November 14, 2011 | In: Opinion

Will Nintendo Go Bankrupt?

I used to love Nintendo. I remember I had a few Nintendo games when I was a kid (you know, these games that consisted of two screens, such as “Donkey Kong”, “Green House”, “Mickey and Donald”, “Octopus” – now I remember, these games were called “Game and Watch”).

Back in 2009, I bought a Nintendo DS and played New Super Mario Bros. I used to play it for only 15-20 minutes a day and that was it. I loved it for a few months, and I then put it back in its box where it’s now gathering dust.

I then bought a Wii back in April of 2010, I knew it was fun but I didn’t have the chance to play it. Of course, the graphics were not great but the gameplay with Nintendo games is always memorable and fun because of the simplicity and because Nintendo’s main philosophy behind games is that they should be entertaining, non-addictive, and non-stressful. Needless to say, the Wii is in another box at the moment, also gathering dust.

Now a couple of weeks ago, I installed angry birds on an Android powered phone, and then I knew were the hype about this game is coming from. It is so fun, and yet each level can take a maximum of 5 minutes, and it is playable on your mobile phone, something that you carry with you all the time. I don’t think that everyone out there can say the same thing about the Nintendo DS. I think you got my point, why buy a Nintendo DS when you have a smartphone?

Of course, some would say that little kids don’t carry smartphones, but even if that is 100% true, then in my opinion, Nintendo has now lost at least 90% of the adult portable gaming market to smartphones.

Additionally, every Nintendo game sells for at least $29.99. Angry birds (I have no idea why I keep writing Angree all the time before correcting it to Angry), which is by far the best game on a smartphone, is free. Additionally, the maximum amount that you pay for any Android game is $5, and there are so many free games out there.

I think it’s obvious that at best, the future of the Nintendo DS or DSi is grim at the very best. It’s only a matter of time before Nintendo gets out of the mobile gaming market (it’s sad because Nintendo stayed there for decades).

Which leaves Nintendo with the Wii, but isn’t the Wii now so passée? For kids, it’s no longer cool to own a Wii, and for adults, there’s no point of owning it in the first place (games of the same caliber and with better graphics can be even played on a smartphone). I’m not saying that no one is buying a Wii anymore, but all the technology that made the Wii so hot was borrowed by both the XBOX 360 and the PS3.

Does the stock market reflect my sentiment and my thoughts about Nintendo? Let’s see!

Nintendo’s stock for the last 5 years (courtesy of Google Finance)

Above is Nintendo’s stock over the last 5 years, you can see that it reached a top of just over JPY 70,000 (or $907) back in November of 2007, but it is now trading at only JPY 12,500 (or $162), at just a fraction of the peak price, and even at this price, Nintendo is trading at a forward P/E ratio of 170, which means that it’ll take Nintendo 170 years to buy back its stock from the market based on its current earnings. But will Nintendo exist in 10 years from now (let alone 170 years)?

I am saddened to say this, but Nintendo, as a company will go bankrupt sooner or later, and its stock should be a penny stock. If you have shares in this company that has no future, just get out, because Nintendo will go out of business, it is simply a matter of time, and there’s nothing, absolutely nothing that anyone can do to save the company (besides changing the whole vision and the array of products that the company has).

1 Response to Will Nintendo Go Bankrupt?

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Will Sony Go Out of Business? « Fadi El-Eter

May 12th, 2012 at 5:05 pm

[...] The gaming business is not as before: One of Sony’s most important product is the playstation, and the economy built around the playstation (games sold, subscriptions sold, etc…). However, that business is experiencing a major slowdown because many people are electing to play games on their smartphones or their tablets, and not on a dedicated console, which substantially changes the rules of the game for Sony and other companies in the gaming industry, such as doomed Nintendo. [...]

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