Just seven years ago, Nintendo was the undisputed king of the video game world. The Wii was impossible to find, as people who had never considered themselves gamers couldn't get enough of the company's products. Today, despite the introduction of a high-definition system that blends console and tablet gaming, the company is looking more and more like the industry's pauper.
Sales of the Wii U are stagnant. A slow trickle of releases hasn't helped matters. At the same time, Sony has managed to recapture its golden touch from the PlayStation 2 days, when it could do no wrong in gamers' eyes—and Microsoft is posting healthy Xbox One sales, despite some public relations missteps.
That's got some investors and analysts calling for change at the Kyoto, Japan-based company. Some want it to license its characters to the mobile market and other console companies. Others think it should abandon its latest game system altogether.
"[I] don't think Nintendo should exit the console hardware business, but ... it should consider getting out of the Wii U business, and consider going back to the drawing board on consoles," said Michael Pachter, managing director of equity research at Wedbush Securities. "Nintendo has a console in the marketplace that isn't working, and if it continues to tilt at windmills, its software sales will suffer."
Nintendo's global president, Satoru Iwata, is not currently answering any media questions about the status or direction of the company—and, in fact, is not at E3 at all.
Days before the show, Cindy Gordon, vice president of corporate affairs at Nintendo of America, informed the media that Iwata had "been instructed by his physician not to travel overseas in the immediate future and so he will not be making the trip to Los Angeles." (He has not taken a medical leave from the company.)
However, in a briefing with analysts at the end of March, he reiterated his support for the Wii U.
"The fate of a video game system is often influenced greatly by the introduction of a single title," he said. "Before the release of the 'Pokemon' game, Game Boy had been showing slow growth, and many people wondered whether it was the end of Game Boy. But the 'Pokemon' game single-handedly changed the landscape of the system, which then started to show the strongest sales in the life cycle of the system."
Nintendo, as those comments imply, isn't content to sit back and accept third place in this console cycle. The company recently released "Mario Kart 8" to glowing reviews—and is counting on the game to boost Wii U sales. (The game sold 1.2 million units in its first weekend.)
And in the pipeline are a "Skylanders"-like take on the company's rich stable of characters, which will span both the video game and traditional toy categories—and many expect the company to unveil a high-definition installment in "The Legend of Zelda" series at this year's show.