posted by Thom Holwerda on Fri 30th Oct 2009 17:04 UTC
IconThanks to the massive success of the Wii and DS game consoles, Nintendo was able to turn the tide and once again become the number one game company in the world. As with any honeymoon, however, it must come to an end at some point. Nintendo reported its financial results for the first half of 2009 yesterday, and it didn't look good.

The Wii was a massive gamble. Sony and Microsoft were busy trying to one-up themselves by producing ever more powerful hardware, without really trying to do something truly innovative in the game console space. Nintendo, on the other hand, tried something completely new, and designed its Wii console entirely around motion control.

This paid off big time for the Japanese company. The Wii was able to tap into a resource neither Sony nor Microsoft could tap into: the casual gamer. The Wii became a massive hit among the casual gamer crowd, who ate the thing up like cake with strawberries and whipped cream.

It also had a darker side effect, an effect which did not reflect itself in Nintendo's stellar sales figures and financial results: Nintendo started to snub its hardcore fans. As soon as Nintendo realised it could earn a lot more money by focussing its efforts on the casual crowd, its hardcore fans were in trouble.

I used to be a hardcore Nintendo fan, just like one of my best friends. We were both very excited when the Wii was first announced, but I was already a bit sceptical when I heard all the specifications. Standing up all the time? Flailing your arms around like a lunatic? Is this something I want to do when I play games - an activity which I perform to unwind?

We were both disappointed by the Wii, and as hardcore Nintendo fans, this was a weird sensation. On the 'net, I heard more and more hardcore Nintendo fans airing similar concerns. While the Wii is a very nice piece of hardware, it just doesn't appeal to a lot of hardcore Nintendo fans. This feeling was only made worse by the fact that the motion control system just doesn't work very well. It's inaccurate, it doesn't register your motions very well.

As Ben "Yahtzee" Croshaw said many times, the Wii appeals to casual gamers and the gimmick crowd. However, they are like magpies - they will stick with the Wii until the next shiny object comes along. It's a dangerous affair to rely on those types of gamers, instead of the hardcore ones, which will buy whatever you put out as long as it doesn't kill bunnies. Yahtzee already wondered - what will happen when the novelty wears off? When people realise they play games to unwind, not to act like an "air traffic controller covered in beetles"?

Well, we now know what happens when the novelty wears off: Nintendo's profits and sales plummet. The company's profits in the first six months of 2009 dropped 52% compared to the same period in 2008 - from USD 1.59 billion to USD 709.3 million. In the US, the PlayStation 3 outsold the Wii for the first time last month, and the DS, too, is starting to see slower sales (it's still the best selling console in the US, but only by 32400 units).

Nintendo sold 5.75 million Wii units worldwide during the first six months of 2009, compared to more than 10 million units in the same period in 2008. That is a massive worldwide drop in sales, which certainly cannot be attributed solely to Sony's price cuts.

There are a few possible bright spots in Nintendo's future, though; the Wii has seen a price cut too recently, and is now stuck at the magical price point of 200 USD. This could increase sales, but history does not suggest a price cut will always lead to sales increase, nor does it say anything about the sustainability of such a possible sales increase. Another bright spot is the upcoming release of New Super Mario Bros. Wii - analysts suspect it will be the best selling game of the holiday season.

Then again, Sony and Microsoft have some decent games coming in or already released too - Left 4 Dead 2, Mass Effect 2, Uncharted 2: Among Thieves, Bioshock 2, Dragon Age: Origins, and so on.

Still, Nintendo won't reach the highs of the past few years any more. Let's not forget that despite these financial results, the company is still doing very, very well - just not amazingly out-of-this-world stellar any more.

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