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Friday, January 17, 2014

Okay, So Maybe Not.

By LUDWIG VON KOOPA - Nintendo's stock dropped faster than Obama's poll numbers.

Remember how I wrote that article earlier this week (two days ago) about Nintendo's rising stock numbers and the supposed China expansion? I also said that normally I don't care about stock numbers. Well, uh, this article only exists just because I said that. Since Nintendo's numbers dropped again. Big time. As soon as they went up.

In the words of Rachel Jeantel, "woopsee sir".

Perhaps Nintendo's shareholders read my article and realized, "Hey, why DID we bid Nintendo's price so high? This Ludwig guy is right! It's stupid!" They also must've rejected my conclusion of,
"Perhaps if nothing new is happening with China, then Nintendo's stock has simply been undervalued all along and that's finally being corrected. This won't cause a lot of new sales or anything, but perhaps all the great games already out for Wii U and coming out for Wii U will."

Well, according to this Reuters report, Nintendo president Satoru Iwata acknowledges the unfortunate failure of the Wii U's ability to sell units. (Which is why we keep telling you to buy one.) Look at these revised projections: 9 million units to 2.8 million. ...Yikes. Even the actually successful 3DS is feeling a pinch of 18 million to 13.5 million.

You could say, "Hey, Nintendo just had unrealistic expectations." And that's true. The trouble is that, from what we can tell, they set up all of their internal planning based on some kind of projection. It may not be that they actually took their own publicly stated 9 million seriously, but whatever they used internally was surely higher than what'll actually happen. Being able to accurately forecast these things is important for allocating fixed costs per unit (which helps out with overall cost), cash flows, and financing options. In other words, if you underperform relative to expectations, you're not only losing in market share but you have to also take that hit in your budgeting somewhere. In other words, Nintendo's managerial accountants are crying. Iwata gets to keep his job, but who knows about theirs.

Let KoopaTV take an official stance on the so-called solution to Nintendo's problems, the alleged panacea: We do not support mobile-gaming, and we would not support if Nintendo entered that arena. More importantly, we also don't believe it would actually fix Nintendo's issues. It would severely ruin Nintendo's brand equity. We agree with Iwata's assertion that the underpriced mobile games are stunting the industry and ruining many people's perception of what a properly priced game looks like. Joining in on that is only a disaster.

So what can Nintendo do? It's all about the games. Just keep them out of mobile. And PC. Like Smash 4.

As usual, Ludwig encourages you to participate in the comments. Also, you should buy a 3DS and a Wii U and tons of software. Make Iwata's day.

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