One of the Greatest Companies of Our Generation is Flopping
The news: Former video game juggernaut Nintendo is heading into its third-straight annual loss.
Largely, this is because of the Wii U, the system they released in November 2012. In an analysis by Reuters, Nintendo is expecting an operating loss of 35 billion yen this year, or about $335.76 million. Their initial forecast was a 100 billion yen profit.
Nintendo cut its global Wii U sales forecast for the year by almost 70%, which brought it down to just 2.8 million units. Satoru Iwata, the company’s president, promised that business would turn around this business year, but he would not resign if profits continue to fall. “There will be no major management shake-up in the short term,” Iwata said.
Competition is fierce: In September 2013, Nintendo announced a $50 price cut for the Wii U, bringing it down to $299. The price cut coincided with the release of a new, cheaper version of the 3DS. The handheld Nintendo 2DS prices at $129.99, which is $40 less than the 3DS. Conveniently, the price slash of the Wii U also came just before the releases of the PlayStation 4 and Xbox One. Since being released in November, Sony has sold more than 4.2 million PS4s, and Microsoft has sold more than 3 million Xbox Ones.
The PS4, starting at $399, and the Xbox One, starting at $499, aren’t just doing better business because they’re flat-out better systems. Game publishers like Electronic Arts, Activision and Ubisoft develop their games exclusively for those systems, which causes Nintendo to lose out big time on the amount of titles they can release. Popular video game series’ like Madden, WWE 2K and Grand Theft Auto generate tons of financial success that Nintendo sees none of every year.
What comes next? The biggest reason Nintendo is losing out to the likes of PlayStation and Xbox is simply because they’re making inferior products. No video gamer would invest in a Nintendo product knowing that there’s something much better out there, and this company has to understand that by now. MG Siegler of TechCrunch put Nintendo’s lack of success into great perspective – they have failed to make great products for a number of years now, and the market is rapidly changing around them.
It seems like whenever a new generation of video game systems is released, Nintendo falls further behind. Further down the road, whatever systems Sony and Microsoft come out with after the PS4 and Xbox One could swallow up Nintendo to the point of no return. Until they can make a legitimate contender to that of PlayStation and Xbox, Nintendo will continue to fall and be just as dead as Blockbuster, a once successful store that rented out their once successful games.