Six years ago, Nintendo (OTC:
) was on top of the world. The company had overcome two console
blunders (Nintendo 64 and GameCube, both of which
lagged behind in sales to their competitors
), and released a new console -- Nintendo Wii -- that would go on
to sell 97 million units worldwide. Nintendo's success was not
unprecedented. From the late 1980s through the early 1990s, the
company produced the two most successful game consoles: the NES
and Super NES. Sony (NYSE:
) became the new champion in 1995 and led the industry for 10
years. During that time, Nintendo relied on the success of the
Game Boy -- which dominated handheld gaming for more than 15
years -- to earn massive profits.
The Japanese game maker continued that trend with the release
of the Nintendo DS. As the first touch screen gaming device, the
DS was regarded as a risky departure for Nintendo. There were
rumors that the company was developing another Game Boy to
replace the DS in case it failed, but it proved to be a huge
success. As of 2012, the DS has sold
152 million units
worldwide -- more than any other Nintendo-made device.
That success was expected to continue when the Nintendo 3DS
was released in March 2011, but after consumers scoffed at the
$249 price tag and the lack of quality software, the Nintendo 3DS
flopped at retail and prompted a
premature price reduction
. In the months that followed, sales of the 3DS finally began to
pick up, but Nintendo's share price continued to decline.
The declines have been so severe that Nintendo has lost 77
percent of its value since October 2007.
Sales of Wii U, Nintendo's latest console, are expected to
exceed the original Wii
this holiday season, despte analyst doubts about the console's
future. Over the next four years, IHS (NYSE:
) believes that the company will sell 56.7 million units --
considerably less than the 79 million Wii consoles that were sold
during its first four years on the market.
At this point, 50 million would be a lucky break for Nintendo.
With an MSRP of $299 (for the basic model) and $349 (for the
deluxe package), Wii U is Nintendo's most expensive console yet.
The games are also more expensive. While SNES and Nintendo 64
games were manufactured on expensive cartridges and frequently
retailed for $59.99, GameCube and Wii games retailed for $49.99.
With the Wii U, Nintendo has returned to the higher pricing
It is not yet known if Sony (NYSE:
) and Microsoft (NASDAQ:
) will raise the price of new software when the next game
consoles are released. Both companies already charge $59.99 for
Year-to-date, Sony -- which manufactures televisions,
computers and other electronics in addition to video games -- is
down more than 45 percent. Microsoft, which released Windows 8
and Windows Phone 8 on October 26, is up nearly one percent
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