Nintendo says that the poor results are due to several different factors, among them are sales declines on software and hardware, as well as a hit on profit margins due to price cuts.
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| The color of the logo matches the color of the numbers on Nintendo's quarterly results |
It is of course no secret that the 3DS handheld console has not done at all as well sales wise as Nintendo was hoping, but at least Nintendo are seeing increasing sales now that they have implemented a significant price reduction on the system.
Nintendo states that the decrease of game sales are due to lack of "hit titles", with the only exception being the 3DS version of The Legend of Zelda: Ocarina of Time.
So what to make of this?
I am not surprised that Nintendo is experiencing severe setbacks in their earnings.
The Wii seems to really be a "done" console by now. There are very few games of significance coming out for the system, and the general public seems to have tired of the novelty of motion controls, which the Wii really pioneered.
Furthermore, both Microsoft and Sony have by now tried to steal the motion controlling thunder from Nintendo, by bringing out their own versions of motion controls in the form of the Move and the Kinect (With Kinect itself adding a new novelty of controller free motion control gaming).
It seems like the new Zelda game; Skyward Sword is going to be the last great hurrah for the Wii and Link gets to turn the lights off on the console.
Besides the sharply declining sales of the Wii, it is also a massive problem for Nintendo that the 3DS has not properly taken off yet.
I think that this is really down to a few different things:
1) Nintendo has failed to deliver compelling new games on the system
That the best selling 3DS game is a remake of a 13 year old game is not a good sign in my eyes. It is vital that the 3DS gets some "killer" games quickly, so gamers will see a great game and understand why they need a 3DS.
It is really surprising to me that we still have not seen a proper Pokemon game by now, which is usually a very effective way of pushing systems for Nintendo.
2) The upgrade between the DS and 3DS has not been clearly communicated
I think that Nintendo did themselves a disservice by naming the 3DS like they did. The name makes it seem like it is just another DS type, like a DS XL or a DSi.
I think that there are a lot of consumers, especially parents buying these systems for their kids, who simply do not realise that the DS is the next step in the Nintendo handheld family, and so it gets lost between all the different kinds of DS's that you can buy these days.
3) Price
The price of the system could maybe have been acceptable if points #1 and #2 had been in place at the time of launch.
But as things were at the time of the launch, the 3DS ended up as something of a very expensive tech novelty that allowed you to play around with 3D without glasses.
I think the price reduction was a good step in the right direction for Nintendo, and it is certainly not too late at all for the system to turn around and become a smash hit for Nintendo.
But with the PS Vita also launching this year in Japan, and next year around the rest of the world (incidentally, you can also find my thoughts on the Vita and more generally on the handheld industry in this post), there is going to soon be some very stiff competition for the 3DS.
And of course the other big question mark for Nintendo is going to be the Wii U, and whether Nintendo is going to be able to repeat their success of turning a new type of hardware gaming into a sales success.
It will be the first of the next generation of consoles, but is it going to find itself squeezed out, when Microsoft and Sony launch their new consoles, possibly already in 2013?
Nintendo has been in trouble before and come out on top, so it's going to be really interesting to follow the development and see if they can do that once again.
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