Wedbush Securities analyst Michael Pachter has once again been posed with a question about Nintendo NX, asked as to whether Nintendo can survive another instance where, as with Wii U, the console is seen as a relative failure.
While indicating that the company’s cash reserves can afford to take another hit, he added that both their handheld and console businesses are at risk given an increasingly competitive market in the games industry.
He went as far as to say that their recent failing in hardware design has cost them third-party support, and that he anticipates “very low third-party support outside of Japan” on Nintendo NX. That is, unless Nintendo once again strike widespread success.
“When last I looked, which was in the last three months, Nintendo has something like $10 billion in cash. I think that the worst case if the NX is a bust, they will lose half a billion,” he shared in the latest Pachter Factor episode on Siftd.
“Every time I have ever criticised that company and its management, including its late president, it wasn’t because they were running the company into the ground and about to go bankrupt. It was because I didn’t think they were generating enough profit on the phenomenal assets that they have. I’m not critical of these guys in the way that you should be worried.”
He continued, “As long as they keep producing great content – and they have never wavered – they’ll be fine. I just don’t think they are going to maximise their profits without having a good hardware strategy and a good software strategy.
“And, I frankly think that handhelds are challenged because mobile has become the way that most people play games, and console is challenged because they have been underpowered the last couple of generations and they are trying to be cute with these different kind of hybrid devices. Like, a GamePad instead of a controller, and nobody really liked it so the Wii U didn’t work. Their failure in hardware has cost them third-party support, because third-parties can’t afford to make a game for a 10 million install base Wii U that could be discontinued at any time.
“[With] the NX, I think you are going to see very low third-party support outside of Japan unless the thing is a hit,” Pachter closed. “And so, I mean my criticism of them is just that they have squandered a big lead that they had in hardware and gone from first-to-worst, quickly, on the console side.”