The video game industry is one prone to dramatic ups and downs. A single console, or in come cases video game, can make or break even big companies like Nintendo Co., Ltd (ADR) (OTCMKTS:NTDOY) (TYO:7974). The iconic maker of Mario, Nintendo has fallen on hard times as of late with slipping sales weighing down the company’s balance sheet. Now, the company is making some bold claims, stating that it will return to profit this year.
You’ll have to excuse investors if they don’t share the optimism. The company made similar claims last year before poor sales forced the company to back off its bold claims. This time, however, Nintendo Co., Ltd (ADR) (OTCMKTS:NTDOY) (TYO:7974) is insisting that it is in position to get back into green territory.
Nintendo will have its work cut out for it. The recent shift towards mobile phones and the increasing power of computers is making it harder and harder for game consoles to carve out their own niche. With more people playing video games on their smart phones, console centric companies like Nintendo are finding it harder and harder to sell consoles and games. Customers also appear to be becoming more price sensitive, making it harder to turn a profit.
At the same time, both Microsoft Corporation (NASDAQ:MSFT) and Sony Corp (ADR) (NYSE:SNE) (TYO:6758) appear to be leading within the console wars themselves.
Meanwhile, Nintendo’s Wii U has so far been underwhelming sales wise. Still, Nintendo does have some things going for it and has survived similar challenges in the past.
Nintendo, a stalwart of the industry
No company enjoys a bigger name in the video game industry than Nintendo. The Coca-Cola Company (NYSE:KO) of video games, Nintendo Co., Ltd (ADR) (OTCMKTS:NTDOY) (TYO:7974)was one of the first companies to turn video games into big profits. Having produced video games and consoles for over three decades, Nintendo has built up a massive brand image.
Most of Nintendo’s fame is derived from its major video game series, including Mario, Donkey Kong, and Zelda. Forbes rated Nintedo’s brand name as the 63rd most valuable in the world, trailing just behind Volkswagen AG (ADR) (OTCMKTS:VLKAY) (ETR:VOW) (FRA:VOW) and Adidas.
Company has survived numerous challenges
Nintendo Co., Ltd (ADR) (OTCMKTS:NTDOY) (TYO:7974) has proven, if nothing else, that it has the capabilities to fight tough battles in the competitive video game industry. After taking over the industry from American based Atari, Nintendo successfully held off a serious challenge in the 1990’s from fellow Japanese based Sega.
A more serious challenger, however, Japanese conglomerate Sony Corp (ADR) (NYSE:SNE) (TYO:6758) emerged a few years later with its Playstation gaming system. Sony was able to take the reigns from Nintendo and in the early 2000’s launched the Playstation 2 console, which would go on to be the most popular console of all time.
At this point, Nintendo Co., Ltd (ADR) (OTCMKTS:NTDOY) (TYO:7974) looked to be on the ropes, having failed to generate excitement with its Gamecube gaming system.