Two years ago, Nintendo could do no wrong. The Wii was at the height of its retail domination and competitors were scrambling for second place.
Today it’s a much different story and the looming holiday season could be a crucial one that determines the strength – and perhaps the future - of the company’s core console business.
Nintendo likes to set low expectations for its investors. It’s a safe course to follow, especially in a down economy. This year, though, its warnings have taken on a more dire tone.
“If everything doesn't go ahead just as we hope [this holiday season], and if we do not do anything about it, our platform business will be in trouble,” said Satoru Iwata during a late September investor call. “We will need to prepare for such situations."
Nintendo relies on the holiday season to move Wiis. Its casual audience tends to be most active in gift-giving season. This year, though, there’s no big game release pending that seems poised to drive Wii sales – and “Super Mario Galaxy 2”(released earlier this year) does not have the draw of its predecessor. Additionally, Microsoft and Sony will also have motion capture controllers on the market that have the advantage of being novel products that have learned from Nintendo’s missteps.
“At one point, the Wii had captured the zeitgeist of technology and interactive entertainment,” says John Taylor, an analyst with Arcadia Research Group. “But it has been many moons since there were shortages of the Wii in the [retail] channel and sales have been eroding at a fairly fast clip.”