Nintendo posted the first loss in the company’s history at the end of the last financial year, which is notable for a couple of reasons. For starters, the fact that in a fickle industry like video games they’ve run at a profit for 30 years without a hiccup is pretty impressive. Second, the fact that even a dependable giant like Nintendo can be brought low – to the tune of 43.2 billion yen – suggests that something big is up.

There have been plenty of theories about why this happened. The most prosaic is simply that the strength of the yen, especially versus the US dollar, has stripped the guts from the company's overseas profits. It’s certainly been a contributing factor, one that’s weakened Japanese manufacturers in general, but not to the same degree as Nintendo.

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.

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?

The shelves in your local game store have the answer.

Nintendo’s last massive success was the Wii, which was followed by a deluge of games, many of them made by third-party developers rather than Nintendo itself. And many of them were terrible. Eager to jump on the bandwagon of a console that had cracked both ends of the family market open so convincingly – senior citizens are still playing Wii bowling tournaments today – the company flooded the market with cheap pap that made the genuinely good games harder to find.

If you were part of that new audience, someone who didn’t keep up with reviews and blogs, you were at the mercy of what looked interesting on the shelf. You might luck onto a game as inspired as the jazz-and-graffiti-versus-authoritarian-surrealism of de Blob, or you might wind up with garbage like Final Fantasy Crystal Chronicles: The Crystal Bearers.

With their latest console, the 3DS, Nintendo has kept a tight rein on third-party games. Have a look at its section of your local EB and, a year after launch, you’ll still only see a few shelves dedicated to it – not because the cartridges are small, but because there just aren’t that many of 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.

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.

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.

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.

Any article that starts with such a headline isn't worth the time required to read it.

I dont think so.

Oh, poor Gilgamesh, I bet he would've loved to find this article before you.

I dont think Nintendo will fall down, they survived with N64 and Gamecube, they'll survive their first loss.

It's the Nintendo is doomed drinking game! Take a sip every time:

*Somebody brings up Nintendo making rehashes as if only they do it
*Somebody mentions Angry Birds
*Somebody mentions a single year's loss during the world's worst financial crisis since the 1940's
*Somebody ignores Nintendo's downloadable offerings, including "Cut the Rope"

Happy blood poisoning!

But Nintendo should look out, if handheld gaming dies Sony could still turn the Vita into a phone and compete with them smartphones. What will Nintendo do in such an event? Drop the 3DS like a brick?

Umm I too wouldn't bother reading it. Any article suggesting Nintendo is or could even possibly go down next is insane. I'd suspect the author was either drunk or high! If anyone is going to be killed off it will be Sony. Sony is bleeding money and the PlayStation Vita is currently on course to die soon, it would be suicide for Sony to maintain its PS3/PSP business model. The idea of high powered expensive hardware is a very dumb idea consumers don't seem to care. PS3 has done fairly well but how much better have they done compared to 360? Not much better and the Wii slaughtered them. PS2 slaughtered the high end Xbox and GameCube, PSOne beat far superior hardware like the N64. The GameBoy beat Game Gear.

High end consoles simply are not highly profitable and the business model is rarely successful. Nintendo is the only company who was able to pull it off. Selling fewer GameCubes and still turning a larger profit then MS and Sony.

Nintendo could take consistent 500 million dollar annual losses for years before dying. The company remains in a very strong position. Arguably stronger then Microsoft in the console industry and Sony doesn't even come close!

Either way, dedicated handheld gaming shall either make a triumphant comeback or die a painful death, Nintendo either comes up with a masterplan that will shake the industry(or Sony) or lose the handheld territory to a bunch of Cut The Rops.

I shall watch closely as the events unfold, the next years will be interesting.

Oh they'll survive, they'll just never be as big as they were in the when the Wii and DS were big. Kinda like Sony with PS2, though I think the Orbis has the potential to do better than PS3, I seriously doubt it'll could ever do PS2 numbers. But back to Nintendo, the Wii U just doesn't have what make the Wii a massive success, the Wii introduced new audiences and had a fresh idea with motion control and that's mainly why it sold so well. The Wii U isn't introducing gaming to anyone new and people are far too familiar with tablets and gaming on touch devices, I predict it'll do worse than Orbis and Durango.

That's not to say Nintendo are anywhere close to ending, the 3DS is becoming a big success and although I don't think the Wii U will do as good as it's competitors and not nearly as good as it's predecessor, it'll still be very profitable.