Nintendo, the once dominate video game maker who is now riding in third place behind Sony and Microsoft, has just posted a $531 million dollar (¥43.2 billion) loss, the first annual loss for the Japanese company in more than 30 years. This is due to a combination of factors, starting with the slow pick up of their 3DS handheld, which had to endure a price cut (which put the price below cost) in order to sell, which actually costs Nintendo money, rather than make it. Then there is the growing threat of mobile games found on smartphones like Android and Apple’s iPhone/iPad which mostly retail for $0.99 to $4.99, $25 to $35 dollars less than games found on Nintendo’s handhelds. Even games found on social networking sites like Facebook have been chipping away at Nintendo’s earnings.
The main reason for Nintendo’s sudden fall from grace is due to smartphones, because the games they pay, have been the lifeline to which Nintendo has stayed true, easy-to-play, pick up and go, anyone can play, games. Games like Plants vs Zombies, Angry Birds to high-end games like Real Racing 2, ShadowGun and even the upcoming iOS game, Oceanhorn, which looks and plays just like The Legend of Zelda: The Wind Waker, which will most likely sell for under $10. All of these title offer amazing visuals, fun and easy gameplay and more importantly, offer some type of social aspect, be it Twitter, Facebook or iOS’s Game Center. On top of that, the most expensive of those games is only $6.99! While Nintendo makes great first party titles (which are always $5 – $10 more than third party games), their third party titles, which retail for $29 on the DS and $35 – $39 on the Wii, don’t offer a value that consumers can’t get on their smartphones, a device that most people have on them all the time.
Nintendo hopes to turn things around later this year with the release of their new home console, the Wii U, which will support HD graphics (finally), DVD playback and a new controller with a 6.5-inch display. The Wii U’s success is going to come down to support from third party developers, if Nintendo doesn’t have them, their first party title won’t be enogh to carry them over the finish line this time.
Right now, Nintendo needs to watch Apple, because their loss is Cupertino’s gain. With Apple making strides in the mobile space far beyond that of any other computer company, especially with the new iPad and its ability to produce visuals that rival that of the XBOX 360 and PlayStation 3 (with games like Infinity Blade: Dungeons, ShadowGun: Dead Zone and Oceanhorn), a massive app store, a growing game center and at prices that are well below $10, they have become a sleeper cell in the games industry that has only just begun to wake up. I’d hate to see the company I grew up come toppling down, but unless Nintendo can figure out a way to compete, it just may happen.
Here’s my advice for Nintendo, release older, classic titles on the iPhone and iPad and later, Android. Games like Super Mario Bros. 1, 2 and 3, Contra, Punch Out, Super Mario 64, Mario Cart, you get the point, all the games NOT found on their current flagship device. This way, they keep all their new titles, like New Super Mario Land, Kid Icarus and such, exclusively on the 3DS or its successor. Then they can make money off their new titles and hardware, while creating a brand new revenue stream from older titles, all while barely having to work for it. Nintendo has a great library of first party titles and while it’s true that they may not sell brand new, cutting edge hardware with them, they can still act as a cash cow…and right now…this cow needs to be milked.
(Just a simple plug for myself, I recently wrote an editorial for iPhone Life Magazine, on newsstands now, that covers Oceanhorn with an exclusive, never before seen image, check it out.)