Nintendo is having a bad year. Revenues are off sharply, and profits are a distant memory. Earlier this month, one of the companies bringing forth a new title cancelled the launch because there just weren’t enough customers remaining for the Wii. Just this last week Nintendo’s President admitted to making a mistake by chasing casual gamers and abandoning serious gamers. I’ll agree that was a mistake, but I think the real mistake was not seeing how much gaming development was moving to smartphones and iPads. Another mistake was bringing out a console that was behind in technology but profitable, and not cycling quickly. The final mistake was not having a plan B when the Wii fad wore out.
Let’s talk about the Nintendo Train Wreck this week.
Wii vs. PlayStation 3 vs. Microsoft
Both Nintendo and Sony screwed up last cycle. Sony screwed up in an attempt to corner the market on next-generation DVD technology, creating a gaming system that initially cost twice as much to build as the $600 the company initial charged for it. (The market had never been that excited about products that cost over $400.) Sony did bring out a system that was advanced enough to remain technologically viable for over five years, but it took such a big cost hit early on that it nearly sank the company.
Nintendo took the other extreme. It brought out a system that could sell profitably for less than half of what the PS2 was priced at, but it was almost immediately out of date. It couldn’t even support HD programing, and HDTVs were replacing SD in massive numbers. To make the Nintendo strategy work, they needed to update their console more quickly so it remained current and find a way to move the gaming content with them.
Microsoft was neither as far advanced as Sony with the Xbox 360, nor as far behind as Nintendo. It initially passed Sony, then took over when Nintendo stopped being a fad. Now the Xbox 360 leads the market.
Tablets and smartphones
For handheld players, game content has been moving to smartphones and tablets steadily. If you look at the revenue trend through 2011, it is wonder that the game companies have any left. And if you watch where people play the games, particularly with tablets, you see them in the same spaces where they used to play game systems: living rooms and bedrooms. You can only use one of these at a time, and the advantage of a tablet or smartphone is you can both play a game and watch TV at the same time. In a family; the family can still enjoy the TV while the kids are playing a game.
This is why they appear to have chewed through the casual game market first. Folks are not only playing largely casual games on these devices, they are playing them in the same places folks used to use their Wii consoles.
The opportunity for casual gaming consoles and handheld systems has nearly evaporated. Now as these platforms gain more and more performance, they’ll begin to move up market. They are already pulling from budgets that might otherwise have gone to other game systems. In the near-term future, they could fully replace them unless those systems are advanced significantly.
Looking ahead: Are consoles dead?
The Atari (which created this segment) along with Commodore and Sega platforms are long gone. Only Nintendo survived from that initial wave, and currently, they are on death watch. Sony is only in better shape because it has broader business, but the company is hardly what anyone calls health. While Microsoft can likely last forever, even the Xbox is looking a bit old. Given a choice between an iPad and an Xbox, it would appear that most continue to pick an iPad.
However, everything is relative. The right advancements and games could return excitement to this segment, and it certainly has before. I do think the days of being able to keep a console unchanged for over five years are pretty much done. Consoles will likely have to sell closer to cost and be upgraded more often to remain current and interesting, because what they are competing with is updated significantly annually.
Lessons learned
Industries tend to be myopic. While Microsoft, Sony, and Nintendo watched each other, Apple snuck in and stole their revenue, then Google slipstreamed Apple. If they had seen the threat in time, they (and particularly Nintendo) could have resourced a competitive response. Atari, for instance, stopped making consoles and instead started focusing on games alone.
In the end, this is a wakeup call. Play heads-up ball, or someone will take your ball away from you. Nintendo may not ever get its customers back, and if Sony and Microsoft don’t get a clue, they’ll likely follow Nintendo.
Few companies pull out of the kind of funk Nintendo is in, and I don’t see anything from the company that suggests it will be an exception. So yes, tablets and smartphones did kill Nintendo. They may have killed the entire segment. We should know in a couple of years.
Guest contributor Rob Enderle is the founder and principal analyst for the Enderle Group, and one of the most frequently quoted tech pundits in the world. Opinion pieces denote the opinions of the author, and do not necessarily represent the views of Digital Trends.
HELL THE F###EN NO!!!!! This article was probably made by someone who is not even a real gamer. Look at the 3DS, Nintendo did a pretty GOOD job with that, the Wii was modest, but Gameing is by far the best that it has ever been, and for someone to just come and say that these stupid little tablets can take the Gameing industry from the people who made it what it is today is one of the worst articles that I have taken the time to read. This is throwing away everything that people put there hearts and souls into and throwing it away for a stupid I-Pod game that you will play for 15 min. and get board with. These are the reasons that this ” Article” and I use the term loosly, is wrong.
1. When you drop an I-Pod it breaks very easly, and cracks the screen
2. They are always makeing new I-pods and I am tired of seeing when I try to download a game that it wont support the type of model I have.
3. Most of the games will get tiresome of playing after 15 min. if not about 3 hours.
4. There is way more content in the cames for the PS3, 3DS, and the PS Vita than a crappy free downloaded game on an Android or an I-Pad.
5. And with Nintendo they have the classics on it that are timeless, which mostly, if not all of the Tablet games do not have and will grow old in a couple of weeks, at most months.
6. Some Games just need buttons.
So this ” Article” is garbage, written by someone who is obiosly not a game expert. This will never be a true opinion, and if it were, Gameing would be crap.
Nintendo lost me with the announcement of the Wii and to my surprise it out sold the competition. Recently in my game design classes we were debating if we thought hand held consoles was on its death bed. The consensus is, Wii U will fail ultimately because its another lame ass hand held that doesn’t outshine the likes of the iPad and Android tablets. What we need for the next generation is for these game company’s is to take a leap of faith and try to design a virtual reality kit/system. As for Nintendo they better stop making Zelda, Mario, Yoshi, so on and so forth games, focus on hardcore gamers and consoles, start producing some new innovative products or their Titanic will eventually hit an iceberg and sink.
Oh, do be quiet with that nonsence. Mario, and Zelda are timeless classics and they will never age. Though it would be nice if Nintendo would make a Virtual reality, which in the future they probably will, they will always have the classics, and they wont stop makeing them because they are there icons, However you are also right on them needing to work on hardcore gamers more, in which they need to do.
This article is stupid
WII – number 1 selling console in the world
ds number 1 selling portable in the world
3ds – CURRENT number 1 selling system in the world
So please explain this, the 3ds is the number 1 selling system in the world, how are tablets and smart phones effecting it? Making it sell more?
“So yes, tablets and smartphones did kill Nintendo. They may have killed the entire segment. We should know in a couple of years.”
Ridiculous statement not backed up by fact
Your linkes
Link 1 – A false tabloid site, which is bias
Link 2 – Numbers which are bias, and not used because they dont even make sense.
Simple, Nintendo is loosing money, do your homework before you start calling people bias.
Because they are still feeling the after effects of last years poor sales, but he is indeed right.
Nintendo takes its first posted loss in 125 years and you think tablets and smartphones “killed” them?
why don’ you write an opinion piece about how they have the money to take losses this size for 75 years straight before they even have to consider selling intellectual properties like Zelda, Mario, or Star Fox?
I think the reason is that you’ve just read all the Nintendo hate and wanted to jump on the ban-wagon.
Congrats on your opinion that’s more or less a carbon copy of the other crap I’ve read on the subject.
Can’t wait to read your opinion after the Wii U outsells everything like mad- i doubt you’ll be herping and derping about devices killing Nintendo then…. moron.
Facts are Nintendo is loosing money, and the Wii U looks lame. The hardcore market is much more appealing then the casual market. As a game designer and educator I can tell you that Nintendo is on it’s way to a dark road and most of my students agree. Alec no offense but you sound like a Nintendo fan-boy instead of offering a valuable opinion. The facts are showing the the mobile market is killing Nintendos casual gaming experience.
The reason for this is because more people have a phone than a gameing system, I wouldnt go so far to say that they are killing them, but a large reason for why there are so much people on the mobel gameing market is because some of the stuff is free, and mant people have a phone or some other mobel divice.
Were not buying it at all Rob. I’m a developer, let me tell you if you do make an app for android or ipad you’ll be lucky if you’ll get enough sales to stay afloat. Unless you get lucky, are a recognizable brand, or have tons of money for advertising. And if you can rise above complete crowed of crap on there, you may break even and you may get lucky and be a hit. Until it gets easier to filter out the crap and have any kind of presence I just don’t see phones or tablets as legitimate platforms to take on console. Blossoming platforms yes, but not a huge contender.
I’m working in my own studio right now on a game and I could of focused on phones but I didn’t for those reasons, instead I chose to focus on some platforms that are real contenders. Social platforms. Just look at the dough zynga makes. And while most of the games are indeed catering to the once in a while gamer while on a break market, there’s more water to social platforms than most think. Availability is gigantic, you don’t have to delete an app to get it, it just loads right in your browser. Anyone can try it instantly with just a click and when inside a social network the potential customer is already relaxed and ready to kill time. The perfect time for an impulse buy. And soon once all the html5 games start coming out and webgl matures you’ll be able to play full 3d games right in your browser without a plugin. Stop comparing the console market to the phone industry. Why don’t you write about the real contender, social platforms.
Interesting point, I don’t think the volume of games is enough yet, but the growth in social is impressive and certainly WOW was more of a social event than pure game. In any case agree it is a contender. Thanks!
Good point.
You should developed something for the Nintendo 3DS or Vita, it could really help as I currently have no games I like at all on both except Pokemon, which is silly since its still a sprite game.
Nintendo did not die. And likely will never die. Whether you like it or not people will never stop buying their games and to do that they need to buy the consoles. And a lot of people I know wouldn’t think twice about doing that. Also, iPads are completely unrelated to home consoles. They have completely different uses. I also hate Microsoft and Xbox… so much.
Nintendo mistake wasn’t that they chased casual gamers. Their problem is that they continue to label gamers. Many of the so called casual gamers are the ones buying games on iOS. If we must use labels, does Nintendo consider Angry Birds a hardcore game? What about Doodle Jump? Plants vs Zombies?
I’ve been gaming hardcore for over 25 years and following the industry and trends for just as long. I love my consoles, handhelds, and mobile devices equally. It’s because they each offer their own individual experience and benefit me in different ways that I’m not currently gravitating toward any particular platform…
IM possibly uninformed O. Mobile is not killing consoles. If consoles were dying right now, it would be because Nintendo, Microsoft and Sony are doing it to themselves. I think they each need to proceed in a direction that has them primarily exploring, expanding on, and marketing what makes console gaming a definitive experience, while also incorporating ideas that have made mobile gaming and devices such a hot commodity (where appropriate). If you were to take the best that each console has to offer, make it better and throw it into one platform in a cohesive way.. you’d have one helluva product.
An article is begging to be written, but I feel that this wasn’t it. No offense.