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“A good reputation is hard-won and easily lost. But the lost reputation has invariably been given away by the actions of the holder, rather than been taken away by somebody else.” – Colin Beveridge

With the lacklustre reception that has greeted the Wii U upon its arrival 15 months ago (5.86 million units shipped worldwide), it’s safe to say that the Wii U is an undesired flop. Even blockbuster exclusives like Mario 3D World and the eagerly anticipated Mario Kart 8 have done little to inspire confidence in the format.

Together with this, Nintendo have also delivered the double whammy of bad news as they’ve announced that sales for their best selling handheld 3DS format are also now in decline, and that even fan favourite franchise updates (such as the recently released Zelda and Pokemon games) have done little to stem the handheld’s ailing fortunes – despite the system selling 11.65 million units in 2013 (down from 12.71 million units sold during the same period in 2012).

Without going into too much detail as to why sales for the Wii U and 3DS have faltered, it’s worth pointing out that Nintendo no longer enjoy a monopolistic stranglehold over the market that they once presided over during the 16 bit SNES era and when the GameBoy enjoyed a zeitgeist level of popularity. Certainly, Nintendo now face competition from all fronts as they see their market-share continually erode in the face of hungrier competitors. And as the Wii U faces stiff competition (and has been getting deservedly trounced) by Sony’s Playstation 4 and Microsoft’s XBox One consoles, so too does the 3DS come up short in the face of mobiles and tablets (as well as Sony Vita) despite being the best selling “console” for 2013.

adapt to change

Having your market share be eaten by hungrier competitors is one thing, but to not swiftly adapt to changing market conditions is a folly only reserved for the biggest of fools. And whilst 2013 was supposed to be “The Year of Luigi”, in many ways Nintendo’s own comedic performance aped that of the bumbling icon, as the company aimlessly ambled its way through the year before parting with its money (like the biggest of fools) as it forecasted a loss of £205m in the year to March.

But even with its recent (incredibly foolish) performance, it’s still too early write off Nintendo as a viable console hardware manufacturer. Despite the industry’s calls for it to jettison its hardware manufacturing arm in favour of licensing its intellectual software rights to Sony, Microsoft and mobile, Nintendo still has around $10 Billion in the bank. $10 BILLION! That’s enough money to allow Nintendo to carry on with its Kamikaze-style money burning madness for the next 20 years – and still be in the black.

Like most conservative companies, Nintendo has always been a traditionalist at heart, and certainly knows its history. And from a historical perspective, the company has always shied away from licensing its intellectual properties to competitors. But as Nintendo’s vice-like grip and influence on the industry fades, it is only its Japanese pride (or sheer misplaced sense of arrogance according to some people) that compels the company to carry on being a hardware manufacturing player. Indeed, many Nintendo fans are all too eager to excuse Nintendo’s recent performance by highlighting exactly how much money the company has in reserve, and that exiting the hardware manufacturing business will be bad for Nintendo’s long-term future. But it’s not quite so simple as that, as investors (and consumers) who want to buy into a company’s shares and products understand that it is a company’s previous performance that dictates its perception and overall health within the marketplace tomorrow. After all, would you hire someone whose recent CV history has been less than stellar?

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Personally however, one would agree with Publilius Syrus who once stated that “a good reputation is more valuable than money”, and that it is on the basis of this hard won reputation that the PS4 and Xbox One have (rightly) trounced Nintendo’s own Wii U 15 month lifetime sales figures within a matter of weeks – despite both coming in with less then stellar launch software.

This is the third year in a row that the Japanese company has failed to make a profit, and some would argue that Nintendo needs a few truth bombs dropped on it so as make it realise its predicament and force it to stop living in its warped bubble and change its insular attitude towards a global games industry – despite the successful money making fluke that was the original Wii console. And hopefully these recent losses will force the company to finally admits its mistakes, and adapt to the ever-changing nature of how the industry operates today in order to once again become the global industry titan that it once was.

Despite Satoru Iwata having already outlined his company’s 10 year plan in the Corporate Management Policy Briefing, what follows is my Top 10 action plan on how Nintendo can stem its decline and reverse its ailing fortunes so as to once again gain the favour of gaming audiences everywhere. And considering that Sony UK managing director Fergal Gara stating that the “format war, if you want to call it that, is a marathon, not a sprint”, Nintendo’s management (in an ideal world) would do well to heed the following suggestions as a way to claw back some of the company’s lost credibility.

Of course, what I suggest will not be a quick fix solution – and instead, will take many, many years of consistently hard and concerted work (fraught with many trials and tribulations along the way) to produce results that won’t be immediately apparent for at least another 2-3 years. After all, Rome wasn’t built in a day, and to paraphrase Warren Buffet, it will take 20 years for Nintendo to rebuild its reputation (although Apple managed it in just over 10).

Some may argue that what I am proposing goes against the very fabric of Nintendo’s DNA, but I’d like to argue that if Nintendo isn’t willing to evolve, then the company deserves to no longer be a major player within the gaming sphere. So with all due respect, and despite Nintendo having outlined its own action plan, here is my Top 10 List on how the Nintendo can turn its fortunes around:

Click here to go to Part Two.

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