Is Nintendo The Next SEGA?

If you've been following Nintendo news as of late, you know that the company is in trouble. During its last-reported quarter, its revenue slid considerably, it posted a loss, and hardware sales plummeted. In order to revive the ailing 3DS, Nintendo was forced to cut its price from $249.99 to $169.99.

With all these troubles, I can't help but wonder if it's time to sound the alarm on Nintendo. At this point, the company is hard-pressed to find a single business unit that's operating even close to where it should be. And if it can't jumpstart 3DS sales, there's a good chance that Nintendo will find itself limping to the launch of the Wii U next year.

[aquote]Sony and Microsoft will have the luxury of seeing the Wii U in action[/aquote]

Speaking of the Wii U, I'm not so convinced that it has what it takes to be a success. I think that the device's controller will be a standout feature that will attract a host of consumers in the short-term. And its graphical capabilities should appeal more to the hardcore segment.

But its market appeal could be short-lived. Sony and Microsoft are both planning their own hardware refreshes, and chances are, those platforms will feature even better graphics than the Wii. Moreover, those companies will have the luxury of seeing the Wii U in action to find areas in which they can either deliver the same compelling features Nintendo's device offers or improve upon the hardware's shortcomings.

Considering all that, and keeping in mind where Nintendo stands right now, I can't help but wonder if it's in danger of becoming the next SEGA.

[aquote]If Nintendo hardware sales continue to plummet, how long before key stakeholders focus their efforts on competing devices?[/aquote]

If we look back at SEGA during the 1990s, we'll find a company that was performing relatively well in the hardware space after the Genesis was released. But after a few hardware missteps with the SEGA CD and Saturn, along with poor market strategies, the company was up against a wall. It released the Dreamcast too early, and saw that console get trumped by the PlayStation 2 and Xbox. And when it was all said and done, SEGA had no choice but to leave the hardware game altogether.

Now, I'll admit that SEGA and Nintendo are in different situations right now, and the issues that were surrounding SEGA at the time, including trouble with developers and retailers, aren't necessarily Nintendo's problems right now. But could they be? If Nintendo hardware sales continue to plummet, how long will it take before key stakeholders focus more of their efforts on competing devices?

SEGA's decision to end its hardware development and focus solely on software was a controversial one at the time, but it made quite a bit of sense. The company had solid game properties, led by Sonic, and it knew that it could sell them on multiple platforms.

It's a similar story for Nintendo. If the game company sees its hardware business start to take it down, it has the software it needs to make the landing a bit softer. With Mario, Zelda, Donkey Kong, and others, Nintendo is arguably the most successful software developer in the game industry.

But before the Nintendo fans jump all over this, let me just say that I don't know if Nintendo will ever be the next SEGA. And if it does eventually turn out that way, its transition might not happen for a long time. I'll also freely admit that Nintendo's demise has been predicted time and again over the years, and so far, it has triumphed.

But things aren't going well at Nintendo. And unless the 3DS and Wii U can help the company overcome its issues, Nintendo's future might not be as glorious as its past.