Saturday, June 23, 2012

What Nintendo needs to do to make a comeback

Can the Wii U fix Nintendo's problems, or will the company have to do something more drastic?

Nintendo is one of the most iconic companies in gaming, but it faces the real possibility of oblivion if it doesn't find a way to turn its fortunes around.
In October 2007, less than a year after the release of its blockbuster Wii console, Nintendo was worth $78.50 per share. That equated to a market cap of $85 billion -- double the value of Sony at the time.
However, Nintendo's fortunes have only gone south since then. With Wii sales cooling and mobile apps the hot trend in gaming, Nintendo's stock collapsed this month to $14.50 per share, leaving it with a market cap of just $14.8 billion, a fifth of its value in 2007.
Super Mario just isn't so super anymore.
What happened to Nintendo, a company that has been around for 123 years? A variety of trends have dramatically changed the gaming industry over the last 5 years:
  1. Mobile gaming is growing. Nearly half of smartphone users say they play a mobile game daily. That's great for Apple, but not so great for Nintendo, which has yet to release a game for iOS or Android.
  2. Social gaming has grown into a multibillion dollar industry, though its growth is slowing.
  3. Console gaming sales have collapsed across the board.
  4. The Nintendo 3DS, the company's most recent handheld gaming device, failed to meet expectations, forcing Nintendo to cut its price to boost sales. Sales are now picking up, but it's simply not generating as much revenue as Nintendo had hoped.
The end result? Nintendo posted its first ever annual loss, losing $533 million during its last fiscal year.

Nintendo needs a 1 Up Mushroom

It's clear Nintendo is suffering, but how does it regain its mojo?

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