Nintendo Stocks Drop after Nintendo Switch Reveal
By Boston Blake 22 October 2016
Gaming industry analysts comment as to why Nintendo’s stock price drops after the Nintendo Switch reveal, saying the console may struggle in the current market.
As Nintendo prepared to announce the Nintendo Switch, gamers and investors around the world were feeling epic levels of hype. The excitement was so strong, it drove Nintendo’s market value up, skyrocketing the company’s value by $1 billion. However, once the gaming giant had officially revealed the Nintendo Switch, the company’s stocks turned the other way.
The Tokyo Stock Exchange closed for the day with Nintendo’s shares down 6.5 percent. Unfortunately for Nintendo, this drop essentially erases the $1 billion market value that was added prior to the console’s release.
One analyst, Dr. Serkan Toto, offered some thoughts as to why he and others are skeptical about the Nintendo Switch. Toto said:
Sorry, but is a portable/home console approach really that innovative in 2016? I am most concerned about the target group of the device: who else but die-hard Nintendo fans will buy the Switch? The Switch lacks a killer feature, and I think it will be very difficult for Nintendo to win back the casual gamers that are mostly on mobile now. In Japan, for example, the mobile gaming sector is already 2-3 times bigger than consoles. Even the PS4 struggles over here. It’s going to be a huge challenge to try to reverse that trend.
Toto brings up a good point about the Nintendo Switch. With the growth of mobile gaming, how much longer will portable gaming devices last? Sure, the Nintendo Switch has some features that make gaming-on-the-go a deeper experience than most mobile games, but the console may still struggle to deliver a unique experience that gamers are looking for.
Another analyst, Joost van Dreunen of Superdata, shared similar feelings, saying he worries the Nintendo Switch lacks broad appeal that’s needed for strong, sustained sales.
I have my reservations with regards to the breadth of the audience it targets. The Switch will likely be most popular among a younger audience: its functionality is uniquely geared toward pre-teens and teenagers. While the device seems much less like a toy than we’re used to from Nintendo, its features like backseat multi-player and the ability to have several people play using a single piece of the controller target Nintendo’s traditional audience. The reveal video makes a lot more sense to me if you swap out all the adults in it with kids.
Of course, targeting a younger demographic means Nintendo is likely trying to recapture a market that’s quickly moving to mobile gaming. As more gamers look to take their gaming on the go, having a console that’s easily portable may be an effective marketing tool for the younger generation.
Nintendo may be banking on higher sales from gamers who aren’t ready to commit to both a portable and home gaming device, in which case a dual-focus console could be effective. However, making its new home console portable means Nintendo is essentially cannibalizing it’s own dual focus home and portable gaming market, which could turn out to be disastrous for Nintendo. It wil be interesting to see how well the Nintendo Switch does, considering it’s a big risk for the gaming giant.
Piers Hardin-Rolls of IHS sees the Nintendo Switch as Nintendo’s way of pulling gamers back from mobile by offering them a portable gaming experience they can also enjoy at home on the big screen. IHS expects Nintendo to sell 2.85 million Nintendo Switch units worldwide at launch in 2017. When asked about pricing, the analysts agreed that Nintendo should keep the cost below $300.
If the Nintendo Switch catches on like Nintendo is undoubtedly hoping it will, including Xbox’s Phil Spencer, it’s likely the company’s stock will once again make its way back up to where it was earlier this week. Until then, gamers and analysts will await additional information about the console.
What do you think about the Nintendo Switch? Do you think it will be successful?
The Nintendo Switch is set to release March 2017.
Source: GI.biz
