Game Over for Nintendo?

A sharp decline in Wii sales have investors very worried, but bloggers say all is not lost

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Back in 2007, the Nintendo Wii was proclaimed the 'winner of the console wars.' Sales of the innovative video game system rapidly eclipsed those of its more powerful, graphically advanced competitors, the Microsoft Xbox 360 and Sony PS3. The intervening years have not been kind. On Thursday, Nintendo reported a devastating 52% decline in profits due to sluggish Wii sales. The day did bring some good news for Nintendo fans, however: The company announced the launch of a new, larger-screen iteration of its DS hand-held gaming system and, separately, a deal with Netflix to stream movies over the Wii. Are the new products enough to give the company a much-needed boost, or is just one more sign of the end of Nintendo's video game reign? Bloggers were split:

  • Victims of Their Own Success Analyzing Nintendo's fall from grace, a few tech writers concluded that the company's formerly winning strategy had come back to bite. The Guardian's Jack Schofield argued that the casual gaming market Nintendo won over had become Wii-weary: "Casual gamers may have cut back their spending during the recession, and they tend to be less bothered about having the latest and greatest titles. They may be buying second-hand ('new to me') games that make no money for Nintendo, or have just tired of their toy. Nintendo has failed to encourage to them with must-have Mario titles." CrunchGear's Nicholas Deleon is of the same mind, suggesting that Nintendo should have attempted to appeal to the more reliable hard-core gamer market to begin with: "I would say that there have been next to no games released for the Wii that interested me, a gamer who’d rather sit there and try to 100 percent Resident Evil 5 (well, Resident Evil 4… Resident Evil: 5 had too many things that annoyed me) than lose five pounds playing Wii Fit. I’m a gamer, not someone looking to have a fun evening with my grandkids."
  • Multiplayer Madness  Several bloggers pointed out that competition in the video game industry has heated up lately thanks to the iPhone and other smart phones that double as portable video game players. Venture Beat's Dean Takahashi  doubts the chances of Nintendo's new DS line succeeding against the iPhone and iPod touch: "It doesn’t address Apple’s biggest advantages: an AppStore with 100,000 apps and lots of free games, downloadable content that you can buy instantly and download over a Wi-Fi connection, and outstanding communications that you can really only get with a phone. I think we can expect Nintendo to chase these features over time, but in the meantime, this new DSi is going to have to do." Tony D' Altorio of Daily Markets concurs: "Apple still has the edge with games that cost less than $10 each, as opposed to $25 and even $40 from its competitors. And since that kind of price difference makes a very big difference, Apple holds the advantage for the time being."
  • Nintendo's Next Round Other bloggers offer hope that Nintendo will be able to get back on top. The Wall Street Journal's James Simms believes that "investors are overreacting" to the numbers and says that Nintendo's  beloved characters, new products and expansion into emerging markets will help pick the company up. Joystiq's Alexander Sliwinski wholeheartedly agrees, noting that the company still managed to rake it in: "Nintendo's profits took a 52 percent dive in the first-half of 2009 compared to the same period last year, which sounds horrible -- until the realization hits that the company still brought in $766 million in pure profit. Yes, Nintendo is still doing all right, even as it cut its profit forecast for the fiscal year ending March 2010 from $3.3 billion to merely $2.53 billion. Tragic, we know." Meanwhile, Business Week's Kenji Hall reminds readers that the prime console-buying time is just around the corner: "Assuming that Nintendo's earnings pattern mirrors last year's, the company could still have a big holiday season and make up for it. (The second quarter accounted for 22% of overall sales and 24% of operating profits last year.)" If this doesn't work, that's when he thinks the company will be in real trouble.
This article is from the archive of our partner The Wire.