Nintendo Shares Take A Hit After Wii U Announcement

Since Nintendo unveiled its next home console, shares in the company have fallen to a 5 year all-time low. Yesterday saw a decline of 5.7%, dropping a further 5.2% as of midday, today. The new platform, dubbed the Wii U, is Nintendo’s first HD console, allowing consumers to play either through their television sets or via the new controller which harbours a built-in touch screen. Chief fund manager of Ichiyoshi Investment Management, Mitsushige Akino, explains:

The product itself is not bad–market expectations had been far too high… it is also a reflection of structural issues caused by a transformation within the market.

The main reason for concern as to how well the Wii U will sell is Nintendo’s target audience. The original Wii was seen as a totally unique experience, using motion controls to open a gateway for non-gamers whilst pressing first party titles to keep the Nintendo core happy. However, this time around not only is the Wii U playing host to multiplatform versions of big-name upcoming titles (Assassin’s Creed, Dirt, and Batman to name a few,) but it’s also employing innovative technology via a tablet-style device, which has been compared to the iPad and similar products. We suspect that investors are cautious of Nintendo trying to reach out and satisfy nearly all gaming-related consumer groups where other competitors are already dominating (Apple with the tablet market, Sony and Microsoft with online/hardcore console gaming,) and though the company may well achieve that goal, for now it seems unlikely.

Source: Wall Street Journal

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17 Comments

  1. You’ve hit the nail on the head with the last paragraph.

  2. My gut feeling is that this is a reaction to the announcement of old hardware’s obsolescence rather than a lack of faith in the new hardware announced.
    Shareholders realise that the 3DS has had a less than exciting start and now the Wii will lose all profitability because nobody want to buy a console already replaced. So, from a purely speculative, business-minded viewpoint, Nintendo aren’t as bankable as they have been. I’d sell stock too, if I had any. But I’d buy it all back up again a couple of months before release.
    Give it six months after the thing is finished and the marketing drive has had a “holiday period” under its belt.
    Basically, and it’s almost becoming a cliché at this point, you’d be a fool to bet against Nintendo.

    • “you’d be a fool to bet against Nintendo” Absolutely. The Ninty guys know what they are doing and once those great 3DS exclusives start making it to shelves and people get to try out the WiiU for themselves I think things will pick up again

    • Nintendo are in a somewhat blank year. As you say the 3DS wasn’t the best start, the Vita has had a very positive reception as its main rival, and the WiiU is still almost a year away (if not 18 months) whilst the Wii’s sales have already been on the down for the last year or so.

      The smartest investor would have sold before the conference, as this kind of dip will always happen during a product reveal, and then pick up again afterwards.

      Long term, things look like they might be bright, but short term, 2011 is far from being Nintendo’s crowning glory.

    • I see where you’re coming from, though I guess that Nintendo’s bread and butter (the families) will still continue to buy Wiis even after the Wii U launches, especially with the recent price drops.

    • Maybe you would, but this time is different. The Wii offered a unique experience that was accessible to everyone, even people who don’t play games were buying Wii’s for nights when friends came round, we have one in our Living room even though it hasn’t been switched on since Christmas with by brother having moved on to a 360. The WiiU is coming to the party far too late, it’s lost its key audience in becoming more power and less gimmic orientated and not catching the hard core because they’ll already have a 360 or PS3, which is the weight at which the WiiU seems to be punching. The rumoured price of the WiiU is £400, why would you plump for that when you can get a 360 or a PS3 for less than £250? Only people that want the first party games I imagine. People are saying it would be foolish to bet against Ninty now, but I remember people saying that about Sony 5 years ago, they’re not anymore. I have a sneaking suspicion the same fate may befall Nintendo here.

      • As you say, price will certainly be a big factor to its success (now whos pretending to be Pachter? hehe). Given the device isn’t going to have a hard drive, etc you never know they may manage to keep the price down, or just accept quite a loss on each console, knowing that people will need to buy the various pricey accessories and games in future.

      • I wouldn’t call it so much pretending to be Pachter as common sense, people aren’t going to pay 400 quid (if that is indeed the price) for a console with no HDD and a controller that will be pricey if you want a 2nd one, that only does the same thing as another console you can get for up to £300 cheaper if you box clever.

      • Sorry, unless I missed something:
        Pachter = common sense
        :)

      • You missed something… Joking, sort of.

      • Spot on Jayjay, I (and I speak for my 10 year old son here as well) have absolutely no interest in this product at all (current PS3 users). It appears to offer no more than the PS3 (in fact less) and only offers some kind of tablet, which is a space filled by other offerings right now. On the other hand what may pique my Ninty interest is some cut price Wii’s and peripherals – cleverly by keeping the peripherals compatible ninty will be able to keep charging high prices on those.

    • Once upon a time, I wouldn’t have bet against SEGA, thankfully I’m not an anal~yst.

  3. Meh, investors. Not sure what to say on this one, apart from that I don’t think Nintendo are capable or reaching to all audiences when the Xbox 360 and PS3 are much more well designed to suit the ‘core’ audience and when Nintendo can’t design hardware and software very well to suit their needs.

  4. The name could also be an issue with marketing it at the casual audience. It sounds as if it is simply a new model of the Wii rather than a new console so some people may be put off buying a system which they “already have”.

  5. I don’t see it as a reflection of the old hardware or the new hardware coming in but a combination of the two (and associated comparisons). This transitive period helps Nintendo gauge public reaction and realise where they need to apply themselves.

    For me, this reaction is a good indicator of the entire industry settling on a “remains to be convinced of even the basic hardware being the right choice” as the games support will probably be supremely strong in the long-run.

  6. This console offers nothing the current gen doesn’t already do bar streaming a game to a tablet.

    And you can bet your bottom dollar it will be proliferated with ports of game of already own with tacked on tablet features which really don’t enhance the game play all the much.

    Innovation for the sake of innovation, isn’t really innovation.

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