By Guest Blogger, Nick Kellingly

Nintendo is one of the names in computer gaming. Whilst companies like Sega, Atari, Philips, etc. have entered and exited the console market with varying degrees of success across the last 20 years; Nintendo has held its own against all comers.

The company scored a massive hit with its Wii console which broadened the appeal of gaming from the traditional youth market to a family one. Grandparents lined up to play games with their grandchildren as the company shifted focus from standard controller based games to innovative new controllers that let people play tennis, keep fit and even fight with pretend swords.

Their latest consoles aren’t having the same impact. The Wii has lost ground to Sony and Microsoft as limited hardware fails to appeal to hardcore gamers and while grandparents were keen to get involved the first time round; it turns out they aren’t becoming addicted to the endless upgrade cycle like traditional gamers.

Even the handheld consoles, the 3DS machines, which are best-in-class at the moment aren’t having the impact the company expected. Sales forecasts are down and investors are unimpressed with Nintendo’s current console based strategy.

Times are Changing

Companies that don’t listen to their customers end up in trouble. Back in 1971 Borders Books opened their doors to the public for the very first time in a single store in the US state of Michigan. For the next 40 or so years the company went from strength-to-strength; they provided a comfortable environment for readers to browse and buy books in. They opened megastores around the world. Borders became the place to shop for reading material.

In 2011; Borders went broke. Thousands of people lost their jobs and store after store was closed. What happened? The e-reader happened. Amazon launched the Kindle and Barnes and Noble launched the Nook. You don’t have to go to a bookshop anymore; you can download a book and read it on an e-ink screen that looks very much like a paper page.

Borders failed to respond. Their management team was so locked into a business model that worked for 40 years, they couldn’t hear their customers asking for electronic editions. There was no Borders e-reader on the horizon. The company didn’t even try for a “quick fix” of teaming up with a second-tier e-reader brand to fill the gap before developing a product of their own.

The rest, as they say, is history. E-books are outselling paper books. There are still readers who insist that they’ll never abandon the printed word but their numbers dwindle every year. When you can buy a book and read it instantly on a digital device, there is much less need for hard copy bookstores. Borders store closures were inevitable. If the company had hedged against this they might have become a dominant provider on the internet. But without an e-reader offering, they were left high and dry instead.

The same is true for Nintendo’s market place. When you ask a computer gamer about Nintendo what they want to talk about is the games. That’s what matters to them. Not the device that the game is served on. That’s common sense. It’s why Sega’s Saturn failed so miserably; the games weren’t there. It’s true of every console manufacturer that’s exited the console space.

Nintendo fans love Mario, they love Zelda, they love Donkey Kong and all the other quirky characters and gaming experiences they have had over the years.

By insisting on console based delivery for these games, Nintendo is ignoring device convergence. Ten years or so ago, everyone had a phone, and they had a camera, and they had an Mp3 player and they had a games device. Today; the camera, the Mp3, etc. can all be found on their phone. Smartphones and tablets have even taken a chunk out of the traditional PC market place with laptop and desktop sales declining as the convergent devices become ever more powerful. Nintendo is being squeezed out of the market because people want one device to carry in their pocket not multiple devices.

The Voice of the Customer Must Be Heard

Nintendo needs to ask their customers; “Is there anything we can do better next time?” before it’s too late. Their customers will tell them that they love their games. They may even tell them that they have always loved the hardware too. One thing we are positive they’re going to tell them is that they no longer want bespoke gaming hardware. They are going to say they want that Nintendo experience, exactly as it has always been, but they want it on their phones and tablets.

This should be good news for Nintendo. Their hardware divisions are under-performing. The cost of research for next-generation consoles is high and the returns are diminishing. Shareholders have already expressed their dismay over the lack of a convergent strategy and shareholders are customers too.

A move to device independence would enable Nintendo to concentrate on the thing they do best; games. The company has an unrivalled reputation for delivering quality gaming experiences. This has been in part due to their management of titles on their proprietary hardware; but there’s no reason that the Nintendo badge can’t be guarded as zealously as before when moving to convergent platforms.

Nintendo’s competitors are no longer Sony and Microsoft. Gamers are getting tired of buying high ticket price games that can only be played on one machine. Angry Birds and Candy Crush are hugely profitable examples of titles that have been released by Nintendo’s new competitors on converged platforms. It’s true that not all customers of these titles are paying customers. There’s a lot of free-play on these devices. However, the potential customer base is so much larger than the console market that even turning a small percentage of these free-players into paying customers is immensely profitable. It is estimated that Candy Crush brings in over $10 million a day.

Nintendo is capable of change. We’ve seen it with the Wii. It is time for the company to listen to the voice of its customers now and make the change that will keep Mario on screen for years to come.