It may be curtains in Kyoto for venerable gamemaker Nintendo, after the company's huge bet that falling sales could be saved by the spring release of its 3DS portable have turned out to be much worse than even the worst-case scenario.
Nintendo's fortunes following the U.S. release of the new handheld in March (February in Japan) was supposed to herald a resurgence for the company. Wii sales have dropped precipitously, and the introduction of the Wii U at this year's Electronic Entertainment Expo was greeted with a big yawn.
Instead, the company reported last week that its estimated profit for the fiscal year ending March 2012 was being cut a whopping 82 percent, from an expected $1.41 billion to a mere $257 million. Bloomberg says that's almost 70 percent below the lowest estimate from a group of 21 analysts.
So what is Nintendo going to do? Cut the price of the 3DS by more than a third on Aug. 12, from $250 to $170. Similar price reductions will occur in Japan and Europe, ostensibly to compete with Sony's forthcoming Playstation Vita, which is planned to retail for $250. Unfortunately, I don't think it's going to help one bit.
Part of Nintendo's problem is its previously rabid courting of the casual gaming audience. This was a sound strategy six years ago, when cell phones primarily used MobileWeb and tablet computers didn't exist.
But now every Dick and Jane with a battery charger and a smartphone contract has a premium game device at their fingertips, complete with motion controls, touchscreens, exceptional graphics and audio, a gaggle of friends with whom to play Angry Birds or Farmville — and no social stigma that usually accompanies being a gamer.
"Nintendo is getting desperate," Koichi Ogawa, chief portfolio manager at Daiwa SB Investments in Tokyo, told Bloomberg. "The video-game industry is in a tough period with consumers shifting to playing on their smartphones."
Ironic, considering Nintendo pioneered much of that populist technology. In essence, the House of Mario is a victim of its own success.
The former playing-card company put out its shingle making games accessible, from the 8-bit NES to its never-ending iterations of the stylus-controlled DS format. Where it's failing, however, is in its inability to move past its core competency and show any true innovation for the next product cycle ... or even the current one, for that matter.
It's not that the 3DS isn't an amazing piece of hardware. Truly, its glasses-free 3D capabilities are fascinating, if not truly new. Leave it to Nintendo to pack expensive technology into a superbly designed piece of hardware. No, the problem is that once you get past the 3D dog-and-pony show (and even the Augmented Reality gimmick, which I really love), there's not much there, there.
Tentpole titles have been lackluster. Super Monkey Ball 3D and Resident Evil: Mercenaries 3D are simply expanded minigames. Most games seem to be typical DS offerings, but with meager 3D effects thrown in for no apparent reason, other than to increase the bottom line — a strategy also negatively affecting the film industry.
While third-party support has always been vital to hardware success, Nintendo has been king of first-party devotees. More than four months after the 3DS was released, all they have to tout now is the retread The Legend of Zelda: Ocarina of Time 3D. That makes president Satoru Iwata's promise that a Mario Kart port will turn things around look even more frantic.
Until this system — and this company — find something truly unique upon which to pin their hopes from now on, things can only go downhill. Sony has chosen to chase the technogeek crowd. Microsoft has a solid fanbase in online gaming. But Nintendo is losing its casual crown, and is unlikely to ever get it back.
Too bad the stopgap Wii U will likely be a costly error, too. Don't believe me? Ask anyone who bought a Sega Saturn.
— Joshua Gillin writes about video games and entertainment news for tbt*. Feel free to challenge his opinions at firstname.lastname@example.org.