Nintendo Still in Disarray - Apparently

Industry analyst Michael Pachter has reiterated his claims that Nintendo is in trouble, stating that it's because the game giant is losing control of its most lucrative markets.

Mr Pachter made the claims that Nintendo was in disarray a few days ago, prompting quite an outcry from fanboys and gamers. However, he's now defending these points publicly - on the NeoGaf forums - backing them up with solid reasons why.

Taking a slightly less controversial tack than the sound bites often give him credit for, Mr Pachter began by saying that his original points had been based around the potential for social gaming. His points regarding Nintendo focused on his belief that a large part of the Wii's audience was made up of casual gamers, because when that console was released, it was the only real platform of its kind.

Today however, casual and social gaming can be found far more cheaply and easily on Facebook, on smartphones and tablets, leading many of Nintendo's key gaming audience to move on to bigger and better things. He said the same thing for the 3DS and - roping Sony in as well - the Playstation Vita, saying that many handheld gamers now spend as much time on their phone as anything else. As smartphones increase in capability, having a dedicated mobile console doesn't seem as necessary.

"Summing this up, I think the addressable market for the Wii U is around half of the market for the Wii," Pachter said. "I think Microsoft and Sony will compete for a portion of that market if the Wii U is priced too high. I think that the dedicated handheld market is permanently impacted by smart phones and tablets, and think that Nintendo's addressable market is probably also half of its former market."

Clarifying his original point, he said: "Nintendo is in disarray because they waited too long to launch the Wii U."

He might have a point too. As time has gone on, the aging Wii's abilities have kept it from being enjoyed in the same high definition fashion as the Xbox and Playstation 3 have allowed - with the increased uptake of HD televisions.

However it's not just speculation that Pachter is basing this on, but financial figures too. "Nintendo stock has dropped by over 80% in the last few years, and the market has appreciated over the same period. I'm paid to advise investors, and none have made a profit owning Nintendo stock. I don't think that many will make a profit over the next few years, because I don't think Nintendo's strategy will return them to profitability."

It's hard to argue that once the fad of motion controlling with a wiimote - where the only real functionality was either moving or not - the Wii became a far less attractive option. It did wonders for the industry by bringing in whole new swathes of gamers, but once they'd progressed beyond the few good casual titles on the Wii, perhaps they did indeed go elsewhere.

Despite these claims however, the Wii U is set to launch before both Sony and Microsoft's next generation hardware. Depending on how far in-front this makes them and how technically capable the Wii U is compared to the others, as well as price, will determine the opening rounds of next-generation console warfare.