June 12, 2011

Nintendo's debut of Wii U draws investor skepticism

Wii U Associated Press Nintendo's next video game console, the Wii U, is shown at the Nintendo booth at the 2011 Electronic Entertainment Expo in Los Angeles, June 8, 2011.

NEW YORK - The upcoming Wii U - part tablet computer, part game machine - could help Nintendo surpass its rivals once again.

Yet investors so far are skeptical, with unknowns such as the price. The company's stock has fallen 10 percent since the Wii U's unveiling this week. Expectations for the new machine have been high following the original Wii's roaring success.

Wii U, which will go on sale next year, features a motion-sensing controller with a tabletlike touch screen and high-definition graphics.

Of these, only the tablet-screen feature will be unique to the Wii U. Sony Corp.'s PlayStation 3 and Microsoft Corp.'s Xbox 360 already offer high-definition and motion controls.

Scott Steinberg, CEO of video-game consulting company TechSavvy Global, said people were expecting an innovation that's "so far ahead of the competition that it can position Nintendo as a leader again."

Instead, he said, people got "a whimper, not a scream."

Then again, people were also skeptical in 2006, when Nintendo Co. went against conventional wisdom with its Wii. The quirky, cheap game console relied not on high-end graphics and complex buttons to lure in hard-core players but on simple motion controls to lure in everyone.

The Wii's then-revolutionary technology lets players stand up and bowl, play tennis and drive a virtual car simply by flailing a wand in front of their TV. It has sold more than 86 million units, at least 30 million more than either the PlayStation 3 or the Xbox 360.

Whether Wii U will replicate the Wii's success or fade like the Virtual Boy (if you don't remember it, it's for good reason) will depend largely on its price.

Nintendo will also have to convince customers that they need another dedicated gaming device in the age of iPads, Facebook and Angry Birds.

"People are getting harder to impress," Steinberg said. "They are expecting more for the money. They already have a number of systems in their home that are performing well."

With Wii U, Nintendo is catching up with its rival console makers by offering a system that runs high-definition graphics, an essential feature in 2011. Sony and Microsoft also began selling their own motion controllers late last year.

The Wii U's tabletlike controller, however, is novel. Although Nintendo says the idea behind it came long before the iPad's debut in April 2010, the ensuing tablet craze couldn't hurt.

Michael Pachter, a Wedbush Morgan analyst, called the console brilliant and believes Nintendo will have no problem selling it, as long as it costs less than $300.

"I was really, really surprised at the stock-price reaction," Pachter said. "I thought it (the Wii U) was really cool."

Pachter said he had to hold the device in his hands before understanding its significance: "They integrated a tablet into a console."

No one else has done that.

The Wii U's controller is a mix between Nintendo's family of DS touch-screen handhelds, complete with stylus, and a traditional console-game controller with two joysticks and trigger buttons. It's a little bulky - a bit like holding a hardcover book by its top and bottom edges.

In Nintendo's demonstrations at the Electronic Entertainment Expo, a game called Shield Pose has players blocking suction-cup arrows fired by pirates from different directions in rhythm to a beat. The accelerometer inside the controller knows if you are blocking in the right direction.

Other games make use of the controller's ability to have a different perspective on the same world. In one, the Wii U controller operates a spaceship and is in a shoot-'em-up battle with players on the ground. Those players, holding traditional controllers, have to look at a split-screen view on the TV for their perspective.

In offering new experiences through the Wii U, "not only do we want to bring back those people who have left Nintendo, we also want to create a new group of core users," said Katsuya Eguchi, manager and producer of software development at Nintendo.

"I think we can do that with the new controller, but it will be hard to bring back those people who've moved onto Xbox 360 or PlayStation 3, unless we offer something a little bit different," he said in Japanese through a translator at the Electronic Entertainment Expo in Los Angeles.

Some analysts worry that traditional video games have to compete for attention and dollars with smarter-than-ever phones, quick games such as FarmVille and tablet computers, including the iPad.

That is not necessarily true.

Clicking on a field of virtual crops to harvest on FarmVille is not quite the same as spending two hours as U.S. commandos fighting Cold War-era enemies in Call of Duty: Black Ops. It's not the same as immersing yourself in the Mushroom Kingdom with the Super Mario brothers.

Nonetheless, demand for the Wii has dropped in recent years.

Even the much-hyped Nintendo 3DS, a glasses-free, handheld, 3-D gaming system, has been selling slower than expected. Pachter believes a big reason for Nintendo's stock-price drop this week is not Wii U but Sony's decision to price PlayStation Vita, its newest handheld-gaming device at $249, the same as the 3DS.

With an economy that's still on the rocks, money speaks. The lack of an announced price for Wii U, Pachter said, "makes people worried that it'll be 500 bucks."

by Barbara Ortutay Associated Press Jun. 10, 2011 12:00 AM

Nintendo's debut of Wii U draws investor skepticism

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