Nintendo Losing Credibility In Console Wars?

Is Nintendo losing its stake in the console wars?

With Microsoft likely pushing hard to release a comparable system after Sony’s PlayStation 4 event, and Valve pushing the Steam Box, where is Nintendo in all this? The Wii U isn’t selling as well as we had expected, bringing back the days of the N64 and Virtual Boy. Plus, with Shigeru Miyamoto preparing Nintendo for his retirement, the company that brought videogames back after the crash in the ’80s could be in jeopardy.

Michael Pachter of Wedbush Securities received a tweet about this and posted a video on GameTrailers explaining his view of Nintendo’s possible demise:

“Our next question from Twitter is from @barryscottclark … ‘Mr. Pachter, do you ever see Nintendo going the way of Sega and having to exit the console making business?’ Having to? No, never. Wanting to, not while their biggest shareholder is Mr. Yamauchi, who I believe is around 70, 71 years old, and not while Mr. Iwata is CEO. I think those two guys are deeply rooted in tradition … and what made Nintendo great. And I think that the Nintendo formula for success for the last 35 years has been; manufacture console, sell it at a profit, and support console sales with proprietary software. And then when your console sells well, collect royalties from third parties for the privilege of putting their software on the console. I think that model is broken for Nintendo. I think that Nintendo is no longer able to compete the way they did in the past and sell their consoles at a big profit. I think that the Wii, when it first launched, they were probably making about a hundred dollars profit per unit. I think the DS, when it was first launched, was probably generating about 50 dollars profit per unit. The 3DS, I think is barely making a profit, the Wii U is barely making a profit, we’re talking five or ten bucks per unit. So Nintendo’s hardware profits are so low that it really doesn’t make sense for them to be in a hardware business. But I don’t think they realize that yet.”

The rest of Michael Pachter’s response is in the video below.

What do you think? Is Nintendo losing its stake in the console wars?

@michaelpachter @rohanlikespants Mr. Pachter, do you ever see Nintendo going the way of Sega and having to exit the console making business?

— Barry Clark (@barryscottclark) February 2, 2013