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Nintendo baffled by share price slide

Fri 10 Jun 2011 8:21am GMT / 4:21am EDT / 1:21am PDT
BusinessHardware

Iwata feels 10% drop "very strange," but analysts appear divided on Wii U

Nintendo share prices have continued to decline in the wake of the Wii U announcement earlier this week, diminishing by a further 4.7 per cent on June 8.

This follows a 5.7 per cent drop on the day immediately after the reveal of its new home console, which left Nintendo stock prices at their lowest in five years. While yesterday is yet to close in the US, current figures suggest a further decline of 3 to 4 per cent.

Nintendo itself claims to be flummoxed by its share slump, with CEO Satoru Iwata telling Reuters that "Honestly speaking, the reaction to (Tuesday's) presentation and what I heard from people I met and the mood of the convention did not chime at all with what happened in the stock market.

"It's very strange."

There is historical precedent for this, similar having occurred in the wake of the Wii's initial announcement, with Iwata claiming that in both cases it was a matter of observers not having used the new technology themselves.

"In the end, it is easy to get the mistaken impression that this is just a game console with a tablet. People who came to the presentation and tried it out have understood very well that it opens up a lot of new possibilities. But people who have not tried it will find it hard to believe that this controller will change things."

Multiple analysts have offered different takes on the prospects of the Wii U, although the response has been broadly positive, if cautious. Mitsushige Akino, chief fund manager at Ichiyoshi Investment Management, told the Wall Street Journal that "The product itself is not bad," but Nintendo may have suffered because "market expectations had been far too high... "It is also a reflection of structural issues caused by a transformation within the market."

Meanwhile Panoptic Management Consultants analyst Asif Khan told Industry Gamers that the issue may be that "Put very simply, investors hate uncertainty. With the Wii U announcement, the investing community has no information on release dates, price, components, specs, and even some features seem up in the air."

He added that "I also think that the Wii U controller looks weird to someone who has not had a chance to play with it. Most investors have not had a chance to hold the device and the software demos were limited in their scope.

"This kind of negative response by investors is not shocking, and I have been viewing it as a buying opportunity for myself and clients."

The price of the Wii U has yet to be revealed, although Iwata has suggested it is likely to be in excess of 20,000 ($250/150).

21 Comments

Not interested in forking over that much cash for a system that will likely be on par with the PS3/360. Let's not forget that the 360 and PS3 have been on the market for some time now. So when the new MS/Sony consoles come out they will likely trounce what the WiiU will be able to do.

WiiU seems more like the 1/2 step to the true next gen systems that are in the pipe lines.

Posted:3 years ago

#1

Aleksi Ranta Product Manager - Hardware

276 127 0.5
Its not about the hardware, its the software that matters.

Posted:3 years ago

#2

Daniel Hughes Studying PhD Literary Modernism, Bangor University

436 496 1.1
We've only seen the tip of the iceberg, as far as Wii U is concerned. Give it another detailed public airing at the Tokyo Game Show, and again at GDC next year, before a final appearance at E3 next year with launch details, and these issues should fade away.

Posted:3 years ago

#3

Francisco Javier QA Manager, Zed Group

28 21 0.8
This all negativism reminds me of the announcements for DS and Wii. Everyone was anticipating the decline of Nintendo's weird ideas, and nowadays, they have become once again the leaders of this industry. Apple came to the industry too with a few innovation cards on the table and changed the game industry, just like Facebook is doing on the social/casual game industry. Kinect is expanding further Xbox's market too (however, still there's a need for good games to satisfy the demand) meanwhile Sony's rip of the Wii is not moving more consoles from shelves.

Innovation has lead always to expansion of the gaming industry, and right now we don't know what's all about of the Wii U concept. We all should be positive, for the sake of the gaming industry.

Posted:3 years ago

#4

John Karageorgiou consultant

29 34 1.2
Let's remember that the Wii was very revolutionary in terms of offering a new dimension in gaming, as well in creating a new market segment that was previously untapped by MS or Sony.
I am baffled by Wii U's value proposition however - is it trying to be "all things to all people?", is this what its core community actually wanted, and did Nintendo actually test the customer's expectations?
Far too many questions, and too few answers at the moment and this will impact Nintendo's share price for sure.

Posted:3 years ago

#5

Rick Lopez Illustrator, Graphic Designer

1,269 942 0.7
Sony had the games and Nintendo raised the bar in what can be done with them. Naturally most investors arent people who know much about gaming and cant think outside the box. Most of them simply follow trends, since they dont wanna take chances. Leave it up to investors and youll have a grand theft auto every years. Leave it to investors and they will take a franchise like that and drive it to the ground.

I think it was a good E3 for both. Microsoft had kinect. im not to Impressed. Without phisical controls, most kinect games end up on rails, since character displacement on screen is compromised by character actions and the fact that you cant really run around your living room or away from the console, to mimic that character displacement. they can probably get around this through 2 methods i have thought about, that wont take away from microsofts original vision of kinect and still offer an expirience differant then sony or nintendo. I prefer Wii Motion and SOny Move to Kinect. Im very excited about Nintendos new console. im just waiting to see what games roll out the door and the price of the system.

And if a Next Gen Console means better graphics, then bleh... not much revolutionary there. I think the future of gaming is what you can actually do with games and physics engines, because in terms of graphics, its pretty much flat lined with reality. Improvements can be made, but with HD and 3D already established, its not gonna take gaming too far just making graphics better. I think the path to better graphics, is a natural evolution. As processors become better, graphics naturally will. Even if Sony and Microsoft roll out a new system, It wont be long before Nintendo does it again.

Nintendo knows this....

However, I did love Halo 4...

Posted:3 years ago

#6

Peter Dwyer software engineer, openbet

24 0 0.0
The share slump isn't a surprise for anyone who watched the presentation. It was boring and uninspired. Seeing the controller for the first time made me think "Is that the console or is that the controller..and if it's the controller how does that work for any old games?". Couple that with the fact that only about a dozen titles of any note has ever come out for the Wii (I can only really name four and two of those have the word galaxy in them) and you have an atmostphere where users are simply not willing to invest in another novelty item from Nintendo.

I'm still waiting for Skyward Sword to appear and now Nintendo are effectively telling me my Wii console is obsolete.

If I were a share holder that had bought a Wii. I'd be selling up after their presentation as well!

Posted:3 years ago

#7

Taylan Kay Game Desginer, Nerd Corps Entertainment

60 103 1.7
Investors are right to worry. The difference with Wii is that back then when you saw the new Wii it did not take much to understand it. It was intuitive. It was its simplicity that made it a hit. With the new Wii U, as Peter said, people don't know what to make of it. Is it a console? Is it a controller? How come only one unit per console? What exactly is it adding to the Wii experience?

The trend for the casual market is moving away from big intimidating controllers. Heck, it was Nintendo that started it, Kinect perfected it, and now Nintendo is backtracking with a controller the size of my head.

The secret of success for Wii was its focus on the casual market, they were almost unrivaled in that back at the time. Now Kinect has a serious claim in that niche, and the investors are not impressed with what Nintendo has brought on to defend their home turf.

Posted:3 years ago

#8

Adam Campbell Studying Games Technology, City University London

101 0 0.0
Please re-name it Nintendo U.

Posted:3 years ago

#9

Rick Lopez Illustrator, Graphic Designer

1,269 942 0.7
Well if you look at Nintendo's sales and profits I think the Wii was a success. if you look at Nintendo like the other companies, then I guess they would be hard to understand. If Nintendo went head to head with the other companies it would have been suicide for there business. Simply making a Wii with higher Specs would not be the way foward.

I dont think this controller is made to substitute the Wiimote and people can still expirience everything what Wii offered on the new console and I belive new games will still come out that support it. And I feel the Wii mote will be part of nintendos consoles much like the dual shock is to the playstation. Now developers have more of a choice when developing games.

After all, the appearance of MOVE hasnt replaced the Dual Shock. I feel this touch screen contoller can exist side by side with a Wiimote. It also has the standard button layout of the Dual Shock and 360 pad. So it can litterally play old games and hardcore games alike.

But as i hear myself talking and writing this, I can understand why many people may seem confused. And why investors got scared. But when nintendo put an underpowered Wii console out the door, how hyped were investors back then???

I myself have to admit, i wasnt excited about the Wii and never bought one, i dont like motion control, but it made alot of people that are uninterested in games, interested in them. This console seems to bring everyone together.

I did anticipate this and did stock up on Wii games, now I can enjoy them :)

Posted:3 years ago

#10

Neil Aldis Assistant Manager, Mobile Project Development, Capcom

8 0 0.0
"People who came to the presentation and tried it out have understood very well that it opens up a lot of new possibilities. But people who have not tried it will find it hard to believe that this controller will change things."

There's your answer - not a completely successful press conference if you can't get across to your global audience that this is A) a totally new product/console, and B) it's revolutionary.

Nothing to do with the kit, everything to do with your presentation. Come on, hands up who watched from home and didn't wonder whether this was a Wii add on or not.

Posted:3 years ago

#11

Jim Webb Executive Editor/Community Director, E-mpire Ltd. Co.

2,270 2,439 1.1
Actually the answer is social gaming. Investors expected Nintendo to go 100% social gaming. Since they didn't do that, their sold shares.

This is the reason. It's not the presentation, it's not the horsepower compared to the HD consoles, it's not even the software itself. It's simply that Nintendo did not go full on social gaming.

All you have to do is look where investors are putting their money right now to see this.

Posted:3 years ago

#12

Klaus Preisinger Freelance Writing

1,134 1,171 1.0
Try to remember how far out the Wii was when it was first unveiled. It was beyond novelty and absurdly unique. Compared to that the Wii U is what exactly? A low res iPad with proper controls and a console streaming the game over WiFi?

When the Wii was shown, you could hate it or love it, but you knew what it was. Here there are only nasty follow up questions.

Investors might not like the facts of Nintendo trying to sell the same hardcore games as everyone else, Nintendo not having something truly unique and Nintendo not introducing a strategy on how to increase online revenue.

Posted:3 years ago

#13

Andrew Goodchild Studying development, Train2Game

1,254 421 0.3
Also, I think that investers may be thinking that on top of a scary new proposition, and the Wii potentially winding down, the 3DS hasn't got off to the start expected, and they really needed to see at this conference what Nintendo were going to do to change this. Whether Wii U is amazing or a turkey, it is 9 months away, the 3DS is Nintendo's current priority to push, and from what I gather, wasn't really mentioned.
Also, maybe they wouldn't be so worried about early confusion over Wii U if they weren't faced with post release confusion over the 3DS being reflected.

Posted:3 years ago

#14

Greg Wilcox Creator, Destroy All Fanboys!

2,193 1,170 0.5
First of all, as I've said elsewhere, I completely GOT the damn presentation and it BAFFLED me that other writers and every analyst comment I read afterward turned out to be such damned dense, period.

The problem here wasn't the presentation - it's the TOTAL lack of sense of wonder from jaded writers who normally have everything force-fed to them in stats-based increments and minutia, repeated, posted verbatim and re-tweeted seconds afterward with no deeper thought than "Is it Smash Bros. time yet?" or "I can;t wait for that E3 party later... what time does it start?"

If you were a developer with a brain, the potential of the Wii U controller was mind-blowing. If you were a lifelong gamer looking for something that added a but more depth and fun to the usual grind, the potential was mind-blowing. If you're some clown "expecting" the usual unveiling of a whole system and spec sheet along with a bunch of launch games you won't care about three months from now, well, you were baffled.

Oh, Jimmy's right re: social gaming, but I think Nintendo is wise enough not to divide in-house resources to do this at the moment. Might they announce some sort of partnering down the road with a social games content provider? Who knows? Minecraft on the Wii U would be fantastic, as would a few other hugely popular titles. However, with the social games bubble already HUGE, I think it's a wise idea NOT to follow a trend for the sake of an investor lining his pockets. When that bubble finally pops, guess what? A lot of investors will be scrambling to dump everything and move onto the next thing, not giving a shit about the last old thing.

That and I think Nintendo has it's OWN social gaming plans (Zelda Universe, anyone) - If this is announced as an exclusive (which is how I think they want their social content, period), watch the stock explode along with the pants and minds of the people who ACTUALLY play the games.

Memo to Nintendo: if you haven't thought of making Zelda Universe an online social game, feel free to steal that idea - I only have a few thousand of them in my head... all good ones (mostly)...

Posted:3 years ago

#15

Jim Webb Executive Editor/Community Director, E-mpire Ltd. Co.

2,270 2,439 1.1
Thank you, Greg, for being another person to grasp the concepts behind Wii U right away.

And do we ever get full specs and launch games 18 months prior to launch? Absolutely not. So I don't get why so many are disappointed. In fact, Sony hasn't released the full components and specs of the PS Vita and that launches much sooner yet I hear no one crying over that.

Posted:3 years ago

#16

Aleksi Ranta Product Manager - Hardware

276 127 0.5
"Sony hasn't released the full components and specs of the PS Vita and that launches much sooner yet I hear no one crying over that."

-Why would one cry because PSV is actually playable and the hardware nitty gritty specs dont really matter at the end of the day.

Posted:3 years ago

#17

Adam Campbell Studying Games Technology, City University London

101 0 0.0
I'm not, it looks like a transition period. Only time will tell if they should have really pushed Wii for another year before making an announcement. That said, I'm into their good books :)

Posted:3 years ago

#18

Klaus Preisinger Freelance Writing

1,134 1,171 1.0
The Wii and DS have grown the expectation with investors of Nintendo being so far ahead of the competition that the competition requires years to achieve feature parity. Investors just realize Nintendo not being that far ahead of anybody else this time and as a result they hedge their bets more cautiously. Nintendo is ten times smaller than Microsoft and Apple in a world where advertisement still matters.

The new console is still a few rounds of dividends away, the 3DS is going nowhere it seems, so why cling to the stock now? There are gaming companies with a higher promise of short term earnings, so let's get them for now. Totally natural investor reaction.

Posted:3 years ago

#19

Jim Webb Executive Editor/Community Director, E-mpire Ltd. Co.

2,270 2,439 1.1
Aleksi, my point is that with 18 months to go for the Wii U, it's not possible to know all the specs yet some media, investors and analysts are crying foul that Nintendo didn't release them already. My point being that Sony has refused to release all the specs for the PS Vita and never once did I hear the same complaints.

Posted:3 years ago

#20

Andrew Goodchild Studying development, Train2Game

1,254 421 0.3
@Jimmy, that could be becuase people expect that Nintendo will probably release something with the minimum increase in power over 6 year old competitors, whilst they know Sony will release a handheld that will be up as high spec as $250 could reasonably by expected to buy you. This would be judged based on the last decade of hardware releases. Whatever the failures of PSP, lack of spec at release generally isn't considered one of them, and they threw everything they could at the PS3.
Don't get me wrong, the specifications won't matter to everyone, but for those to who it does, you can't blame them if they give Sony the benifit of the doubt a bit more, due to recent history.

Posted:3 years ago

#21

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