Nintendo denied the report that it was planning to release Nintendo games for smartphones. Earlier, Nikkei reported that Satoru Iwata, Chief Executive Officer of Nintendo, stated his company needs to look into smart phone game inclusion to better its business condition. However, Nintendo responded by saying that Iwata’s statement demonstrates Nintendo’s willingness to use smartphones to promote its core products, but not to develop independent games for smartphones. The company confirmed that it had no plan for smart phone games. Even still the report, though false, shows a troubling condition Nintendo is facing now.
Nintendo expects $240 million in loss after initially projecting $500 million in profit. Such a wide discrepancy stems from its wildly optimistic expectation on its latest console Wii U. The company had hoped that its Wii U console would sell approximately 9 million units; now it expects to sell 2.8 million consoles. In addition the 3DS, the best-selling consoling in 2013, missed the investor’s projection of 18 million units, only selling 13.5 million units.
The dire financial condition spurred Iwata to state in his interview with Bloomberg that Nintendo is considering how to utilize smart phone devices to improve its core gaming business. In the same interview, he stated that there is no simple way to port Mario games developed for Wii to smartphones.
The causes for Nintendo’s grim financial state are also external. Sony and Microsoft respectfully released PlayStation 4 and Xbox One in November 2013, which moved many holiday shoppers away from Wii U and other Nintendo consoles. While most of the Nintendo games are intended as family oriented, hard-core gamers were instead flocking to a new generation of gaming consoles. Another major factor is that most casual players are opting for smart phone games, which does not require them to carry an additional portable device. Delay in release for major games such as Pokemon Bank or Donkey Kong Country: Tropical Freeze, further exacerbated Nintendo’s business.
By denying the Nikkei report Nintendo does not expect to use smart phone to escape its current condition, at least for now. Many industry experts and fans have been clamoring for Nintendo to start porting its famous games and characters to smartphones in order to improve its financial condition and survive in the fiercely competitive market with two industry giants, Sony and Microsoft. By publicly denying a route to recovery through smartphones, Nintendo and Iwata intend to improve or change the company’s core business model through existing or already-planned products.
Developing games for Android and iOS would cannibalize a market for 3DS, which is still holding very strong for Nintendo. Abandoning hardware business and transitioning itself into software developer for PlayStation 4 and Xbox One is also dangerous because the company would then become less valuable as a whole. Many pundits point out when Sega turned from hardware manufacturing, after its failure in Dreamcast, and became a software developer it has become a marginal player in the gaming industry. In contrast, Nintendo still has gaming consoles selling well and undoubtedly a set of the best well-known gaming brands: Mario, Zelda, Pokemon, Donkey Kong, and more. Mario brand alone has been valued at $10 billion in 2010.
Currently Nintendo, with three straight years of losing money, is sitting with $8.3 billion in cash reserve so there is no immediate danger to the company, except with investors who receives dividends based on the company’s performance. Industry experts, according to Reuters, expect Nintendo, an extremely conservative company in technology industry, to move into cloud online service where users can share and play Nintendo hits without actually buying physical disks. By denying Nikkei report on a potential move to the smart phone market, Nintendo seems to be proving that these experts are correctly speculating.
By Jonathan JY Jung