[Exclusive] Analyst Believes Nintendo Has Already Lost The Next Gen Battle With Troubled Wii U

Count Nintendo out: the next generation console battle is essentially a war between Sony PlayStation 4 and Microsoft Xbox One, according to the often controversial Wedbush Securities video game analyst, Michael Pachter.

Game press and gamers have focused on PS4 And Xbone as E3 nears, but one company that hasn’t been a focal point of anyone is Nintendo. The company isn’t even having a press conference, just a few smaller press events focusing on their games. I’m not a fan of big press conferences that reveal little, so taking the quiet road isn’t the worst strategy.

But Nintendo may have already lost the console race before Sony and Microsoft even entered.

“Right now Nintendo doesn’t look very good,” said Pachter.  “They’re not compelling on the content side, especially with Electronic Arts pulling its support. They certainly are behind on the multimedia side. They’re behind on specs…a 32 gig hard drive versus 500. And I really think without third party software support they’ve got a real problem. The only people that are going to buy a Wii U going forward are people who want to play Nintendo first party content. You’re certainly not going to buy it to play Madden or FIFA if there is no Madden or FIFA on the Wii U, so Nintendo is going to come in a distant third in this next race unless they do something to get third party support.”

There are some similarities between what happened with Sega’s last console, the Dreamcast, a cool system that lost its “wow” factor as soon as Xbox and PlayStation 2 launched. Sega exited the industry as a game manufacturer afterward. But I was one of the gamers who had been consistently screwed by Sega buying disasters like the Sega Saturn, Sega CD and Sega 32X. Nintendo is coming off a high with its Wii and it still does extremely well in the portable space with Nintendo 3DS and Nintendo DS – even as competition mounts from Apple, Samsung and other tablet and smartphone makers.

I think E3 would be the perfect time for Nintendo to cut the price of Wii U – something it desperately needs to do. The company had success after launching the Nintendo 3DS for too much and with too little big franchise support. Sound familiar? But things are different for Nintendo Wii U, unfortunately, for Nintendo fans.

“Wii U is going to fall farther behind if I am right on pricing, absent a cut of their own,” said Pachter. “I don’t think the Wii U will repeat the success of Nintendo 3DS because competition from Xbox One and PS4 is tougher than competition from PS Vita.”

These days, the game publishers that are still supporting Wii U release (mostly) ports of games from last year with a short press release and not even review copies – likely because we’ve already played these games (minus a few GamePad additions) already on PS3, Xbox 360 or PC.

E3 should definitely make the Nintendo die-hards happy if franchises like Smash Bros., Mario Kart, Legend of Zelda, Pokemon, Yoshi and Wii Fit are playable at the Nintendo booth. Bayonetta 2 is also expected to be at the show. While EA has bailed on Nintendo and Ubisoft has taken Wii U exclusives like Rayman Legends to PS3 and Xbox 360; Sega has come to Nintendo’s rescue. They’re bringing three Sonic games to Wii U, including Mario & Sonic at the Winter Games and Sonic Lost World. But will that be enough?

Analysts had counted out Nintendo before Wii launched, following the Gamecube flop. While price point will help Nintendo, they need some type of momentum. Sony and Microsoft have both made mistakes pre-E3, but Nintendo has failed to capitalize on opportunities.

Pachter believes Xbox One and PS4 are similar – and both well advanced of Wii U. Sure, their press conferences were night and day with Sony focusing on next gen games like Killzone Shadow Fall, Infamous Second Son and DriveClub and Microsoft spending the bulk of their time talking about entertainment functionality.

“I actually think on the game side PS4 and Xbox One are almost identical,” said Pachter. “If you look at the specs, it looks like it’s just the same exact thing. I think gameplay will be identical, but Xbox One has much more multimedia functionality.”

Anyone who watched that laborious press conference knows all about that media functionality. While some of the Minority Report functionality is pretty cool, I caught a Samsung Smart TV commercial tonight that featured gesture controls. So the Consumer Electronics companies aren’t going to sit back and let the console makers lead for very long (considering how quickly new TVs are released versus new game hardware). But there’s another reason Microsoft may have focused so much on entertainment, and it has everything to do with Wii U.

“I think that’s where the market is,” said Pachter. “The entertainment functionality is a great hook for a family with small children who otherwise might be a Nintendo candidate for Wii U or for a Wii. Any gamer who wants to talk his parents into getting him a new console can point to all those features and say, ‘Let’s get Xbox One now because we can tune TV and we can talk on Skype to grandma. That’s actually pretty compelling, but I really think it’s an attempt to win over the non-gaming household or the household with small children who might have considered the Xbox just too hardcore for their kids.  I think Microsoft felt this will be a successful strategy.”

Another thing that might be haunting Nintendo, even to this day, is the success it had with Wii. By growing the gaming audience to older adults and even senior citizens, Nintendo made a lot of people happy with Wii Sports. In fact, some people are so happy that retirement homes and many households still break out the Wii U when friends and family come over. They didn’t want to upgrade to Wii U because they were happy with Wii. Nintendo has an uphill battle making more people not only happy with Wii U with cool exclusive games, but to entice them to even buy one in the first place. Sony and Microsoft aren’t making things easy on them.