloved games on the system, but the immense amount of shovelware meant that only Nintendo’s games were a truly safe bet for casuals. This had the side effect of further alienating third parties.
That leads us to the Wii U. Nintendo lost the casual market due to poor marketing, brand confusion, and because the market they had for the Wii was a false market to begin with (older people buying the Wii for Wii Sports only is not a market that’s coming back). Because of the Wii, the core market was also hesitant to join up with Nintendo, especially due to the fact that the Wii U was another underpowered system, no stronger than the Xbox 360s or PS3s that the majority of gamers already possessed. Despite these shortcomings, it’s important to note that the Wii U launched very strongly. Not as strong as the PS4 and Xbox One, but they were able to sell millions in only a few months. The problem wasn’t the launch, or the hardware at the time. If it were, Nintendo would have been left with abysmal numbers. One could argue that it was the Nintendo faithful alone that kept the numbers up launch, but the same could be said with every launch ever.
In my opinion, the real culprit for the Wii U’s flagging fortunes has always been the drought that followed the launch. Nintendo may have launched strong, but it took them far too long to start releasing quality games on the system. Wii U purchasers found themselves complaining about the lack of retail releases as well as Nintendo’s consistently bad job at utilizing the incredible potential of the Virtual Console. This was the same drought that hurt the 3DS so much. However, there are key differences that prevent the Wii U from springing back nearly as easily. The difference lies primarily in the competition. The 3DS faced the strongly under-performing Vita. The Wii U, on the other hand faces the already successful PS4 and Xbox One, both of which are an entire generation of graphics above the Wii U. To make matters worse, the competition is primarily driven by third party games, which Nintendo had been alienating on consoles since the N64 era.
But let’s look at the projections themselves. Nintendo boasted 9 million units being sold while they were in the middle of the drought even before the price drop. Was this ever a realistic forecast? No, never. In order to hit those numbers, the Wii U would have needed to become a massive phenomenon, one which needed to destroy the competition during the holiday season. There was no indication this was even possible when Nintendo pulled the number seemingly out of thin air. For anyone paying even the slightest attention to the situation, 9 million was never going to happen, not when the forecast was first made, nor as time progressed. The worst part of this news is that it hides the fact that the Wii U has been performing a lot better since the holiday season. Not 9 million sales better, mind you, but the system has definitely begun to see a rise in sales.
It’s time to step back, however, an look at exactly what failure means. Does failure mean dropping out of the console race? Does it mean falling to third place in sales? Or maybe it means simple stagnation? It’s hard to say, and failure is defined differently by everyone who uses it. More importantly, what does failure mean for those who are interested in the Wii U, or who currently own one? To answer this question, I want to look at the Nintendo 64 and the Gamecube. These are fan favourite systems though neither of them took the market share of their respective generation. The Gamecube especially trailed behind the behemoth that was the Playstation 2. Despite these ill fortunes, both of these systems came away with very happy fan bases. I see a similar future for the Wii U. People have argued that the Gamecube and N64 had more third party support, but I don’t think that’s very fair. The Wii U isn’t that old and games like Rayman Legends, The Wonderful 101, and Monster Hunger 3 Ultimate are already captivating many. In the future, games such as Hyrule Warriors and Bayonnetta 2 definitely interest many.
To me, failure means being forced to drop out of the console race altogether. I don’t see this as being likely due to the increasing sales of the Wii U on top of Nintendo’s reserves, but let’s play devil’s advocate for a moment. Many people want the Wii U to go under so Nintendo can be a third party developer. Is this really a good idea? On paper, being able to play Nintendo’s amazing first party games without having to buy a separate system sounds great. However, there are some problems. First is stagnation. Say what you will about Nintendo, but they certainly move differently from the rest of the industry. In the end, the Xbox One and PS4 are nearly identical to each other and to modern PCs. It’s only Nintendo, through shrugging off industry norms, which remains unique. This uniqueness is good for the industry. Even if the system is bad, offering a choice of infrastructure and ways of doing things is extremely valuable. Without Nintendo, there is no choice. Competition is always good. Companies should be forced to react to others instead of simply fortifying their positions constantly. Without a third option, what we get is one choice masquerading as two separate ones. And would Nintendo even become a third party developer. Nintendo is a rather eccentric company, and I can see it going pure handheld before going third party. As such, I’m not convinced that Nintendo failing in the console market is at all in the best interests of the industry, especially since the industry is on the cusp of being introduced to a whole slew of lifeless, uninspired Steam Machines, which bring nothing new to the table and only saturate the market.
So back to the question at hand – is Nintendo doomed? I say no, or at least, not likely. The company itself has huge reserves that could weather several failed consoles, the Wii U has begun to show signs of improvement, and there is a large number of quality games on the horizon including Super Mario Kart, Super Smash Bros., X, Fire Emblem x SMT, Hyrule Warriors, and Bayonetta 2. I have a hard time seeing the system as a failure from a consumer prospective considering how many fun games have been released and are coming. Don’t get me wrong – it’s likely that Nintendo will come in third place this generation, acting more as a supplementary console to the other two. But that doesn’t make them a failure. At this point, to be a failure in my eyes, Nintendo would have to cut all support for the Wii U immediately, which, as you may suspect, is very unlikely.
– Mistranslations for the Modern Gamer