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Nintendo Considering "New Business Structure"

Wii U has continued to underperform, and it's causing internal reflection at the company.

It's been a rough day for Nintendo. We don't usually post financial news on Giant Bomb, but this is big.

Nintendo is forecasting a $250 million loss for the current fiscal year, ending March 31, and has slashed its sales forecasts for Wii U from nine million to 2.8 million.

This news was followed by a press conference with Nintendo president Satoru Iwata, which was attended by Bloomberg. At the event, Iwata provided a potentially revealing quote about Nintendo's future:

"We are thinking about a new business structure,” he said. “Given the expansion of smart devices, we are naturally studying how smart devices can be used to grow the game-player business. It’s not as simple as enabling Mario to move on a smartphone.”

Iwata is not expected to step down from his position as Nintendo's leader.

Nintendo could be a very different company a year from now. But how? We'll have to see.

Patrick Klepek on Google+
332 Comments
Edited by thatdutchguy

The 3DS is the only good thing Nintendo created in the last 10 years.

The Wii and Wii U sucked.... i don't really feel bad for them, New super mario bros Y'all. WAH WAH , ugh.

Edited by MrPlatitude

@patrickklepek said:

@budwyzer said:

Nintendo should just go the way of Sega and just make games for other platforms.

Look how well that worked out for Sega!

To be fair, Patrick, the level of competency of developers at Nintendo is a bit higher than it is at Sega, and they've managed to grow with the times.

It's not a completely invalid argument, but there's no way that Nintendo would bow out behind the behemoth that is the 3DS. [although its projections were slightly cut, according to NPD it was the highest selling piece of hardware this year] At least not yet.

Great point. Nintendo is a much better developer than Sega. I would love to play Super Mario 3D World, I'm confident they made a great game, but I don't think the Wii U is a great console and I'm not going to buy it to play one game. Now if I could play it on a Playstation...

Posted by PurpleSpandex

@patrickklepek: Nintendos' game quality is already starting to reflect the downfall of Sega. Sure there are a few great games coming out of them but overall, its not so hot.

Posted by clank543

Honestly, I just got the Wii U a couple weeks ago and am having a great time with it. I never had a wii, so I can play that catalog plus the 4 or 5 games that interest me on the wii U. Honestly, though, I'm not really sure what they need to do to make this console relevant. I don't think SSB is going to make THAT much of a difference and Mario Kart won't light the world on fire. Sony and Microsoft have already carved out their audiences and Nintendo just seems to be the red headed step child that has some incredible platformers, but that's about it.

Posted by Atwa

@atwa said:

I think people are way to dramatic about Nintendo's current situation. Yeah, the results were not good but coming off Wii and DS of course their predictions would be high. The 3DS is doing really well all things considered, the current situation of the Wii U just overshadows that. Nintendo will not go third party, not for a long time, they have so much money in their vault that they could go through years of commercial decline without being in trouble. Look at the 3DS, it started out terribly and doom was spelled out for it as well. Why wouldn't the Wii U be able to do the same? Surely if Nintendo stays dedicated and keeps releasing good games eventually it will pick up? Smash Bros, Mario Kart and Zelda are all big enough to push systems. I am kinda excited about the situation, as a Wii U AND 3DS owner, it might force Nintendo to try something completely new which I am all for. Despite being very satisfied with both systems.

I would be more worried about Sony, yeah the PS4 had a fantastic start but where are the games? Most are so far off so I wouldn't be surprised if that console starts falling off in terms of sales dramatically.

If Nintendo's War Chest had billions, then I would agree with you. But to a company that large, hundreds of millions isn't as much as it seems. You have to look at Net Cash on Hand, not just Assets. It's pretty easy to cook through a hundred million faster then most think. Especially posting losses like that. I'm not trying to be super doom and gloom, but with a steady stock sell-off, and a massive dip today, ready cash dries up faster as investors pull out.

Uh, their war chest does contain billions though?

Edited by alwaysbebombing

@atwa said:

@alwaysbebombing said:

@atwa said:

I think people are way to dramatic about Nintendo's current situation. Yeah, the results were not good but coming off Wii and DS of course their predictions would be high. The 3DS is doing really well all things considered, the current situation of the Wii U just overshadows that. Nintendo will not go third party, not for a long time, they have so much money in their vault that they could go through years of commercial decline without being in trouble. Look at the 3DS, it started out terribly and doom was spelled out for it as well. Why wouldn't the Wii U be able to do the same? Surely if Nintendo stays dedicated and keeps releasing good games eventually it will pick up? Smash Bros, Mario Kart and Zelda are all big enough to push systems. I am kinda excited about the situation, as a Wii U AND 3DS owner, it might force Nintendo to try something completely new which I am all for. Despite being very satisfied with both systems.

I would be more worried about Sony, yeah the PS4 had a fantastic start but where are the games? Most are so far off so I wouldn't be surprised if that console starts falling off in terms of sales dramatically.

If Nintendo's War Chest had billions, then I would agree with you. But to a company that large, hundreds of millions isn't as much as it seems. You have to look at Net Cash on Hand, not just Assets. It's pretty easy to cook through a hundred million faster then most think. Especially posting losses like that. I'm not trying to be super doom and gloom, but with a steady stock sell-off, and a massive dip today, ready cash dries up faster as investors pull out.

Uh, their war chest does contain billions though?

I believe in Assets and Stock Options it just, but I'm pretty sure actual liquid cash is much lower.

Edited by iAmJohn
@pj said:

@patrickklepek said:

@budwyzer said:

Nintendo should just go the way of Sega and just make games for other platforms.

Look how well that worked out for Sega!

They are still around. If they would have continued making hardware the company would be dead today. So yes, it did work out well.

And all it took was them spreading out their library to the point that very few of their games in the first few years of being third-party were successes, getting bought by a pachinko company, selling off their sports division to Take Two, bleeding the vast majority of the talent that made them successful in the first place, essentially pulling out of North America to run their entire western division out of the UK, restructuring their company to put serious focus on the European PC market... yeah you know what? I'm going with you weren't actually a Sega fan growing up, because otherwise you wouldn't be arguing that the Sega that exists today is in any way shape or form like the Sega that went third-party in 2001.

I'd say that's pretty relevant to this because Nintendo is a lot like that old Sega in having a very unique design philosophy that permeates their games. I'd have more faith in Nintendo to be able to keep that philosophy if they went third-party, but considering the problems that other such companies have had when doing so, you should definitely be afraid of Nintendo going third-party. Be very afraid.

Edited by Duncecap
@pete0r said:

In hindsight, giving Luigi his own year was a mistake.


Iwata's headstone.

Posted by Atwa

@atwa said:

@alwaysbebombing said:

@atwa said:

I think people are way to dramatic about Nintendo's current situation. Yeah, the results were not good but coming off Wii and DS of course their predictions would be high. The 3DS is doing really well all things considered, the current situation of the Wii U just overshadows that. Nintendo will not go third party, not for a long time, they have so much money in their vault that they could go through years of commercial decline without being in trouble. Look at the 3DS, it started out terribly and doom was spelled out for it as well. Why wouldn't the Wii U be able to do the same? Surely if Nintendo stays dedicated and keeps releasing good games eventually it will pick up? Smash Bros, Mario Kart and Zelda are all big enough to push systems. I am kinda excited about the situation, as a Wii U AND 3DS owner, it might force Nintendo to try something completely new which I am all for. Despite being very satisfied with both systems.

I would be more worried about Sony, yeah the PS4 had a fantastic start but where are the games? Most are so far off so I wouldn't be surprised if that console starts falling off in terms of sales dramatically.

If Nintendo's War Chest had billions, then I would agree with you. But to a company that large, hundreds of millions isn't as much as it seems. You have to look at Net Cash on Hand, not just Assets. It's pretty easy to cook through a hundred million faster then most think. Especially posting losses like that. I'm not trying to be super doom and gloom, but with a steady stock sell-off, and a massive dip today, ready cash dries up faster as investors pull out.

Uh, their war chest does contain billions though?

I believe in Assets and Stock Options it just, but I'm pretty sure actual liquid cash is much lower.

"Another price cut is a strong possibility for the Wii U if sales stay sluggish, said Sato, the Toyo Securities analyst. Nintendo has 460 billion yen in cash ($4.4 billion) and is prepared to survive a bad sales year or two, he said."

http://www.komonews.com/news/tech/Holidays-key-test-for-Nintendo-as-Wii-U-struggles-236570471.html

Edited by Illuminosopher

Funny to see people say Sega is doing well when all you here about is how crappy their games are, and to hear people say that Sega never really made good games I would like to see if that statement would actually hold up when they were holding their own when Nintendo was at it's peak.

What I'm saying is Nintendo is Batman and Sega is Robin and I will be damned if I'm gonna sit here and have people tell me Batman should be fucking Robin.

Posted by alwaysbebombing

@atwa said:

@alwaysbebombing said:

@atwa said:

@alwaysbebombing said:

@atwa said:

I think people are way to dramatic about Nintendo's current situation. Yeah, the results were not good but coming off Wii and DS of course their predictions would be high. The 3DS is doing really well all things considered, the current situation of the Wii U just overshadows that. Nintendo will not go third party, not for a long time, they have so much money in their vault that they could go through years of commercial decline without being in trouble. Look at the 3DS, it started out terribly and doom was spelled out for it as well. Why wouldn't the Wii U be able to do the same? Surely if Nintendo stays dedicated and keeps releasing good games eventually it will pick up? Smash Bros, Mario Kart and Zelda are all big enough to push systems. I am kinda excited about the situation, as a Wii U AND 3DS owner, it might force Nintendo to try something completely new which I am all for. Despite being very satisfied with both systems.

I would be more worried about Sony, yeah the PS4 had a fantastic start but where are the games? Most are so far off so I wouldn't be surprised if that console starts falling off in terms of sales dramatically.

If Nintendo's War Chest had billions, then I would agree with you. But to a company that large, hundreds of millions isn't as much as it seems. You have to look at Net Cash on Hand, not just Assets. It's pretty easy to cook through a hundred million faster then most think. Especially posting losses like that. I'm not trying to be super doom and gloom, but with a steady stock sell-off, and a massive dip today, ready cash dries up faster as investors pull out.

Uh, their war chest does contain billions though?

I believe in Assets and Stock Options it just, but I'm pretty sure actual liquid cash is much lower.

"Another price cut is a strong possibility for the Wii U if sales stay sluggish, said Sato, the Toyo Securities analyst. Nintendo has 460 billion yen in cash ($4.4 billion) and is prepared to survive a bad sales year or two, he said."

http://www.komonews.com/news/tech/Holidays-key-test-for-Nintendo-as-Wii-U-struggles-236570471.html

That's a way better outlook then what I had been reading them at.

Edited by Yesiamaduck

@huser: As a PC dev they have Football Manager and the Total War series doing gangbusters

Posted by Quarters

Ouch.

Posted by LarryDavis

@illuminosopher: Dick Grayson was a better Batman than Bruce Wayne. Much like I would expect if Nintendo went the third-party route, their games would be a hell of a lot better than Sega's.

Edited by CakeBomb

This is Nintendo's own doing.

Their obsession with having unconventional controls as default (instead of how Sony does it) and having a low power envelope along with improving on 1997 CPU technology has been disastrous.

For the same 300€ they could have gotten a slightly bigger box, much better hardware (enough to run PS3 games at 720p high settings at least) and have a slightly bigger power draw (like 70-90w), and probably even have Wii BC with a small dedicated chip. Their priorities are so weird and it only hurts them.

Then we have their sloooooooow Internet business with no migration of previous Wii content through an account, nor availability of their rich back catalog.

Nintendo's best years had a standard console with amazing advanced hardware and great games. You can have both.

Edited by JamesBoyce

@patrickklepek: Sega was a complete trainwreck well before they were chased out of the console market. I don't think Nintendo should necessarily go 3rd party, but they NEED TO ADAPT. They need to stop living inside a vacuum, because we no longer live in an era where people buy 300$ machines for the first-party library. Nintendo need to appeal to 3rd parties, instead of thinking they'll come running to them. Nintendo need to build a functional online infrastructure, because the current state of their network is RIDICULOUS. Nintendo need to make a better argument than ''WE HAVE MARIO, POKEMON AND YOUR GRANDPARENTS PROBABLY KNOW WHAT NINTENDO IS''.

Posted by mrfluke

this is an instance where i agree with you in some of what you said in the past patrick, nintendo should cut their losses on WIIU give a new console one more go, and create a handheld/appletv hybrid style console.

Posted by ADAMWD

@patrickklepek: I think the people that work at Ninendo as a whole are a lot more skilled at their respective positions than those who work at Sega. They are not known for their quality.

Edited by Vigil80

At first, it sounds like bad news. But then I imagine a scenario where Zelda, Pokémon, and Animal Crossing are multi-platform, and working with other companies' hardware forces Nintendo to get current with their internet usage...

Posted by crow13


I think Nintendo's biggest problem is that they have no understanding of what their competition is doing. I think some of the decision makers and hardware developers need to take a closer look at Microsoft and Sony's consoles. Learn how to create an online community that works. Have your games available via E-shop. Make some hardware that can run ported software from third party's that doesn't have to compromise graphics. You can't sell hardware off of Nintendo's reused 1st party titles over and over when they aren't changing the formula up enough.

Posted by ErikSchroder

@budwyzer said:

Nintendo should just go the way of Sega and just make games for other platforms.

You know, I've thought about it… and I'd be okay with that.

Posted by endaround

Nintendo last year released more amazing games than any other publisher and it isn't really close. Life is weird.

Posted by freakin9

The Wii U failing is nothing new, the smartphone news I'm not sure how to take. I don't think branching out to third party is going to lead to anything good for Nintendo. Maybe they plan to release a new DS that can be used as a phone and it's as simple as that. Though a kid friendly phone no one will want. I at least hope they have a plan and they aren't really still in the middle of thinking over this next step. I would guess they do already have the plan set in place.

Posted by RE_Player1

Going from market leader one generation to a joke the next must be infuriating to shareholders.

Posted by freakin9

I think Nintendo's problem is a simple one... they thought they could get away with gimped hardware again. The problem is, this time they don't have an interesting peripheral to draw the casuals in, they all already have a, much better, tablet.

Edited by Adrian79

I can see a handheld-only future for Nintendo, no matter whats going on with home consoles, their handhelds always do well.

Posted by Deathpooky

@pete0r said:

In hindsight, giving Luigi his own year was a mistake.

As part of corporate reorganization, Luigi will be fired and replaced with a new Mario brother.

Posted by Abendlaender

@budwyzer said:

Nintendo should just go the way of Sega and just make games for other platforms.

You know, I've thought about it… and I'd be okay with that.

Really? Cause Sega is making so much great games nowadays?

Posted by Dagbiker

Nintendos problem has been that they ether dont know they have a a problem or are in denial of their problem.

Sega was in denial of the problem right up until they pulled out of the console wars, so at least Nintendo is realizing they need to fix something a little sooner.

Posted by Sunjammer

They could start BY TRYING TO ACTUALLY SELL THE THING instead of just crossing their fingers and hoping their shitty YouTube videos and non-existent word-of-mouth will pull them through. They thought they could coast on the Wii and it blew up in their faces.

And I'm a Wii U developer, too. I put a fuck ton of hours into figuring the box out (and don't get me wrong, I *do* love the system) but man, ffs, I have not seen a single, SINGLE piece of advertising for it in my home country.

PRO TIP: TO SELL SHIT YOU HAVE TO SELL SHIT. Jesus fucking christ.

Posted by PimblyCharles

Don't get me wrong, Nintendo makes great games, but they desperately need a new IP that captures their identity.

Posted by Sil3n7

Nintendo had 5B cash on hand from back in July. I don't think this is the end of the world though there should be people in Japan really waking up to this kinda news. The world is changing and Nintendo would do well to understand it.

Edited by GeneralBison

Yes, Nintendo needs a shake up!

Posted by graf1k

I take no joy in it, but I absolutely called this whole WiiU thing. Anybody that wanted to play last-gen games for the next 2 years or so probably already had a PS3 or a 360 and so the only people out there buying the WiiU are the Nintendo try-hards die-hards. The quasi-shitty tablet was a bad enough mistake, but to pair it with largely last-gen hardware made for something too expensive to compete with 360/PS3 and not powerful enough to compete with PS4/XBone. The only surprising thing about dev support drying up is that it didn't even take until the end of the PS3/360 era to happen.

That said, I really don't know what, if anything at Nintendo will actually change. Putting games out on smartphones would cannibalize the one healthy platform Nintendo has, but the WiiU is so far gone at this point, I don't think it's possible to save it. In less than three months, the PS4 and XBOne are on the verge of outselling the WiiU which has been out for about 14 months, and it's only going to get worse. If they give up and start work on their next home console, that just screws over their most die-hard fans. I do not envy Iwata right about now...

Edited by MormonWarrior

I read somewhere that most of the key designers for Nintendo's internet service have never used Xbox Live or PSN. It definitely explains some things...

I think Nintendo could definitely turn around. They offer a very unique perspective and a wide variety of gaming experiences, but the stuff around the edges is always really...crappy. Actually, Miiverse is pretty nifty.

Posted by SharkMan

@duncecap said:
@pete0r said:

In hindsight, giving Luigi his own year was a mistake.

Iwata's headstone.

this. It's like they dont even know where their strong character's are. I mean where the fuck is a starfox game/

Posted by ThePilgrums

Mario vocaloid Pizza Hut app?

Posted by ptys

They are sitting on a gold mine, all I want is the ability to play Zelda and Mario in HD without having to buy yet another box. They should really consider making a steam machine, that would really give PC gaming that extra shot in the arm it needs.

Posted by Fram

The thing that gets me the most about this whole thing is that the 3DS is still considered an underperformer by Nintendo, despite it being the best selling console in the US last year. They revised down its sales targets from 18 million to 13.5 million.

To uneducated me, this reeks a little of Square-Enix-like unrealistic expectations. Despite the enormous amount of cash they're apparent sitting on, nothing but a big change is going to get them profitable again.

Posted by Sunjammer

I think Nintendo's best strategy right now, and this is me being mostly an ignorant nobody, would be to gather a greater group of 2nd party teams. Monolith and Retro are excellent examples of companies that thrive under Nintendo's wing, and I personally would love to see Nintendo, for instance, invest a shit ton of money in Platinum, and directly reach out to indies to fund their development. In short, they need to become a little bit more like Sony in how they deal with small teams, and they need to become a lot more like a publisher in how they deal with their closest third parties.

I feel fairly confident they could turn this ship around with an actual marketing push (a real one), and exclusive partnerships with a stable of dedicated, well funded teams, they could make the Wii U *highly* relevant. And I say that as someone who actually knows the hardware, and how it seems almost designed to turn away multiplat games, but let exclusives sing.

Posted by axlvandamme

I suspect this foreshadows the Wii U being their last home console. I believe they will transition to a mobile only company. Whether that's smartphones or a follow up to the 3DS, I'm not sure.

Posted by arcn

ill believe it when I see it, right now all I'm hearing is "uhhh well we lost a ton of money because we're still trying to party like it's 1999, but don't get mad investors cause we're totally doing that smartphone thing you guys wanted"

In other words, "please understand."

Posted by chose

Nintendo has been going down since the N64, the Wii was a lucky break that just pushed the innevitable one generation further down the road.

Posted by Sunjammer

@fram: Try being "the Wii guys" for a few years and see how that shapes your expectations. I'm not saying Nintendo aren't batshit crazy for thinking they'd just auto-win with the Wii U, but I can sort of see where that hubris comes from. Sony got it good, too. They DID manage to turn it around though. Difference is when the PS3 came out the thing felt like a fucking hoax until developers got a grip on it. The Wii U doesn't even exist yet in the public eye.

Posted by Dan_CiTi

E-A GAMES, it's in the game.

Posted by Taargus_435

Maybe they'll actually put out Virtual Console games now.

Edited by huser

@maitimo said:

I suspect this will not be the massive sea change that many are expecting, so nobody should be patting themselves on the back over their Nintendo doom-saying yet. Wait and see what actually happens.

Something needs to be done about WiiU, sure, but it's not like the 3DS is in quite the same place.

The sad thing is they'll eventually be right, every company is eventually gonna fail, but they'll take that inevitability as a time to pat themselves on the back as if they had actually predicted anything.

Posted by Goldanas

I read news that the new Mario game was outsold by Knack.... crazy.

As someone who purchased both games, I can tell you that I played Knack more, and was more invested in it during my play-time. That says something about Mario.

Mario is definitely a better game, undoubtedly, but it's also so much more boring. There is just nothing interesting about Mario anymore, and the Duplo Blocks aesthetic is really not fooling me anymore.

Edited by Duxa

Love my 3DS, I find it a better device with a better library than the DS (lite). However, they kind of dug their own grave with Wii U.

Posted by metalliccookies

I love the 'Pokemon MMO' theory... I know lets have a company that is known for not having good online support make a MMO, its not like Pokemon Bank being released in Japan caused Nintendo's network to set on fire or anything :/... makes total sense to me... (also lets not forget that not even a Star Wars MMO could cut it and Star Wars is far larger than Pokemon)

To me this just sounds like Nintendo will look at more pricing models... I would like to see small cheap (mobile) style games on the 3DS with Nintendo Franchises (like a Mario endless runner or something)