Nintendo's Disappointing Wii U Showing Will Lead to the Demise of Console Gaming

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It's 2001 all over again. Only this time, Nintendo doesn't have anything to fall back on. In the late '90s and early 2000s, Nintendo ( NTDOY ) attempted to run its console business into the ground by releasing a lackluster follow-up, GameCube, to a lackluster system, Nintendo 64. At that time, Nintendo owned the handheld gaming market. The Game Boy, Game Boy Color and Game Boy Advance provided Nintendo with billions of dollars in profit. As a result, Nintendo was able to relinquish its spot at the top of console gaming and still become one of the industry's most profitable companies.

By releasing the Nintendo 3DS without any good games, and by charging a price ($249.99) far beyond the system's worth, Nintendo was forced to cut the price several months (years!?) ahead of schedule. In what seemed like an instant, the company lost its cash cow -- the handheld market -- and saw its market cap drop 50% in the following months.

Following the price cut, sales of the Nintendo 3DS began to pick up. But unlike the original Nintendo DS (and the various Game Boys before it), the 3DS still lacks a wide range of quality software. Did it improve last Christmas? Yes. But it pales in comparison to the original DS.

With fewer games on the market, Nintendo has not been able to make up for the lack of hardware sales with software sales.

Leading up to Nintendo's E3 2012 press event, everything was riding on the company's ability to impress consumers with its next console. It wasn't just Nintendo's own bottom line that was at stake; Nintendo had essentially been tasked with saving the entire console industry.

Year after year, Sony (NYSE: SNE ) and Microsoft (NASDAQ: MSFT ) continue to drag their feet, staying the course instead of releasing new and innovative hardware. New consoles keep our industry young. They reinvigorate the masses and inspire mass sales. But in an effort to stretch the profitability of PlayStation 3 and Xbox 360, their respective makers have decided to wait to release their next consoles.

In essence, this made Nintendo our only hope.

It's no secret that the media wants consoles to die so that tablets can take their place as…what, exactly? The new leaders of lackluster gaming? Nintendo is eager to help them, it seems. Instead of fighting like a champion against the toughest of competitors, and instead of reminding consumers why console gaming is and should always be a cherished form of entertainment, Nintendo has done nothing to ensure the success of its next game machine.

Rather, the Mario maker has done the opposite.

In addition to the official unveiling of NEW Super Mario Bros. U (the official title for the silly Mii-themed Mario game unveiled last year), and the breathtaking demonstration for Pikmin 3 (a lifetime classic, to be certain), Nintendo unveiled Sing, a silly karaoke game; a new version of Wii Fit (shows promise, but it's essentially more of the same); and a ridiculous mini-game compilation called Nintendo Land.

None of these games scream "system-seller." None of them were on par with Super Mario Galaxy or The Legend of Zelda: Twilight Princess -- just two of the impressive games that accompanied the original Wii's unveiling in 2006. Yes, Zelda was a holdover from GameCube. But Mario Galaxy was a fresh and exciting chapter in the long-running series.

In 2006, Nintendo also showed off Metroid Prime 3: Corruption, a spectacular first-person adventure that introduced unique motion control elements. And let's not forget about Wii Sports, the creative motion-controlled game that helped Nintendo sell millions of Wii consoles.

Six years ago, third-party developers brought a handful of creative concepts to Wii, including a motion-controlled Tony Hawk-themed racing game from Activision (NASDAQ: ATVI ), and an innovative shooter/adventure game from Konami (NYSE: KNM ) called Elebits.

This year, third-party developers brought a cornucopia of crap to Wii U, including first-person shooters that are destined to suck (ZombiU*? Are you kidding me!?), a little too much hype for the next Darksiders, an obsessively long discussion on Batman: Arkham City, and teasers for other games that will appear on other consoles, such as Assassin's Creed III. (*If you think ZombiU won't suck, go back and play Ubisoft's last over-hyped FPS project, Red Steel .)

I have said a thousand times -- and will say a thousand more, if I must -- multi-platform games are not enough to sell a console. By wasting several minutes on third-party games, Nintendo has showed that it doesn't have the first-party content necessary to make Wii U a true success.

I am a diehard Pikmin fan; one of the biggest you will ever meet. I cannot wait to play through the third edition. I would buy a Wii U for that game alone. But I am the minority. Most consumers don't care about that series, as proven by the disappointing sales figures . With only 780,000 units moved in North America, 560,000 in Japan, and only 250,000 in Europe, Pikmin isn't a strong enough brand to sell Wii U.

NEW Super Mario Bros. U will be fun, but it's the same-old thing. Don't get me wrong; I love Mario. I think my twitter page proves that. (If not, then you should know that I wore that red hat -- and that green mushroom shirt -- to work at this time last year.) But while it was cool to see a new 2D Mario on the original DS, and while it was nice to see another chapter on Wii, Nintendo is beginning to beat a dead horse. We don't need two additional 2D Mario games, but that's what we're getting -- one on Wii U and one on the 3DS. How about another Galaxy instead, or an entirely new kind of Mario game? Nope. Not from Nintendo.

Nintendo could have used E3 to unveil a new Mario Kart for Wii U, the next Zelda, a future Metroid, or some other great game that will excite the masses. Nope. Not this year. We have to wait.

And wait we will. When the Wii U is released, consumers will respond with the same level of excitement that they had for the Nintendo 3DS when it was released.

Follow me @LouisBedigianBZ

(c) 2012 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.



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 , Stocks

Referenced Stocks: ATVI , KNM , MSFT , NTDOY , SNE

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