It doesn't take an industry insider to tell you that Nintendo is clearly trailing Sony and Microsoft in the so-called "console wars" but I didn't realize just how bad it was for them. According to an article on the front page of the business section in today's Seattle Times, Nintendo is lowering sales forecasts, seeing dips in profits, and is currently down to owning a scant 14% of the market. Now, a dip in sales is expected given that this is the end of the console's life cycle and that Nintendo hasn't released a must-buy mega hit for nearly 18 months. But 14%? For a company that dominated the industry just 20 years ago, this is indeed sad news.
When Nintendo unveiled their upcoming "Revolution" console earlier this year at the Tokyo Game Show, I wrote in this space that the uniqueness of the system (games are played with a wand-like remote control that is tracked in three-dimensional space) was a sign of them stepping out of the race and taking their own path to the finish line. My thoughts at the time were that they knew they couldn't compete with Microsoft and Sony in the horsepower division and would instead seek to corner a new division of gaming -- a division that they alone will invent, set the rules for, and be the only player. Now I'm convinced that not only is their new direction a wise decision, but one bore not simply out of a desire to innovate, but out of necessity.
The Revolution console, expected to release in the fall of 2006 is Nintendo's last chance to prove that they can remain a hardware manufacturer (handhelds excluded) and avoid following Sega down the road to third-party software publisher. And I don't think they will.
One of the most interesting facets at work in this discussion is that Nintendo has the most rabid fanbase of the three companies. While each company certainly has its devotees, none are more devoted than those who worship at the feet of Mario. They buy everything Nintendo creates: every sequel, every add-on, every thing. And yet, despite this loyal following, Nintendo is down to owning just 14% of the market. Call me stupid, but I don't think releasing a console that will alienate third-party software publishers and fly in the face of what the majority of gamers -- that other 86% -- enjoy is going to help them regain their edge.