These are trying times for Nintendo. Revenue dipped 8.1% in the last few months. Satoru Iwata, the company’s CEO, is taking a 50% pay cut for the next five months (the second time he’s done so in the past three years). An underwhelming 2.41 million Wii Us have been sold, compared to a projected 9 million units sold. Nintendo’s stock plummeted a few weeks ago when their revenue report was released. Many are predicting the end of House Mario.
In retrospect, it’s pretty obvious how Nintendo got to this point, and what it comes down to is this: Nintendo overestimated the value of gimmicks over horsepower, misread the nature of their consumer base, and chose to self-identify more strongly with past successes than with a progressive vision of their future as a contender. Their failure is based in large part on their steadfast refusal to “play the game” and compete with Sony and Microsoft, not to mention the mobile market and the PC market, believing instead that they had carved out their own exclusive, loyal niche of brand consumers.