The company sold only 3.45 million of the Wii U video game consoles during the first quarter, badly missing its own target of 4 million. The hand-held 3DS gaming device has also been a disappointment outside of Japan.
Making matters worse, Nintendo's solution to the problem is a head-scratcher: CEO Satoru Iwata last week announced his support for in-game transactions and subscription-based payment models.
As secondary concepts these are fine, but if Nintendo thinks this is what gamers really want from a modern console, it has lost touch with reality.
For decades now, it has been this type of thinking that has plagued Nintendo: The company is cognizant of the latest trends and shifts in gaming, but it chooses to disregard them in the name of simplicity, or family-friendly gaming. Instead, Nintendo frequently opts to develop its own warped, counterintuitive take on the latest trends.
Since the launch of the Gamecube in 2001, Nintendo has shied away from online gaming and entertainment-based features that were popular on rival consoles, such as the Microsoft (Fortune 500) Xbox or , Sony ( PlayStation. When it did finally offer some of these features, they were often half-baked (see: )Nintendo's "Wi-Fi Connection" online gaming service). Others were largely unavailable to the masses (see the Panasonic Q, the Gamecube with the DVD player that only came out in Japan).
Sometimes Nintendo's push to be different has paid off, most notably when it released the paradigm-shifting Wii console. But the negative effects of that tendency have never been so evident as now, with the sluggish sales of its latest console, the Wii U.
With Microsoft and Sony turning the gaming console into full-blown living room computers, Nintendo is being dragged along, kicking and screaming, refusing to fully acknowledge times have changed.
The Wii U was Nintendo's attempt to expand on its innovative gameplay ideas. But the impact hasn't been nearly the same as the Wii. Some new Wii U features, like the touchscreen-equipped controller feel convoluted, and less innovative compared to technologies like Microsoft's Kinect camera. Nintendo games that actually take proper advantage of the motion gaming tech aren't coming from third-party developers, and Nintendo's own titles -- which are excellent more often than not -- aren't coming anytime soon.
Nintendo figurehead Shigeru Miyamoto has told the world to be patient for more games to come out, but this time around, simply pumping out its usual top notch games won't be enough.
Yes, the Wii U has improved upon its online gaming service, and given its console more content and features which integrate with your TV. The company said last week it will focus more on what it can do with digital distribution of Wii U games. That's a good thing -- even if Nintendo is five years behind. But the company still is treating that as an added bonus, and not a pillar of its business strategy.
And considering that Nintendo has long said that it cares more about game play than graphics, it seems strange that it hasn't put more time and effort into building out its WiiWare platform for indie developers looking to put out original titles. WiiWare started out promisingly enough in 2008, as the initial home to titles such as World of Goo and Mega Man 9, but since then it has mostly devolved into a den of cheap and generic mini-games. Since 2012, less than 25 titles have seen release through the platform.
Then there's the elephant in the room that nobody wants to acknowledge: smartphone gaming. Nintendo is adamant that it won't release its games for smartphones, despite the fact that they'd likely be instant top sellers.
It's understandable that Nintendo wouldn't want to release some of its newer games on a competing mobile platform, for fear of cannibalization, but looking at the success that companies like Square Enix have had reissuing its Final Fantasy titles on the iPhone, what real harm is there in offering games like Super Mario Brothers? Nobody is going to buy a Nintendo 3DS just to download that from the eStore.
Since the days of the Nintendo 64, it's always been pretty easy to see when, where and why Nintendo was going to stumble as a company. And more often than not, it was because of their own stubborn thinking. The buildup of their past oversights has added up and left them lagging far behind their peers in present times.
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