Nintendo’s struggles continue. For the quarter ending June 30, Nintendo reported revenue of 74.7 billion yen. Compare that to the same period last year, and it’s a 8.4% drop. Even more concerning is that Nintendo reported a 9.9 billion yen loss compared to a 8.6 billion yen profit in the same period a year ago.

Mario Kart 8 was a beacon of light for Nintendo in an otherwise rough earnings report. The game sold 2.8 million units worldwide during the quarter, which was only in stores for about a month.

Mario Kart 8 sales boosted software sales to 4.4 million units for the quarter, up from 1 million in the same quarter last year. As for Wii U sales, they rose to 510,000 units worldwide in the fiscal first quarter. Up from 160,000 in the same quarter last year.

Today’s earnings are yet another sign that Nintendo misfired with the Wii U. Nintendo chief Satoru Iwata has stuck to the strategy of first-party games mounting a Nintendo comeback. While Mario Kart 8 did boost sales of the Wii U, it failed to bring in a massive influx of new Wii U owners. More than 75% of Mario Kart 8 owners already owned a Wii U before the quarter started.

Nintendo’s biggest problem is that it lives and dies by its first-party lineup. There’s no other reason to buy the system. That’s enough for some, but clearly not for most.

Wedbush Securities analyst Michael Pachter touched on Nintendo’s reliance on first-party in a note to investors. “The release slate, particularly for must-have first-party titles, remains too inconsistent for the console to make a sustained push.”

Enough with the gloom and doom. What can Nintendo do to right the ship? At this point, Iwata needs to stick to his strategy. Some will call it stubborn, but what else can Nintendo do? They can’t go mobile. They will dilute the only positive they have which is their first-party lineup. They need to keep hammering on hardcore titles. The new Zelda game announced at E3 generated a ton of buzz.

Re-capturing the casual gamer (those that played Wii) is going to be tough in this market. The casuals are content playing free games on mobile. Nintendo has talked about doing something in the health market. Concrete details on that are a must.

Nintendo should also seriously consider a price cut.

It’s not going to be easy for Nintendo. They’re at a distinct disadvantage compared to the Xbox One and PS4. The power difference between the two are stark and Nintendo lacks major third-party support.

Nintendo’s future will depend on a different strategy from the top brass. Owning that strategy is their only play right now, but a future console needs a lot more power and a deeper online presence.


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