Nintendo's intellectual properties like Mario are its strongest assets. Is the venerable company going spread the characters around?

Nintendo's intellectual properties like Mario are its strongest assets. Is the venerable company going spread the characters around?

Nintendo, the last company standing out of the giants who ruled video games in the 1980s, is in serious trouble.

The home of Mario and Zelda has long attracted a devoted fanbase, but its latest console, the Wii U, has failed to catch on. Revised sales figures revealed to shareholders last week demonstrated just how dire the situation has become: projected financial year sales of 9 million Wii U consoles was cut to only 2.8 million, and projected game sales for the console were cut from 38 million to 19 million.

The financial result of this is a reversal of the projected ¥55 billion (AU$600 million) profit to a net loss of ¥25 billion (AU$270 million), Nintendo's third consecutive annual loss. Thanks to the wild success of Nintendo's previous hardware, the popular DS handheld and the original Wii, Nintendo has a large cash reserve to draw from, estimated at around ¥463 billion (AU$ 5 billion), but the news will no doubt see the company's stock price plummet.

In announcing these deeply disappointing figures, Nintendo's president Satoru Iwata made some interesting comments about the changing habits of video game fans. "We are thinking about a new business structure," he said. "Given the expansion of smart devices, we are naturally studying how smart devices can be used to grow the game-player business."

What does this mean, precisely? Could we be seeing Mario iPad games or a Nintendo-branded Android phone? Nothing so drastic, apparently, with Iwata adding, "It’s not as simple as enabling Mario to move on a smartphone."

The future of dedicated video gaming handhelds has been in question for some time, with many commentators - including yours truly - wondering how long people will continue to buy a device that only plays games when they already have a powerful phone or tablet in their pocket. Sony's PS Vita was subject to the same kind of questions.

Still, Nintendo's current generation of handheld is doing fairly well, significantly better than its TV-bound sibling. In almost three years on sale, the 3DS has shifted around 40 million units worldwide, and games like Animal Crossing: New leaf have been very strong sellers. Nintendo's overall figures would be a lot worse than they are without the 3DS softening the blow.

On the other hand, there is obviously still a strong market for non-portable gaming hardware, with both the PlayStation 4 and the Xbox One smashing through sales records around the world. In only two months on sale, they have sold around 4.5 and 3 million units respectively.

Clearly, something is going wrong with Nintendo, and Iwata was brave enough to admit it. he said that the company needs to evolve, and to "propose something that surprises our customers".

"The way people use their time, their lifestyles, and who they are have changed," he said at last week's press conference. "If we stay in one place, we will become outdated."

It is a very fine line that Nintendo needs to tread. Mixing things up too much risks alienating their dedicated fans, those who are happy with their beloved old games undergoing slow evolution rather than sudden transformation. On the other hand, Nintendo's critics are calling them "out of touch" and "old-fashioned". Iwata himself said that he had failed in his duty as president to issue "the appropriate instructions".

It seems, then, that change is on the horizon for Nintendo. If they decide to follow their old arch-rival Sega out of hardware manufacturing entirely and become only publishers of games software, then they will be in a strong position: arguably, their intellectual properties have long been more valuable than their consoles.

Could Nintendo become the company that makes Mario and Zelda games for PlayStation, Xbox, and iPad? I guess we'll have to wait and see.

One thing is certain, though: they will surprise us. They always do.

 - James "DexX" Dominguez

twitter Screen Play is on Twitter: @jamesjdominguez