Why is it wrong to say that Nintendo is Doomed?

In very much the same way that many analysts are fond to declare the early death of video game consoles, Nintendo is a popular target in the blogosphere across different interests, whether its gaming bloggers, Apple bloggers, or just general technology bloggers. As of right now, the Wii U's poor performance in the last six months has been cannon fodder for these critics. They claim Nintendo's first party games won't be able to save it, and that they have to cut the price of the console to compete, but even then it may already be too late. Many state that Nintendo is just behind the times overall, and that their core market has already been swallowed up by competitors, either by other consoles or smartphones and tablets.

Truth be told, Nintendo gives many reasons for analysts to be skeptical. In spite of their illuminatory regular Nintendo Directs and Iwata Asks interviews, Nintendo remains a very secretive company, with many choices and statements defying conventional thinking and constantly baffling peers and observers.

However, at the same time, Nintendo has consistently proven their longevity and ability to endure through good and bad times. Looking at its console history, they have made it a point not to sell any console at a loss, ensuring each unit sold would net them a profit. This policy was upended briefly when the 3DS took a severe $ 50 price cut, but in a year the costs of manufacturing had gone down to the point that they were able to release a new model.

In recent years, Nintendo has lifted the veil and explained the philosophies behind their choices. The two most important concepts that have served them well especially in recent years were those of the Blue Ocean strategy and Lateral Thinking with Withered Technology. The design philosophy of Lateral Thinking with Withered Technology is often attributed to legendary video game designer Gunpei Yokoi. Along with Shigeru Miyamoto and others, he helped form Nintendo's early and most successful years, inventing the Game and Watch, the Game Boy, and coproducing games like Donkey Kong, Mario Bros., Metroid and Kid Icarus.

Yokoi's idea of Lateral Thinking was borne of his earlier years at Nintendo. Before he made video games for them, he made toys such as the Ultra Hand, Ten Billion Barrel Prize, and the Love Tester. He considered games to be similar to toys, and as such, argued that they do not necessarily have to be equipped with the most cutting edge technology. What is most important is to keep gameplay itself fun and interesting. Yokoi goes further and asserts that forcing the latest technology on a game can get in the way of making a good game itself.

Nintendo Co. Ltd. President and CEO Satoru Iwata has revealed that Lateral Thinking remains a central design philosophy in Nintendo. It was with this mindset that Nintendo conceived of the Nintendo DS and the Wii, in the same way that they did this with the Game Boy and Super NES. Whereas the DS was technically inferior to the Playstation Portable and the Wii was not that much of a step above the GameCube, both introduced novel new control schemes that encouraged creativity in making new video game experiences. For the Nintendo DS, this was the use of a touch screen (occasionally augmented with a microphone.) For the Wii, it was the use of motion controls with the WiiMote and its many companion controllers and accessories (Wii Balance Board, Nunchuk, Wii Wheel.)

There was another philosophy that helped make the Wii a success, and this was the Blue Ocean strategy. In brief, the Blue Ocean strategy posits that competing for the same market with fierce competitors over and extended period of time and targeting high performance is incompatible. To make new inroads and create new markets, companies need to seek out the blue oceans, or research where untapped interest in their products and services reside, and targeting them. The assumption is that the investment will be worthwhile as said company corners said new market.

The way this played out in the 7th generation of consoles, the Playstation 3 and Xbox 360 fought to win over hardcore gamers, picking sides between them (and to a certain extent, the PC). Marketing fostered a loyal, exclusionary culture that had Sony and Microsoft fans at each other's throats. In truth, of course, gamers did not really have to pick one over the other, but by igniting passions in this way both companies sought to dominate the industry. On the other hand, the Wii sidestepped this battle completely, to the confusion of many in the industry. Many of the same hardcore gamers, as well as analysts and industry insiders, disavowed Nintendo and the Wii. What those people failed to see, however, was that Nintendo's marketing and culture targeted a different market entirely. With the Wii, Nintendo sought to bring gaming back to the mainstream, expanding the range of consumers to kids, women, and even older adults. Nintendo's philosophy won out, making the Wii the most successful game console, not only of its generation, but of all time.

To a certain degree, Nintendo's success with the Wii has now come back to haunt them. Many hardcore gamers are still of the mindset of rejecting their consoles and games. More predominantly, it's being argued that Nintendo's successful philosophies are being upended by new ones coming from challengers in the mobile space, such as Apple, Samsung and Android. However, Nintendo can afford to dismiss the naysayers, and they can even afford to fail with the Wii U. Thanks to the Wii (and often uncredited, the DS), Nintendo has accumulated a warchest of cash that will ensure it will not go out of business immediately.

In stark contrast, Sony and Microsoft's investments in the Playstation and Xbox brands have been very costly, especially in the past ten years. It's believed that Microsoft simply bleeds money with each console sold just to tie owners into XBLA, and in spite of their investments in Bing, Surface, Windows 8, Office, etc, most of their businesses aren't making them any money at all, save their cloud based services in Azure. Similarly, Sony has been notoriously unprofitable for over a decade, a spell recently broken thanks to sudden good fortunes with the weak yen in the market, as well as the sale of two of their buildings. Sony's immediate future is uncertain, as activist investor Dan Loeb knocks at their door to force the company to spinoff their business.

Nintendo does not have the problems Sony and Microsoft have, and even now are actively seeking out new opportunities and paradigms to leverage the success they have had with the 3DS to make their currently struggling home console, the Wii U, a success as well. Far from being doomed, Nintendo is seriously underrated. Although its current market strategies create much skepticism and make their stocks unviable, in its core business Nintendo is still very much in the race, and possibly even hiding its position of power.

Written By: Ryan P., Philippines (A Gamer)

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Edited by: Rajesh Bihani ( Find me on Google+ )

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