Nintendo Needs Apple and Google for More Than Just Smartphones

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The company may date back to the 1880s, but it certainly appears that Nintendo (OTCMKTS:NTDOY) is in serious trouble as 2013 draws to a close.

Down over 80% from the dizzying heights of Wii-mania in 2007, Nintendo's stock, as well as its brand, has suffered in the wake of Microsoft ( MSFT ), Sony ( SNE ), and their legion of fans slobbering for mature, hard-core gaming on the Xbox and PlayStation consoles.

Now over a year old, Nintendo's latest system, the Wii U, has failed to make inroads with the gaming community. Boasting specs and performance that feel at least a generation behind, the Wii U also launched without many of the classic franchises that made Nintendo such a beloved brand throughout the '80s and '90s. Even now, aside from another fantastic Mario game, many of those titles are missing from shelves with launch dates firmly in 2014. Throw in a controller that many find awkward, a dearth of third-party support, a clunky UI, and an astoundingly bad marketing campaign, and it's no surprise that the Wii U tanked.

So while there was a desperate cry in recent years for Nintendo to partner up with Apple ( AAPL ) and Google ( GOOG ) and start developing for smartphones and tablets, those pleas are positively deafening now. And yet, Nintendo of America President and Chief Operating Officer Reginald Fils-Aime remains reluctant to dive headfirst into mobile gaming.

"It's a topic that comes up all the time. It's a debate that's constantly had," Fils-Aime said in an interview with KING 5 News .

The arguments against going third party, however, are few and far between.

Since the original Nintendo Entertainment System, the company has developed the most iconic games, characters, and franchises in the history of home gaming. Its Marios, Links, and Samuses (Samii?) remain exclusive to Nintendo hardware and are its most valuable (and beloved) asset. And while titles featuring those familiar characters and gameplay can be fetched for $50 a pop, they would sell for significantly less on an iPhone or Android device and potentially diminish the brand. (See: The Future of Nintendo Co., Ltd: Is Mario Doomed? )

But looking at the Wii U and the long road before the next system refresh -- let alone the time before we actually see more of those classic franchises on the machine -- many are declaring the Nintendo console dead before it even had a chance to live.

So, going mobile and keeping its franchises alive by disseminating them onto smartphones and tablets remains a popular recommendation. But in defense of Fils-Aime, it is a tricky maneuver.

The COO outlined how Nintendo will be "experimenting" with mobile devices, mostly as promotional tie-ins with the Wii U.

"We recognize that there are a lot of smartphones and tablets out there, and so what we're doing is we're being very smart in how we use these devices as marketing tools for our content," he said. "We're also doing a lot of experimentation of what I would call the little experiences you can have on your smartphone and tablet that will drive you back to your Nintendo hardware."

Fils-Aime described the integration as "much more marketing activity-oriented" which only passively involves elements of gameplay -- "a movement, a shaking, something like that."

"We believe our games are best played and best enjoyed on our devices," he said, "and so the full game play will only be on Nintendo devices."

While it's a relief to see Nintendo dip its toe in smartphone and tablet integration, simply using the devices as marketing tools won't do much to satisfy gamers who are understandably reluctant to invest hundreds of dollars in a Wii U.

But Fils-Aime has a point: Playing Mario on a TV or a 3DS is still a better experience than one that would be had on a smartphone or tablet.

The reason why games like Angry Birds or Candy Crush are so popular on small touchscreens is because their gameplay does not necessitate anything beyond 3.5 inches. Briefly tapping or swiping the screen is all that's needed to keep a game going for hours at a time. Now, Mario games could be considered casual, but they certainly aren't that casual. Something like the vibrant Super Mario 3D World , the most recent Mario title on the Wii U, greatly benefits from a large TV screen and would produce a far less enjoyable experience on an iPhone or Android device.

But what about Nintendo's vastly popular handheld consoles?

Surely, gamers have enjoyed their Mario Karts and Zeldas on a smaller scale, but there is much to be said about tactile buttons form-fitted to one's hands and fingers and a main screen that's seldom blocked by a chunky thumb. And while iPhone and Android devices can easily be outfitted with add-on peripherals that feature a directional pad, analog stick, and a button array, that's yet another bulky piece of plastic to carry around in your pocket. And there's quite a bit of difference in terms of immersive gameplay between set-top and handheld consoles.

So, as it stands, a smartphone wouldn't make for a very good standalone Nintendo system, leaving tablets -- with their larger screen real estate allowing room for controls on the side or bottom margins -- as the only passable, non-3DS mobile experience for Nintendo's current fleet of games.

But the question remains: How can Nintendo utilize Apple and Google to its advantage?

The first step, surprisingly, lies in the Wii U.

The Nintendo system is controlled by a large gamepad featuring an embedded touchscreen that acts as a supplementary screen for gameplay. Though some gamers have described the gamepad's integration with the Wii U as awkward, a large portion of that clunky UI is due to game designers still learning the ropes with the new control system. As more titles come, the gamepad's second screen could prove to be a valuable addition to gameplay.

So why couldn't that second screen be an iOS/Android smartphone or tablet?

Acting only as a supplemental screen with touch controls and at-a-glance information, the main gameplay would take place on a larger television screen -- much in the same way it does with the Wii U currently. "Offline" gaming could also be supported, but with simpler mini-games or secondary action that wouldn't be hindered by a smaller screen. And considering much of the gameplay would still take place at home in front of a television, add-on gamepad peripherals don't seem as clunky anymore, allowing for players to button-mash to their hearts' content.

Now, using smartphones and tablets as controllers might seem like an obvious solution, but it still only get us halfway there. The final step isn't something Nintendo would be as amenable to as it would drastically alter what the company is.

Eliminate the Nintendo console altogether.

In a set-top-box market that now includes the Apple TV, Chromecast, and Roku devices, Nintendo should look into integrating itself as the de facto gaming service for media centers. Using smartphones, tablets, and laptops as controllers -- much in the same way Chromecast does -- this Nintendo gaming app would subvert the need for a Wii U and act as a big-screen virtual console with streamable titles via the media centers.

Yes, that would mean Nintendo bows out of the hardware business, but in an era where consumers are looking for a way to de-clutter their entertainment systems -- and at a time when more gamers are likely to be using an Xbox or PlayStation system -- the company can't expect fans to always buy a new Nintendo system simply because they'd like to play the new Zelda game. And as media centers become more powerful and ubiquitous, Nintendo will be foolish not to partner up with Apple and Google to integrate itself into their bestselling devices and become their go-to gaming service -- the Netflix ( NFLX ) of gaming, if you will.

Whether Nintendo management decides to support Xbox and PlayStation systems is entirely up to them.

See also:

Can't Afford Apple's iPad? The $38 Tablet Is Coming Soon


Apple iTunes, Pandora, and Spotify Users Will Soon be Wooed by Europe's Deezer


Is Microsoft Scroogling Itself With Attacks on Google?



The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.



This article appears in: Investing , Technology

Referenced Stocks: AAPL , GOOG , MSFT , NFLX , SNE

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