/ 9 June 2011

Wii U disappointment drops Nintendo shares further

Nintendo shares have tumbled for the second consecutive day after its second-generation Wii console unveiled in the week disappointed the market.

Nintendo shares tumbled for the second consecutive day on Thursday after its second-generation Wii videogame console unveiled earlier this week disappointed the market, say analysts.

Despite the buzz surrounding the Japanese entertainment giant’s Wii U at the videogame industry’s annual trade show in Los Angeles, the console and its touch screen controller has left investors cold.

Nintendo shares dived more than 5% on Wednesday after the company unveiled the console at the Electronic Entertainment Expo, or E3.

The stock extended losses on Thursday, closing 4.5% lower at 16.160 yen on the Osaka Securities Exchange.

The company’s shares are now at their lowest since March 2006 before the launch of the original Wii console amid worries over its strategy at a time when online games and smartphones are taking market share.

Nintendo has not said how much it plans to charge for the Wii U when the new consoles hit the market next year to do battle with Microsoft’s Xbox 360 and Sony’s PlayStation 3 (PS3).

“I don’t really see Nintendo’s strategy yet,” Hiroyuki Fukunaga, a Tokyo-based market analyst and chief executive of Investrust, told Dow Jones Newswires.

“There are concerns that [the Wii U] may turn out to be expensive with the touch-screen controller,” he added.

Unique fan base
A key feature to the Wii U controller is a 16cm screen that displays maps or other information to complement game play, acts as a touchscreen game board and serves as a second monitor.

A forward-facing camera allows for online video chat with friends while playing with or against them online using a television connected to a Wii U, which will boast high definition graphics.

Nintendo is credited with opening the world of videogames to “casual” family players and with the introduction of motion-sensing controllers on the first Wii console launched in late 2006.

But analysts question whether the Wii U or the handheld 3DS can once gain capture that unique fan base now that such non-traditional gamers can use their smartphones to play inexpensively online.

Microsoft and Sony last year challenged Nintendo by adding motion or gesture-based controls to Xbox 360 and PS3 consoles, which boast more power than the Wii for richer imagery and more complex action. — AFP