Game Over? Nintendo admits the need to look at a new business structure

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Seems Mario and Co. have finally realized the Wii U is far from a competitive machine, and in order to stay relevant in today's market, they need to seriously look at another opportunities in order to keep the house that Mario built open. Friday, after many months of embarrassingly bad sales and market performance, Nintendo revised their Wii U sales expectations between April 2013 to March 2014 down from 9 million units to 2.8 million units. A total drop of 69% compared with previous forecasts. This colossal loss in system sales also means the associates software sales will take a significant hit as well, with Nintendo reporting they are expecting a 50% loss in software sales as well, down to 19 million units from 38 million. 

The ripple effect of these downsized sales forecasts though is  historic:  Trading in Nintendo's home market of Japan saw the company stock drop to 13,145 yen ($126) from 14,645 yen ($140) on Friday, according to Reuters. This is far below the company's record high stocks in 2007 that saw share prices at 73,200 yen ($704). Especially brutal to see investors in the Japanese market dumping their stock. Japan has always been Nintendo's stronghold of consumer confidence, where Nintendo can do no wrong. 

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The news is not entirely surprising to those in the gaming community. We have seen this coming for years. I reported on it months ago. The fact is, Nintendo has become stagnant. Attempting to continue living off the incredible reputation and quality of their core intellectual property like Mario Bros and the Zelda franchise, Nintendo has counted on these properties to keep questionably  competent hardware afloat. Nintendo has finally realized that they missed the boat in the hardware market, and that their stubborn and steadfast decision to not adapt to industry standards like HD, online gaming, entertainment based features, and sufficiently powerful hardware has all but killed their hardware business. Instead of innovating new, more powerful systems like other manufacturers, Big N has instead been pushing an iterative path for new hardware: The Wii U is simply a gimmicky retooled Wii. The Nintendo DS has seen 6 different versions of the system, all with questionably gimmicky improvements: DS Lite: Smaller, DSi: Added an exceptionally low res camera (.3MP.. I had a 10x more powerful camera in a cell phone 10 years ago.), DSi XL: You guessed it, larger screens, same system. 3DS: Marginally Effective 3D, 3DS XL: Yep, bigger, and lastly, the simply abysmal and inexplicable 2DS, an exceptionally large aesthetic nightmare. The fact is, Nintendo has simply lost their way. They have not released a single actual innovation since 2006 with the launch of the Wii.  They are a GAMES company. They make several of the world's most critically acclaimed and successful franchises in history: Mario, Zelda & Pokemon.  Nintendo themselves admitted that they are failing with their current business model, with current President Satoru Iwata stating “Given the expansion of smart devices, we are naturally studying how smart devices can be used to grow the game-player business,” Iwata said. “It’s not as simple as enabling Mario to move on a smartphone.”

While this may be true, these massive losses will need addressed immediately. Nintendo may very well have to reconsider being in the hardware business altogether. Given the sheer brand power and quality of their 1st party software, it is time for them to take these amazing titles and license them. Open up the titles to other platforms: Smartphones, Tablets and competing Consoles. Nintendo could make a king's ransom on the licensing of these title s for play on other consoles. And Nintendo could, with the freed up resources from the hardware business, focus more energy and attention to these software titles, bringing more quality software to it's fans. Maybe Nintendo could get out of the home console business, and still push their handhelds, which have outsold their home consoles by wide margins for decades. 

Whatever decisions the company makes in the coming weeks, things will be interesting, but one thing is sure: Drastic change is vital if Nintendo wishes to avoid joining Sega in the afterlife.