It seemed like yesterday Nintendo was crushing the competition with its Wii game console. An innovative approach to gaming via motion technology, which completely baffled the competition. Satoru Iwata, was hailed as a visionary businessman for his gamble in the risky “Blue Ocean” strategy.
In 2014, nothing can be further from the truth. Under Mr. Iwata’s leadership, Nintendo has seen its first quarterly loss in the company’s history and is consistently having to slash sales forecasts.
More interesting is his insistence of bringing back the lumbering mess that is the Wii U console business. A botched piece of hardware relying upon the same Wii strategy in a smartphone and tablet dominated market.
The game company on Friday announced that it needs to revise its Wii U sales expectations from an anticipated 9 million units sold between April 2013 and March 2014 to 2.8 million units during that period -- a near 70 percent drop compared with previous estimates.
“Nintendo’s proprietary software continues to be first rate, but its console hardware is not competitive; the Wii U is under-powered relative to next generation offerings from Sony and Microsoft, and is not competitively priced (priced similar to current generation offerings from the competition). We don’t think Nintendo should exit the console hardware business, but think it should consider getting out of the Wii U business, and consider going back to the drawing board on consoles.”- Michael Pachter, Wedbush Securities Analyst
Mr. Iwata has underperformed since Wii console sales first began showing signs of decline in 2009. His inability to understand the changing landscape of the video game industry and loss of third party support is stagnating growth. The unfounded idealism of “first party titles will resolve all”, is crippling company profits and investor interest. It is a fair assessment to say that Mr. Iwata may have to step down from the position he’s held since 2002 and allow someone else to lead Nintendo.