After the announcement of the considerable reduction of the earnings forecast for the current fiscal year Nintendo has been in hot waters, with business analysts all over the world expressing unflattering opinions on the management of Kyoto’s historical company.
A very common opinion urges at least a partial move to the smartphone market, even if there not many would realistically encourage a complete withdrawal from hardware development. Iwai Cosmo Holdings Analyst Tomoaki Kawasaki told Bloomberg:
Nintendo should offer Super Mario or Zelda games on smartphones and tablets and raise money. If such games become popular, some people may want to play them on Nintendo’s machines.
He also added while interviewed by Bloomberg Japan:
There’s also the opinion that President Iwata should quit, but he will remain because he said that the president should not give up. There also is the lack of someone that could replace him.
BGC Partners Manager Amir Anvarzadeh echoed pretty much the same sentiment:
Nintendo has a treasure trove of highly recognized characters.They could make billions in carefully devising a strategy that could exploit its strength in content without the price destruction that would come from abandoning its hardware.
Creative Strategies Analyst Ben Bajarin added his own opinion to the choir that supports the idea of a u-turn in Nintendo’s strategy:
They need to go back to the drawing board to reinvent themselves. The Wii U didn’t move the needle in gaming, so they need to rethink the value of tightly integrated hardware, software and services
Wedbush Securities Analyst Michael Pachter is even more clear cut in his opinion:
Iwata has to take responsibility for the Wii U missing the mark. He will be under pressure to make dramatic changes. If he can do so while remaining in charge, more power to him, but they need to make some changes.
Nintendo’s console side is broken. They’re not even an also-ran there, they just don’t matter.
Ichiyoshi Asset Management Executive Officer Akino Mitsunari told Bloomberg Japan:
It’s a structural problem. There’s a necessity to break away from a business model based on hardware, but Nintendo seems unable to escape from it.
Chiba Bank Asset Management Head of Research Yoshihiro Okumura also agreed that a change of Nintendo’s strategy is necessary:
It’s necessary to make a strategic transformation. Otherwise a recovery in stock price will be difficult.
Ace Economic Research Institute Analyst Hideki Yasuda has a different and maybe more radical idea, mentioning that Nintendo should move to the next generation:
Rebuilding has become very difficult. Nintendo has to think about the next generation. If hardware doesn’t sell, third parties won’t make software for it. If there’s not enough software, the hardware won’t sell. Nintendo has fallen into a vicious circle.
My son in elementary school never said he wants to buy a Wii U.
While this may seem the least relevant of the opinions if you look at it from a business point of view, especially compared with the others mentioned above, it’s probably the most disheartening.
While I’m personally not sure that a possible shift towards smartphones will “save” Nintendo (air quotes here are obligatory) we’re at a stage in which an acceleration towards the next generation could be advisable.
I’m actually quite curious to see what Nintendo will being at E3. Something tells me that they have something big up their sleeve, but as usual all we can do is to wait and see.