Analyst: Nintendo Has Blown It, They Will Never Recover

Sales of Wii Will Only Continue to Drop, Says Market Observer

by Anton Shilov
01/25/2011 | 08:32 PM

With the release of Microsoft Kinect and Sony Move motion-sensing technologies for Xbox 360 and PlayStation 3 the stir towards Nintendo Wii game console by casual gamers started to decline. Technologies by Microsoft and Sony are not worse than Nintendo's, but X360 and PS3 have better graphics and a number of other capabilities. An analyst believes that sales of Wii will quickly drop and the company will not be able to recover easily.

 

Nintendo has been long rumoured to release a successor for Wii game console with high-definition graphics support as well as better quality of content overall. However, Nintendo relied on its Wii - which had exclusive motion-sensing game controller, but had outdated graphics core and underperforming microprocessor - and did not release anything new to offer quality of experience similar to PS3 or Xbox 360. Now that the motion-sensing controllers are available for all three current-generation systems, Nintendo has lost its only trump and naturally sales of its Wii started to decline gradually. Since Kinect and Move were announced over a year ahead of release, Nintendo had a lot of time to finalize a successor for Wii (at the end, it had enough time to develop a decent console) and release it in 2010. But the company failed to do so.

"I think Nintendo has completely blown it with their second generation Wii strategy. I think they have the mentality that to launch a new [console] they have to retire the old, and I think that is wrong. I think the right strategy would have been to get a second generation Wii out and keep the old Wii at the same time, and have the second generation be the natural progression upgrade model. [...] With Kinect and Move, it is a lot easier for people to make X360 or PS3 their starter console," said Michael Pachter, an analyst with Wedbush Securities, in an interview with IndustryGamers.

There are not a lot of options for Nintendo now: stand still, watch sales of Wii declining, enjoy the growth of 3DS market share and prepare a true next-generation game console for 2012 - 2014 launch; release a no-matter-what successor for Wii as soon as possible and make its best to convince game developers to create games for it; release a high-profile successor for Wii with a clear game development strategy for third parties; drop the price of Wii considerably so to sell more units in developing markets.

"I think by the time they launch [their next console] if it is Christmas 2011, it is two years too late, and for sure one year too late. So it is over – I do not think they can ever recover. Wii sales will continue to decline and I think Wii 2 will not sell well. Third parties are not going to support it unless it is really similar to the X360 [...] so that it is easy for them to port games from X360 to Wii 2. If Nintendo advances the technology, and it is more powerful than a PS3, then no one is going to support it. If they were going to 'emulate' the 360, which is what I thought they would do, they should have done that in 2009. If they are going to advance the tech, then 2011 is really not the right year," said Mr. Pachter.

Nintendo itself claims that just adding high-definition graphics to Wii is not an option and that the next-gen console should have something else.

“The fundamental issue in the logic flow is that […] ‘gosh it is such an opportunity to take HD capability and link it with the Wii’. […] That is not the way we at Nintendo do things. The way we at Nintendo do things is, you know, when we will move to a new generation, it is because there are some fundamental things the [current] console cannot do. What that says is that simply the addition of HD capability will not be the next step for us. There will be more to it. There will be additional capability. There will be additional elements, and, given that, it is far into the future,” said Reggie Fils-Aime in an interview.