Today's Tear It Down comes from the land down under: The Brisbane Times. Author Jody Macgregor asks the headline grabbing question, "Is It Game Over For Nintendo?" Anybody reading this article has already answered the question with a resounding, "No!" And while a simple "no" may suffice, I'd rather Tear It Down.
Let's get things going by noting that the author starts off with a couple of facts, though slanted a tad negatively.
"There have been plenty of theories about why this happened. The most prosaic is simply that the strength of the yen, especially versus the US dollar, has stripped the guts from the company's overseas profits."
No big problems here. Facts all around...but now we move on to where the author starts to make correlations that miss the mark.
True that smartphones have risen greatly a popular consumer electronic device of which plays games. Not so true that it these app stores are filled with Nintendo-esque titles. Neither in scope or quality.
But Macgregor starts to just ignore facts and inject speculation.
For starters, Cut The Rope is also available on the DSi/3DS. So how is Nintendo struggling against a game also offered on their own platforms? Secondly, the fiscal year losses that Nintendo posted are a combination of foreign exchange rates (as correctly noted by the author to start with), a massive 3DS price cut that saw Nintendo selling the 3DS at a cost below profitability and a major ramp up in R&D for the upcoming Wii U. I suppose we should note the biggest global economic crisis since the 1930's. Were sales for the Wii down on the year? Sure but it still sells at a profit per unit...as do the games. Let's not forget that Nintendo only sold 21 million Gamecubes but was incredibly profitable. That suggest the current losses can't be solely blamed on competition in the marketplace.
Actually, I believe it was the 3DS. Rough start? Yes. Number 1 selling console globally since last November? Yes. Outpacing the original DS by 1 million units? Yes.
Is Jody suggesting that it is bad that most of the games were from 3rd parties?
Yet he lays the blame for all the crappy 3rd party games on Wii at Nintendo's feet as if they developed them.
So he just picks the 3 games that have thus far sold the best but ignores other high selling titles such as Monster Hunter 3G, Street Fighter IV and Resident Evil: Revelations (best selling RE title on a portable console ever).
Actually, he missed several titles that did very well on the charts, he's ignoring Dragon Quest X, The last Story, XenoBlade Chronicles, Pandora's Tower and whatever else might show up at E3. But more than that, does he not realize they are launching the Wii U this year and that it's quite typical for the previous generation console to have a lighter release list at the end?
So we have an obvious Angry Birds reference mixed in with some weird analogy regarding the fate of Nintendo, the consumer market and probably investors too. The irony is that he's saying they should stick to safe stuff yet just chided them for selling safe, well known IPs like Mario and Zelda.
And now we see the guy has no idea what he's talking about. Looking at Nintendo's strategy with the Wii U, it's clear they are targeting far more than just the nostalgic Zelda and Mario audience. Further, Nintendo has well over $12 billion in cash on hand. Where is Zynga? The biggest social gaming provider on Earth? $1 billion in cash on hand. Sony themselves are only at $13 billion cash on hand but have a lot of debt. Nintendo has none. Nintendo also has $20 total assets. And they expect a return to profitability this fiscal year. Given just the cash on hand, they could take $500 million losses every single year 24 years and still be debt free.
Game Over? Not with 24 lives remaining.