• Tear It Down: Is It Game over For Nintendo?

                Welcome to Tear It Down where we take crappy articles from supposedly quality media outlets and tear them down piece by piece.

                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.

                "Nintendo posted the first loss in the company’s history at the end of the last financial year."

                "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.

                "Then there’s the rise of smartphones. The kind of easy-entry, bright and colourful family-oriented games that have been Nintendo’s specialty are increasingly available from the app store for a fraction of the cost of console games, if not for free."

                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.

                "But Nintendo has weathered competition before. In fact, it thrives on it. So why is it struggling against Cut the Rope and Fruit Ninja when it withstood everything Microsoft and Sony, and before them Sega and Atari, could throw at it?"

                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.

                "Nintendo’s last massive success was the Wii"

                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.

                "which was followed by a deluge of games, many of them made by third-party developers rather than Nintendo itself."

                Is Jody suggesting that it is bad that most of the games were from 3rd parties?

                "the company flooded the market with cheap pap that made the genuinely good games harder to find"

                Yet he lays the blame for all the crappy 3rd party games on Wii at Nintendo's feet as if they developed them.

                "The very short list of big sellers on the 3DS includes The Legend of Zelda: Ocarina of Time, Super Mario 3D Land and Mario Kart 7. The first of those is a remake of a game from 1998 and the second two are the latest iterations of popular franchises featuring their most recognisable character."

                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).

                "The one Wii game that cracked the charts last year was The Legend of Zelda: Skyward Sword. This year’s solitary big release on the Wii has been Mario Party 9. Both are straightforward re-hashes of their formulas, aimed squarely at people who are already devoted fans."

                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?

                "When some species of birds get sick, they stop eating unfamiliar varieties of food. Instinct tells them they ate something poisonous, so they should stick to the safe varieties of food they usually eat. If those sources become scarce, then they’ll starve to death rather than trying something different."

                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.

                "That’s where Nintendo is at now. Things have changed, and its reaction has been to focus on the audience who buy games out of nostalgia, for whom Zelda and Mario aren’t just brands but fondly remembered childhood friends. That’s an ageing and shrinking audience the company can’t rely on forever. The only birds who are thriving in the new video game marketplace are the Angry ones."

                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.
                Comments 5 Comments
                1. Otacon305's Avatar
                  Otacon305 -
                  It's not game over for Nintendo, not yet, and not for the reasons in that article. But I do hope they get their comeuppance soon, as they're presently contributing to the very same industry stagnation they sought to end in the 80s. They've sold out, and I want them to burn for it.
                1. jaxmkii's Avatar
                  jaxmkii -
                  If its game over for nintendo its gameover for the whole industry. Everyone had a horrable year compared to past years. Its called the end of infanate growth. But to say a loss in profit means end is stupid... But don't expect a return of the good old days. The ecconomy just wont support it anymore in a postpeak world.
                1. Segitz's Avatar
                  Segitz -
                  As good as the Wii sold in its early years, it now sells just as bad... that's how I look at it. And it's not just the outdated graphics (which allowed it to get said good sales in the beginning)... there just aren't "the" big games available on Wii. Some are.

                  Is it over for Nintendo? Surely not, if Sony is also still alive (after doom and gloom on PS3 release year). Or Microsoft after the original Xbox.
                1. Viper's Avatar
                  Viper -
                  Quote Originally Posted by Segitz View Post
                  As good as the Wii sold in its early years, it now sells just as bad... that's how I look at it. And it's not just the outdated graphics (which allowed it to get said good sales in the beginning)... there just aren't "the" big games available on Wii. Some are.

                  Is it over for Nintendo? Surely not, if Sony is also still alive (after doom and gloom on PS3 release year). Or Microsoft after the original Xbox.
                  Well, it's the end of the line for Wii anyway as the Wii U launches this year which will fix many of the wrongs the Wii had. And in the mean time they have the 3DS which just finished breaking some sales records. Hardly seems like major issue at all. And even the Wii itself is still selling better than Vita and PSP so it's not like it's even the worst selling console on the market.
                1. Segitz's Avatar
                  Segitz -
                  No question... don't really care for 3DS sales. My point was... "they" always call doom and gloom, no matter how small the problem is.
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