Blog #11

by carre107

This is another week with typical Nintendo news (bad news with some occasional hope), but with more bad news for the whole industry as well. I’ll start with Nintendo. I have two articles on them for this week. This first one, (http://www.forbes.com/sites/insertcoin/2013/04/16/analyst-predicts-bad-march-for-the-wii-worse-for-the-wii-u/), is an update on Wii U sales. Last week I announced that February sales actually increased and that Nintendo has hope as long as their sales continue to increase. Well, unfortunately, March sales could not continue this short lived trend. The March results are not official yet, but the article that I read has an analyst’s recent estimates. If these estimates turn out to be accurate, Nintendo will be in trouble (as if they weren’t already). Michael Patcher estimated that Nintendo sold 55,000 Wii Us, compared to 85,000 Wiis. Apparently Nintendo’s successor to the Wii isn’t having much success. Nintendo simply can’t get people to switch to their new system. They are trying desperately with really bad advertisements that are essentially bashing their original Wii system to make the Wii U look better. I won’t describe the whole ad; rather I’ll post it here (http://www.forbes.com/sites/insertcoin/2013/03/25/nintendo-advertises-against-itself-at-pax-with-bizarre-wii-u-chart/) for your viewing pleasure. It’s basically a comparison chart and the author of the article points out all of the hilarious mistakes. To make matters worse, the analyst predicts 290,000 Xbox 360 sales and 260,000 PS3 sales for the month of March. If Nintendo’s new system can’t compete with it’s old system, how is it supposed to compete with the sales of competitor’s consoles, who are going to be releasing new consoles and increase their sales even more?

My next article, (http://allthingsd.com/20130417/nintendo-readying-an-array-of-games-for-3ds-device/?KEYWORDS=nintendo), may answer this question to some extent. It is very brief, but it basically states that Nintendo is making games for the 3DS based on very popular franchises, including Legend of Zelda, Super Mario Bros. and Donkey Kong. These new installments are planned to be released this holiday season. I’m guessing since their Wii U system is doing so poorly, they are trying to keep their name alive by making popular games for a system of theirs that is doing surprisingly well. These games won’t compete with full on consoles that Microsoft and Sony will be releasing, but at least during the holidays Nintendo won’t be completely under the radar. The thing I don’t understand is why they aren’t releasing the same games for the Wii U. It can’t be that hard to vary the programming of a game slightly in order for it to work on multiple consoles. Wii U sales are low because they don’t have games that die-hard fans want to play. Zelda, Mario and Donkey Kong are certainly games that diehards would be itching to play. I get that they are trying to get the most out of the system that is doing well and they might be trying to avoid cannibalism  but they can’t simply give up on the Wii U. They are too invested in it at this point.

As for industry news, video game sales as a whole dropped 10% in March. The article, (http://www.bloomberg.com/news/2013-04-18/u-s-video-game-retail-sales-slide-10-in-march-npd-says.html), states that this decline is due to gamers shifting to mobile gadgets, which in part is true, but I’m more optimistic than the author is here. While some consumers are switching to mobile devices, I believe the drop in video game sales is caused by the fact that new games and consoles are on the horizon. What leads me to this theory is the fact that hardware sales have declined the most. I believe that people aren’t buying these old consoles because they know the new versions of these consoles are being released very soon and people want to save their money for the new versions of these consoles. I remember when I was little, I had to save up a long time to buy the latest and greatest consoles. Since many video gamers are children, I can see why consumers would be waiting for a new system before they empty their wallets. The software declines are caused by this same saving mentality. Why buy a game for a system that will soon be obsolete when you can save that money to buy games for the new system? Children are battling with opportunity costs without even realizing it.

Since my recent blogs can’t involve a whole lot of analysis, as Nintendo news is increasingly similar, I figured I’d throw in a couple of terms from class to describe the Nintendo situation. From lecture 10, I learned that Nintendo is using related diversification. They have mobile consoles (3DS) as well as in-home consoles (Wii U). They started in the in-home game industry with the NES and diversified into the mobile game industry. The method they used was an internal new venture, seeing that they didn’t work with or buy a different company to create their mobile system. From lecture 11, I can produce part of a stakeholder analysis for Nintendo. One of their stakeholders is their consumers, who are external stakeholders. More specifically, I would say the die-hard Nintendo consumers are essential stakeholders. I would strategize in making sure these stakeholders are happy because they are the primary source of sales for Nintendo. Nintendo needs to make games like those discussed earlier that will please their die-hard consumers stakeholders.

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