From one GameIndustry.biz report, we read:
Nintendo’s profits for the first quarter have dropped 60.6 per cent, due to a fall in demand for the Wii and the strong yen.
From another GameIndustry.biz report, we read:
Sony has recorded a loss for the first quarter of the year, with a decline in sales of the PlayStation 3 and PSP hitting the company’s Networked Product and Services division.
From someone who has been observing the “Game Industry” for almost half a decade (has it been that long?), reports on Nintendo are framed very differently than Nintendo’s competitors. Sony and Microsoft game divisions are usually at a ‘loss’ and if they make any profit during a quarter, it is BIG NEWS. However, Nintendo is framed as its profits either dropping or rising, often based on the fluctuation of the currency and on the appearance, and non-appearance, of blockbuster Nintendo titles.
The casual observer, when looking at those first two beginning sentences of those two reports, would think that Nintendo is in a far worse scenario than Sony and, quite likely, that Nintendo is soon to leave the console business altogether!
Meanwhile, the monkeys are going to be coming out in mass to chatter about ‘price cuts’.
What you see above are actually analysts. Why do I say that? It is because I could train a monkey to chatter, “Cut price! Cut price!” to any question I might have to it.
Cutting the price of the Wii wouldn’t be beneficial to the value of the system over the long term. Cutting the price of the PS3 will just hurt Sony even more. Since analysts do not bother with analysis anymore and are more concerned in talking to news reporters, they become monkeys going, “Eeek! Eeek! Eeek! Cut price! Eeek! Eeek! Eeek! Cut price!”
Let us talk about the Wii for a moment. Nintendo’s response was this:
“There were fewer blockbuster titles that briskly drove hardware sales this June quarter versus the same period a year ago when titles like Mario Kart Wii and Wii Fit were launched in overseas markets,” said Nintendo.
And this is all fine and good. But the opposite of this statement is also true. If there are no blockbuster titles as there were with Mario Kart Wii and Wii Fit, we must conclude that Nintendo believes Wii Music and Animal Crossing Wii were not blockbusters.
It is obvious why they were not blockbusters. Animal Crossing Wii was a Gamecube sequel. Gamecube sequels don’t truly fire up people on the Wii (with perhaps the exception of Smash Brothers Brawl). Mario Kart Wii was skewered by critics because it wasn’t trying to be a sequel to Double Dash but trying to be a ‘bridge game’. Super Mario Galaxy hasn’t lit any fires in the demand for the Wii. (Zelda Wii could be very interesting. If it uses motion plus, Zelda Wii could become another ‘bridge game’ and could possibly see Mario Kart Wii type sales.) A big issue will be Pikmin 3. If it is just a ‘sequel’ to the Gamecube versions, Pikmin 3 will be sent out to die. It clearly needs to become a ‘bridge game’. Since Pikmin is a series that girls like (unlike, say, F-Zero or Starfox), Pikmin has potential in that regard. But of course, it would alienate the ‘core’ gamers who threw a fit at Mario Kart Wii not being like Double Dash.
Wii Music could be described as a high budgeted ‘science experiment’. People don’t want to be guinea pigs. ‘Science experiments’ belong on Wii-Ware, not for the flagship game of the holidays.
With the DS, Nintendo can play around with ‘science experiments’. DS has a life of its own. But the Wii is still fragile. Wii has suffered a drought of quality software since mid 2008 until mid 2009 where Wii Sports Resort came out. And by quality software, I mean software that would make people want to buy a Wii. No one is going to buy a Wii for ‘Punch Out’ or ‘Excite Bots’ or ‘Conduit’ or ‘Madworld’, even though they may be fun games. Perhaps I should say quality killer-apps. The only killer-app I see Nintendo have currently is NSMB Wii which is WAY better than 2008 and even 2007 minus the Wii Fit.
So let us talk about Sony. When I say that the PlayStation 3 is the ‘Sony Saturn’, I’m not being ‘mean’ as some may think. I think the PlayStation 3 will have the effect on Sony that Saturn had on Sega. Saturn was a complicated mess, too expensive to make, too complicated to program for, and it destroyed Sega’s finances and their role as a game console company. PlayStation 3 is performing a similar job. I am sure one of the questions that is hanging around Stringer is, “Should Sony even bother being in the game console business?” Sony’s response will be to make the PlayStation 3 last ‘forever’ and could possibly stay with the PlayStation 3 even when Microsoft and Nintendo eventually come out with their own new consoles many years from now.
No one appreciates how hard and tough the console business is. If you were smart and lucky, you could be making billions of profit one year. Blink, and you will be generating billions of losses another year. This high stakes game of the console business has remained this way ever since the Atari 2600 made Warner’s cash coffers awash with cash and then, a year or two later, became the massive drag around Warner’s neck.
When Iwata was called into Yamauchi’s office, Yamauchi paced and described all the companies he had seen exit the console business, all the dead bodies he had seen littering the market landscape. Iwata, however, was thinking he was about to be fired. Of course, that was when Yamauchi told Iwata he would be the successor to Nintendo.
Nintendo is fascinating to study because they are the only console business to stay in business. Even their current competitors of Sony and Microsoft rely on being ‘bailed out’ from the other parts of the companies. While Nintendo has considerable game making talent, it is surpassed with their business talent. Nintendo is a blackbelt in business jujutsu.
From Wikipedia, we read about jujutsu:
Jujutsu (柔術, jūjutsu?) 
And this is what Nintendo has done this generation. They have used their stronger competitors’ energy against them rather than directly opposing it. This generation has been like watching two twin armored goliaths going dizzy with a business ninja hopping around them.
A reader might ask, “Every time you start to talk about Sony or Microsoft, you end up talking about Nintendo. Why do you do this?” I don’t know why I do either. I think it is because the console business of Sony and Microsoft is very boring. Failing in the art of cashflow is not interesting to me. There is nothing I can learn from them. Nintendo, doing their business jujutsu against stronger opponents with more money and resources, becomes far more interesting to me.
The bottom line is not just that Sony has big problems with the PlayStation 3. Sony designed the PlayStation 3 with the assumption the gaming market would keep growing automatically and that computer parts would go down automatically. Sony did not have a contingency plan for a recession or other factors. I believe these assumptions explain why Sony is in the hole that it is in.
Nintendo did not have these assumptions. They assumed the market would shrink and made the DS and Wii accordingly to combat that. This is why Nintendo adopted the mission of ‘expanding’ gaming in the first place.