Is it game over for Nintendo?

[Viper1]

My breakdown

 

"Then there’s the rise of smartphones. The kind of easy-entry, bright and colourful family-oriented games that have been Nintendo’s specialty are increasingly available from the app store for a fraction of the cost of console games, if not for free."

True that smartphones have risen greatly a popular consumer electronic device of which plays games. Not so true that it these app stores are filled with Nintendo-esque titles. Neither in scope or quality.

But Macgregor starts to just ignore facts and inject speculation.

"But Nintendo has weathered competition before. In fact, it thrives on it. So why is it struggling against Cut the Rope and Fruit Ninja when it withstood everything Microsoft and Sony, and before them Sega and Atari, could throw at it?"

For starters, Cut The Rope is also available on the DSi/3DS. So how is Nintendo struggling against a game also offered on their own platforms? Secondly, the fiscal year losses that Nintendo posted are a combination of foreign exchange rates (as correctly noted by the author to start with), a massive 3DS price cut that saw Nintendo selling the 3DS at a cost below profitability and a major ramp up in R&D for the upcoming Wii U. I suppose we should note the biggest global economic crisis since the 1930's. Were sales for the Wii down on the year? Sure but it still sells at a profit per unit...as do the games. Let's not forget that Nintendo only sold 21 million Gamecubes but was incredibly profitable. That suggest the current losses can't be solely blamed on competition in the marketplace.

"Nintendo’s last massive success was the Wii"

Actually, I believe it was the 3DS. Rough start? Yes. Number 1 selling console globally since last November? Yes. Outpacing the original DS by 1 million units? Yes.

"which was followed by a deluge of games, many of them made by third-party developers rather than Nintendo itself."

Is Jody suggesting that it is bad that most of the games were from 3rd parties?

"the company flooded the market with cheap pap that made the genuinely good games harder to find"

Yet he lays the blame for all the crappy 3rd party games on Wii at Nintendo's feet as if they developed them.

"The very short list of big sellers on the 3DS includes The Legend of Zelda: Ocarina of Time, Super Mario 3D Land and Mario Kart 7. The first of those is a remake of a game from 1998 and the second two are the latest iterations of popular franchises featuring their most recognisable character."

So he just picks the 3 games that have thus far sold the best but ignores other high selling titles such as Monster Hunter 3G, Street Fighter IV and Resident Evil: Revelations (best selling RE title on a portable console ever).

"The one Wii game that cracked the charts last year was The Legend of Zelda: Skyward Sword. This year’s solitary big release on the Wii has been Mario Party 9. Both are straightforward re-hashes of their formulas, aimed squarely at people who are already devoted fans."

Actually, he missed several titles that did very well on the charts, he's ignoring Dragon Quest X, The last Story, XenoBlade Chronicles, Pandora's Tower and whatever else might show up at E3. But more than that, does he not realize they are launching the Wii U this year and that it's quite typical for the previous generation console to have a lighter release list at the end?

"When some species of birds get sick, they stop eating unfamiliar varieties of food. Instinct tells them they ate something poisonous, so they should stick to the safe varieties of food they usually eat. If those sources become scarce, then they’ll starve to death rather than trying something different."

So we have an obvious Angry Birds reference mixed in with some weird analogy regarding the fate of Nintendo, the consumer market and probably investors too. The irony is that he's saying they should stick to safe stuff yet just chided them for selling safe, well known IPs like Mario and Zelda.

"That’s where Nintendo is at now. Things have changed, and its reaction has been to focus on the audience who buy games out of nostalgia, for whom Zelda and Mario aren’t just brands but fondly remembered childhood friends. That’s an ageing and shrinking audience the company can’t rely on forever. The only birds who are thriving in the new video game marketplace are the Angry ones."

And now we see the guy has no idea what he's talking about. Looking at Nintendo's strategy with the Wii U, it's clear they are targeting far more than just the nostalgic Zelda and Mario audience. Further, Nintendo has well over $12 billion in cash on hand. Where is Zynga? The biggest social gaming provider on Earth? $1 billion in cash on hand. Sony themselves are only at $13 billion cash on hand but have a lot of debt. Nintendo has none. Nintendo also has $20 total assets. And they expect a return to profitability this fiscal year. Given just the cash on hand, they could take $500 million losses every single year 24 years and still be debt free.

Game Over? Not with 24 lives remaining.