The Nintendo WiiU video game console designed for the home is shown in this undated handout photo. Nintendo, once a leader in hardware sales, is struggling to win users from Microsoft Corp and Sony Corp and is coming off a disappointing launch of its 3DS handheld device.
REUTERS/Courtesy of Nintendo/Handout
Satoru Iwata, president of Nintendo Co., Ltd., presents the new Wii U controller at a media briefing during the Electronic Entertainment Expo, or E3, in Los Angeles June 7, 2011.
REUTERS/Mario Anzuoni
Reggie Fils-Aim, president of Nintendo of America, presents the new Wii U controller at a media briefing during the Electronic Entertainment Expo, or E3, in Los Angeles June 7, 2011.
REUTERS/Mario Anzuoni
Reggie Fils-Aim, president of Nintendo of America, presents the new Wii U controller at a media briefing during the Electronic Entertainment Expo, or E3, in Los Angeles June 7, 2011.
REUTERS/Mario Anzuoni
Shigeru Miyamoto, Senior Managing Director Nintendo Co., Ltd., gestures while speaking at a media briefing during the Electronic Entertainment Expo, or E3, in Los Angeles June 7, 2011.
REUTERS/Mario Anzuoni
By Liana B. Baker and Isabel Reynolds
LOS ANGELES, Jun | Wed Jun 8, 2011 12:42am EDT
(Reuters) - Nintendo Co Ltd's launch of its next-generation Wii console failed to address investor concerns the firm is missing the gaming market's shift to social networking, sending its shares tumbling to a five-year low.
The Wii U, complete with a new touchscreen controller, is aimed at winning back hardcore gamers from rivals such as Microsoft Corp's Xbox and won early praise from industry critics at its launch at the E3 videogame expo on Tuesday.
But Nintendo shares fell 6.5 percent in Tokyo on Wednesday, the most since the March earthquake, to levels not seen since before the original Wii was launched to rave reviews in late 2006.
Investors said they needed more details on price and other specifications and were also worried Nintendo remained too centered on hardware as the gaming market increasingly shifts to a battleground over software.
"Although some experts seem to like the new device, I expected Nintendo to move more into the social networking business," said Mitsuo Shimizu, deputy general manager at Cosmo Securities in Tokyo.
"It's a warning from investors that the company should reconsider its business strategy and move more aggressively into social gaming operations."
Industry critics in early reviews praised the innovation embodied by the separate device, larger than Apple Inc's iPhone, but smaller than the iPad.
The new controller has camera and video-call capability, plus an array of buttons and functions that might entice gamers who play longer and more intensely.
"Nintendo is ahead of the curve for once," said Wedbush analyst Michael Pachter. "It can do anything a tablet can do and people might be asking, why can't my iPad 2 do this kind of gaming too?"
Nintendo retains the lead in gaming hardware, but is struggling to win users from Microsoft and Sony Corp after the disappointing introduction of its 3DS handheld device.
Gaming executives hope the new Wii can jumpstart a $65 billion video games industry -- surpassing Hollywood in size -- still struggling to rebound from the recession.
The entire console is still under development, but is expected to go on sale between April and December 2012. No price has been set, but some speculate it could move for $299, or about the same as an Xbox twinned with a Kinect motion-sensing system.
"The controller is a breakthrough," said Sterne Agee analyst Arvind Bhatia. "Overall, Wii U looks good, but I have to say I wasn't blown away."
That is a far cry from how the Wii took the industry by storm, bringing motion control to gamers accustomed to joysticks and mice. Whether its latest gadget can win over a notoriously fickle market remains to be seen.
Though it may not repeat the first Wii bonanza, the new Nintendo device, nonetheless, will exert some pressure on traditional console rivals such as Microsoft and Sony to come up with new systems.
"It's smart for a number of reasons. There are two levels of interface, the touchscreen for casual gamers and the buttons for more core types," said Ricardo Torres, editor-in-chief for popular games site gamespot.com. "They have a lot of games core gamers care about.
"It's like a sandbox for developers. It's up to them to decide the experience that works best."
But all game console makers risk drowning in a deluge of game-capable phones. In 2010, shipments of such smart phones were more than 1 billion units compared with only around 50 million home game consoles and around 40 million handheld devices, according to research firm iSuppli.
"Their near universal presence gives them the potential to become a viable competitive threat," it said.
STEALING THE LIMELIGHT
The new console is the first Nintendo device to support high-definition graphics and will sport a microprocessor or brain from International Business Machines Corp and graphics processors from Advanced Micro Devices Inc.
But it was the controller that stole the limelight on Tuesday.
Its 6.2-inch touchscreen works like a second display and can show the same images that are on the TV screen or provide gamers with additional information, giving them an edge over competitors.
The Wii U's controller can also be used to make voice calls and run old Nintendo games. It has motion-sensor capabilities and works in conjunction with existing Wii controllers. With its array of buttons, the device could appeal to hardcore gamers who could use it for first-person shooter games.
The device also acts as a stand-alone gaming gadget. It can, for instance, continue running a game on the touchscreen while someone else watches TV. But it functions only in wireless connection with a Wii U console.
"It's still a tethered experience so it's not fully tablet-like," said BMO Capital Markets analyst Ed Williams. But "without a doubt, they are ahead of their peers and are putting themselves in a different position. But what we still need to see is how it will go over with consumers."
The initial game line-up suggests Nintendo is trying to woo hardcore gamers back to the fold, with popular first-person shooters such as Ubisoft Entertainment SA's Ghost Recon, Sega's Aliens and Electronic Arts Inc's Battlefield 3 on the slate.
"There are so many developers already responding to creating new games for the videogame system we are proposing with Wii U," said Nintendo global president Satoru Iwata. "It can satisfy all tastes with deeper gameplay actions."
With more than a year to market, Nintendo could still make modifications and the game slate might change.
This week, Sony announced plans to begin selling a handheld, 3D-enabled games device for $299 -- which critics immediately deemed too pricey.
(Additional reporting by Tim Kelly and Antoni Slodkowski in Tokyo; Editing by Edwin Chan, Joseph Radford and Lincoln Feast)
Credit: Reuters (www.reuters.com)
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