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Nintendo Shares Fall 5-Yr Low After Wii U Revealed

- By - Source : Reuters

Nintendo's market shares dropped to pre-Wii levels after the reveal of its upcoming Wii U console at E3 2011.

In previous reports we revealed that the gaming industry is currently walking on uncertain ground – uncertain because the expected next phase didn't take place as planned thanks to the release of Apple's iPhone and the introduction of apps. Gamers discovered that cheap, bite-sized games can be just as enjoyable, and then began to flock around free social games like FarmVille which don't require a hefty purchase, outrageous hardware requirements or installation on the local drive.

So for a while developers and publishers have wondered "what's the next phase?" Even recently The Sims creator Will Wright admitted that it's foolish to develop a game longer than a year because the "rate of change is increasing almost exponentially." There have even been fears of another gaming market crash if another round of consoles doesn't appear or if the industry doesn't shift over to socialization and monetization.

But as seen on Tuesday, Nintendo wants to serve up another round of consoles. And why not? That's been its gig since the late 1970s. Gaming executives are now reportedly banking on the Wii U's success to reignite the $65 billion video games industry that has steadily declined in profit over the last few years, leading some to speculate an eventual crash. Wedbush analyst Michael Pachter even thinks Nintendo is now ahead of the curve for once, revealing that its upcoming platform – consisting of a base HD-capable console and a unique controller with a built-in screen – can do gaming better than the iPad 2.

Unfortunately, Nintendo investors seemingly don't agree with the idea, as market shares suddenly dropped to a five-year low after the company revealed the new console during the show. The Wii U is aiming to win back the hardcore gamers it lost with the previous family-oriented Wii machine. Investors are worried that Nintendo is putting too much focus on hardware and ignoring the industry shift over to social networking.

"Although some experts seem to like the new device, I expected Nintendo to move more into the social networking business," said Mitsuo Shimizu, deputy general manager at Cosmo Securities in Tokyo. "It's a warning from investors that the company should reconsider its business strategy and move more aggressively into social gaming operations."

Reuters reports that Nintendo shares closed down 5.7-percent in Japan on Wednesday, reaching low levels not seen since before the launch of the original Wii in late 2006. But Nintendo seems stuck to its guns in addressing the hardcore gaming audience this time around despite complaints of a lack of social networking features by critics and the press.

"It's not that we're negative about the network, but if we ignore those customers who don't link their game consoles up to the Internet, that goes against our strategy of expanding the games market," Nintendo's president Satoru Iwata told reporters in a roundtable. "We are just trying not to shrink our own market." He also pointed out that the company's hit games had always been social.

The Nintendo Wii U is currently still in development, and is not slated to hit the market until sometime between April and December 2012. Sony's handheld PlayStation Vita, on the other hand, is slated to arrive this holiday season sporting PlayStation 3 graphics and 3G connectivity.

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Anonymous 06/09/2011 2:46 AM
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In 5 years Facebook will be nothing and the big N will still be printing money.

Anonymous 06/09/2011 2:55 AM
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Okay, this is a bit strange. I think this is the first time I have ever hear of Nintendo being accused of paying too much attention to hardware. They are typically wanting in this category. Futhermore, whats this about Nintendo going after "hard core gamers"? You have to water down the definition of "hard core gamers" quite a bit to say that anyone who has ever touched a Wii is a hard core gamer. I feel like I'm in the twilight zone.

internetlad 06/09/2011 2:56 AM
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Fuck these "industry analysts", i'm going to blow 500 bucks for the machine and 2 controllers just to spite them. . . i'm behind you big N.

Anonymous 06/09/2011 2:56 AM
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wii u is sega sreamcast 2 ? screen in a joystick

Anonymous 06/09/2011 2:58 AM
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"It's not that we're negative about the network, but if we ignore those customers who don't link their game consoles up to the Internet, that goes against our strategy of expanding the games market," , This one quote makes me happy, (I don't connect my games to the internet)

greeve 06/09/2011 3:06 AM
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Kudos to Nintendo. If i wanted to play f*cking Farmville and other social media horse crap I'd just use my phone. There is still a market for people who want to play real games and invest more then 5 minutes a day doing crap.

killerclick 06/09/2011 3:24 AM
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So the gaming industry will be destroyed by women playing Farmville and angry birds. That's also why there are no new consoles and why every PC game looks like it was made five years ago.

PCGOD 06/09/2011 3:29 AM
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ah yes, another "facebook gaming is the future" article. these always give me a good chuckle. "why would someone play teh xbox when i can plays my farmville for free? durdurdurhduuurh"

Anonymous 06/09/2011 3:34 AM
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I am sooooooooooooooooo sick of hearing about how facebook is changing the world. ITS SO STUPID. GET OVER IT.

rottingsheep 06/09/2011 3:36 AM
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ZEPd3Z 06/09/2011 3:37 AM
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These "industry analysts" could be intentionally driving share prices down and will be buying shares when it hits bottom and cash in when wii u becomes a hit, so does this mean Buy Nintendo shares while its down?

alidan 06/09/2011 3:38 AM
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paragraph one : GAMERS dont give a flying @$%@ about iphone "bire sized" games, as almost all of them are crap shovel ware, worse than most wii games. and no self respecting gamer plays farmville, only the casual cancer than ruins gaming (they buy the crap no one else would buy, creating a market that no gamer wants.

paragraph two : the only gameing marke crash that could happen is nintendo, because they got the casual crowd and the quality of 97% of the games is abysmal, where even the worst 360 game is better than most wii games. and will write hasnt been relevant to gaming in years (left the hard core for causal cashins) his opinion means nothing.

paragraph 3 : what, the wii cant sell to everyone because everyone has the damn thing already, of coarse the sales will go down when EVERYONE HAS ONE.

paragraph 4 : those inverters can die for all i care, the last thing i want is the wii to become a facebook hub. the wii, finally came to where everyone else has been for years and is giving us something new.

paragraph 5 : why do we care about his opinion? someone tell me this.

paragraph 6 : so... they lost less than 6% of investers... lets assume that it will hit 10% does nintendo need this 10% or would they want to print money again?

paragraph 7 : and very casual, with some core games mixed in the bunch.

gto127 06/09/2011 3:45 AM
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I'm buying Nintendo shares tomorrow if they are still at a 5 year low. What were these industry experts expecting-- a 3d hologram system? Nintendo has been in business for over 100 years & very rarely loses money.

alidan 06/09/2011 3:45 AM
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Anonymous 06/09/2011 3:51 AM
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Industry folk are lame. Do they really know gamers? There is a whole spectrum of gamers. There's the casual gamer, the inbetween, and the hardcore gamer. Im personally not attracted to this new nintendo machine, but if a few games come out for it that I find attractive to my taste, I would buy it. No attractive games on it, then I wont be buying it. I don't give a #&* about socializing on my game system. Thats what my PC and phone are for.

Anonymous 06/09/2011 4:17 AM
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When I saw the reveal I wasn't really psyched at all, I was pretty indifferent.

Like others have said, this article makes me want to buy one just to spite them. I'm absolutely sick and tired of social networking and I quite frankly can't wait for it to just all die off already.

Same goes for the 3D fad.

gmarsack 06/09/2011 4:18 AM
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I dropped FB like a bad habit. I'm hoping others do the same. Ugg... social networking.. When will the fad die out so we can all get back to enjoying our good old consoles again? I'm behind you on this one Nintendo. Game on!

Anonymous 06/09/2011 4:39 AM
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I work in film, not games, but I follow my peers in game production very closely and am an avid gamer. It seems to me that the gaming industry will never be saved by a new console. The problem with the industry is threefold:

1) Corporate, intellectual property-driven development and industry-following practices which recycle "proven" games into sequel after sequel, stifles true market innovation. This strategy, most often pushed by publishing company executives and not by game developers themselves, retreads tired ideas with so-called "innovative gameplay" that emphasizes a new effect or gimmick. Film houses which capitalize on action concepts fell into this trap in the 1990s after a long run begun in the 80s which became increasingly over the top and ridiculous with advances in special effects. Games are being sent out that are more or less the same experience with a slightly more robust hardware requirement, not unlike the increasing reliance of the action film on special effects over acting and story which eventually choked the market. Until player experience is cultivated as carefully as branding without prioritizing gloss over substance, the games industry will continue to suffer hit-driven peaks followed by extended falloff. Developers, not gamers, are ultimately responsible for the drive towards steeper hardware requirements.

2) Licensing and distribution fees, as well as the industry's failure to amortize development costs, build in high, non-value-added product markups. While developers obviously recognize that the mainstream market does not pay $60-$70 for a game - only the devoted hardcore will pay this much for the experience - it has responded by throwing shovelware at the remainder of the market instead of leveling costs across the board. If the movie industry followed this model, hit movies would cost $25-30 per ticket for their first year in release, while the core of the moviegoing public would be paying $3-5 to see movies now put out straight to DVD. The mainstream market would stay small and only the largest hit titles would ever make enough money to reduce ticket prices low enough to draw a mainstream audience.

3) Game industry software development practices lack discipline and have lagged far behind their more practical industry counterparts. Superficially imposing executives with MBAs to shoehorn corporate milestones over a creative team can only work on occasion. Until the games industry internally comes to grips with a culture that emphasizes rogue development paired with marathon programming and development sessions to meet deadlines rather than using sound processes to make the whole course of development (and the workplace) more stable and predictable, it will continually bleed money out to abortive projects which increase costs across the board. Creative teams in the games industry need to take notes from the film industry's best practices and closely examine the parallel excesses of its worst.

AndrewMD 06/09/2011 4:45 AM
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Until the system is released to the public, there is no way to know how the public will react to it. From an annoucment point of view, I think this system is more gimmick than serious gaming system. Also, how will they attempt to integrate the system into the whole entertainment segment which includes apps like Netflix or Live TV? Considering that Nintendo went through the process of using similar processor and graphics that Microsoft is currently using, it would probably benefit them to see if they can get 360 games to work on their console.

I currently see two major failures for Nintendo at this point in time. 3DS and this new Wii U

ikyung 06/09/2011 5:16 AM
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If Nintendo crumbles, the entire gaming industry will crash. Doesn't matter if you hate Nintendo or not, they are the ones that have been pioneering the gaming industry for the past 3 decades. The only reason gaming has got to where it is at now is because Nintendo has been the one pushing it forward. "Gamers" didn't recognize cheap bite-sized games can be enjoyable. I have not seen one person who calls themselves gamers say "OMG! These cheap 2 dollar applications on my iphone is just as good as my PS3 and Xbox games!"

The gaming industry has been growing in sheer numbers. It will continue to do so. Why? Because gaming EVOLVES. It isn't a fad. It isn't "new". It continues to evolve as society evolves which in turn will ALWAYS have a huge market.

Anonymous 06/09/2011 5:16 AM
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Will Wright is just saying that cause they can't produce great games anymore.
There stuck in a methodology of releasing crappy games, and patching them yearly with expansions.

Lots of developers will still make 2-3 year production cycles.

Look at iD and Bethesda, their making great games in Rage, Doom 4, Skyrim, and soon Fallout 4.

Gamers have just adapted to know when they are getting ripped off...theirs too many subpar crap out right now that only the elite will survive.

eddieroolz 06/09/2011 5:59 AM
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I can understand why Nintendo shares fell. Wii U simply isn't as exciting - or innovative - as the NGP, or PS Vita. The Wii U doesn't make me want to go out and try out a console/handheld. The PS Vita does.

I think the share prices dropping had more to do with the potentially disruptive nature of PS Vita on the handheld console market, which has pretty much been dominated by Nintendo so far.

smeker 06/09/2011 6:53 AM
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Because it's a cheap piece of crap, with 5 year old tech:)

guardianangel42 06/09/2011 7:36 AM
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smeker :
Because it's a cheap piece of crap, with 5 year old tech



I actually noticed that. Though specs aren't... specific at this point the Wii U doesn't appear to be doing anything that the Xbox or especially the PS3 can't do right now. I saw an article that said that the Wii U would have a 3.2 ghz IBM based CPU. Both the Xbox and PS3 also have 3.2ghz IBM based CPUs, with the Cell obviously winning from a strictly horsepower standpoint.

The Wii U looks like an answer to the Xbox 360 and PS3 when those two consoles are on their last legs. In two years time at most both MS and Sony will have released their new, more powerful consoles and the Wii U will be stuck with crap hardware, again left behind.

If anything, that seems like a legitimate reason for investors to sell their stock.

law shay 06/09/2011 7:45 AM
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Well, the investors lack vision (well, that's why they are investors not inventors)

That screen in the joystick is for what ? Social networking of course. Let's say you are playing a racing game (mario kart or Need for Speed doesn't matter). Taunts and chit-chats across players would appear (even video chat) on that screen. Most of the time, the screen is for your ammo, amour and other stats that uses up split screen in family playing. This is not new but this is awesome.

I'm sure Microsoft and Sony would follow too.

Investors, when stupid Apple say domino or other card game playing using a (central) iPad and an iPod for each player, you cheers ! Now, it is the same concept but you sell your stocks. What a shame.

Anonymous 06/09/2011 11:00 AM
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This is just the same story with the Wii all over again. Nintendo stocks dropped 5 years ago after the announcement of the Wii, only to guess what! Rise in geometrical proportions a month or two before the release date. Social Networking is HUGE right now, and developers, as well as analysts know this, but how is anyone to make money from expensive stocks? The price drops low, rich companies buy it, and become richer from profit, the end. Yes, the WiiU hardware is about 4 years old, BUT just how long do you think the xbox360 and ps3 lifespan is? If you look anywhere online, sony and microsoft both gave their systems a 9-10 year lifespan, and unless they take some losses to throw a new home console out there in 2 years (which is what brought down Sega in the first place), all three systems will die out at approximately the same time. Also, movies and games are different, they don't only immerse you (because last time I checked, it has to be an AWESOME movie to keep you glued to the screen) but they grow up with you. Developers don't stick to same things over and over again, unlike action movies, where you're doing something, someone kills your wife/family/friend/lover/dog/cat, and you have to take revenge, see explosions, drive a tank, all while meeting chicks in bikinis, they adapt to the market, attract the consumer based on their tastes. And to tell you the truth, games and movies are becoming one. Why do you think the ps2 was so successful? Because it was the first system where games which had immersive story, music, and experiences which closed the gap between a game and your imagination, which was the main reason why the gamecube was such a failure, nevertheless what happened when Resident Evil 4 came out on it? Let's make a note here, huge success. This was continued later, and not only with amazing games like uncharted, fallout, kingdom hearts, final fantasy, and hundreds of others, but with the fact that it isn't the video game industry falling behind the movies, it's the actual movie industry FEEDING off the game industry with their ideas. Every year we see a new movie come out based on a game, just because that particular game had the idea first, only to become mainstream blockbusters i.e resident evil. So in the end, Nintendo will always be there as a gaming giant, will always innovate and lead the industry, and its stocks, as well as other competing company stock, will always be bought in advance to release, the video game industry will never die, because video games are our own likes, dislikes, and creativity, they are the technology we develop and code to keep us entertained, and unless you prefer a cigarette, drugs, and alcohol as your entertainment, there will always be a need for a console, as well as its software, in your home.

kartu 06/09/2011 12:04 PM
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Yet another shameless Crapple ad.
Go check game sales figures. Then get back and apologize. If you have shame, that is.

jfby 06/09/2011 1:41 PM
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I'm losing faith in these writers; the games today are too expensive and don't offer enough new, innovative content; the people playing Farmville and Fishfarm or whatever aren't the ones who play games like Bad Company 2 or what have you.

Game developers need to bring innovative titles to market instead of rehashing the same old game over and over and over again. I'm not saying that free/cheap 'mini' games aren't the future, but I can say that it won't be because everyone now playing the 'hardcore' games migrated but because they didn't want to keep spending more money for the same game. They'll still be playing 4, 5, 6+ year old games hoping for the developers to release good games again.

Anonymous 06/09/2011 3:14 PM
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worth noting, most stocks rise on anticipation, fall after the event, i.e. look at APPL's price pre/post WWDC in past years. This degree of decline, though may be a bit more.

I think what investors/analysts are realizing is that the female market is a HUGE untapped female/casual demographic that Angry Birds/FB etc are tapping into which could upset the young male console hegemony. Personally though I don't care, as a guy I want both this and a 'vita'.

nexus9113 06/09/2011 4:28 PM
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This article seems extremely pessimistic.

People expecting something extremely revolutionary in graphics terms, it's gonna be a while yet. Even the latest Unreal Engine tech demo wasn't what you would call an entirely next gen engine. Epic admitted that, they said it was more like Unreal Engine 3.8-3.9. We've hit a glass ceiling at the moment with graphics. Poly counts haven't dramatically increased in a long time, instead shaders and texture fidelity has been the focus, and now animations are coming into play. Tesselation is just beginning to come out, so we have a while to see any real fruits from that beyond a few games implementing it as just a side feature.

If you watch any of the Nintendo press conference videos on the Wii U it is a very impressive product. Analysts saying "Where's the social aspect?" have no vision, as the vid's showed video chat, interactivity between the tablet and TV showing that you can literally throw videos and movies up onto the big screen to share, that the console can access the net, and that multiscreen gaming can bring more people in the house to the same console to play.

Third party support is going to be the biggest deal with this console, as just about every major publisher has pledged support (Darksiders 2 as a launch title, Batman: AC, Aliens: CM, BF3, etc), and that was what the Wii did not have (UBI and EA don't count as they were responsible for the majority of the shovelware).

I say wait to see what Nintendo's plan for online service is though, as mum's been the word so far. But after seeing the abysmal failure of the current Wii's service and the backlash from it, they would be stupid not to implement a full featured network akin to Live or PSN. Not stupid friend codes.

I say to just ignore the majority of analysts as all they do is count beans, and aren't actually involved in the gaming industry besides swapping stocks.

hok 06/09/2011 4:29 PM
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Sony's stupid antics didn't help the industry... Other OS biatches...