Nintendo struggle to compete with smart device gaming

Posted on January 29, 2012

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written for the New Statesman – words by Robert Pollard

Japanese game makers announce sharp drop in quarterly profits amid emergence of new gaming platforms.

After a sharp decline in quarterly profits, Nintendo are now forecasting a loss of £370m over the next 12 months.

It is thought that the company’s traditional videogame approach has been severely damaged by internet-based games and smartphone devices, which continue to increase in popularity.

“To say that [the days of consoles] are over is likely an overstatement, but social-network and internet-delivered games are growing and structurally changing the future of the industry, which is a strong wind against Nintendo,” said Shigeo Sugawara, senior investment manager at asset managers Sompo Japan Nipponkoa.

Nintendo were responsible for the creation of the Super Mario franchise, a dominant brand in the videogame sector for many years. More recently they created the Nintendo DS and the Wii games console but the versatility of smartphone and tablet devices appears to be having a severe effect on their sales.

The chief fund manager at Ichiyoshi Investment Management in Tokyo, Mitsushige Akino, believes that their era of dominance may be coming to a close. “Their time of growth [from consoles] is over, and, while I don’t think the company will cease to exist, if they don’t move into new categories, they will no doubt lose the great scale they’ve amassed,” he said.

Nintendo have plans to launch the successor to the Wii in Japan, Europe, Australia and the US at the end of 2012, however, some analysts believe that they will struggle to generate the same level of excitement they managed with previous releases. It seems Nintendo must now adapt to the changing world of video gaming, with large companies such as Google TV looking to enter the market.

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Posted in: Business