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The following is not necessarily the view of the N-Sider staff or even this writer. There are a lot of twists and turns, so be sure to read to the end!
Nintendo's current situation is a precarious one. The company reached a crossroad a decade ago and has seemingly wandered off in a multitude of directions. Nintendo's current position can be attributed to it lacking a concise purpose and objective.
On one hand, the company says Microsoft and Sony aren't competition. Meanwhile, the company whines when the PlayStation 2 and Xbox outsell the GameCube around the world. Nintendo supports console connectivity through LAN and link cables but criticizes playing video games online. There's just way too much contradiction going on in all facets of the company to have any clear idea of the company's goals.
It's simple, Nintendo no longer understands the video game market. The company is still stuck back in the late '80s and early '90s when it practically had a monopoly on the video game industry.
The problem lies in the fact that Nintendo is looking to its past to try to find what it did right, in order to apply all those things that worked back then, to the present.
The thing is, the times have changed, and what worked in 1985 no longer applies to 2004. Moreover, it's not what Nintendo did right in the past, it's what the company did "wrong". By "wrong", I mean out of the ordinary - things that Atari and others weren't doing. Back then, Nintendo was doing things that no one else was. The reason the industry was falling apart in the '70s was because everyone was stagnating. There was simply too much of the "same 'ol thing". It took Nintendo to do something "different" to breathe life back into the industry. In time, all of Nintendo's supposed "wrongs", became the right. And everyone happily followed Nintendo's new lead.
Today, Nintendo is doing the "right", while everyone else is doing the out of the ordinary. Unfortunately for Nintendo, these "out of the ordinary" manifestations are quickly becoming the right. Today, Nintendo is the one stagnating.
A non-cartridge based format has proven to be the right. In addition, convergence (DVD, music playability, etc.) has been proven to be the right. And finally, online gaming is yet another "wrong" that we quickly see becoming the right.
It is those who fail to adapt, that go extinct. Nintendo was once a company who did new things, however with its success, it got comfortable. It got comfortable with cartridges. It got comfortable with a "games only" console. It got comfortable with relying on its own first-party developed games and treating third-parties like shit. And most recently, Nintendo has become far too comfortable relying on its franchise characters to sell games.
All of this has encouraged the company and its employees to stagnate. "New ideas" are pushed aside to make way for the familiar.
And competitors - Sega, Sony, and Microsoft - have done and are doing things "out of the ordinary" to continually pull the rug out from under Nintendo's increasingly fragile legs.
The game playing audience and market conditions have dramatically changed in the past decade and even past year. It changes each generation. Nintendo has simply failed to evolve despite its 20 years of experience in the industry.
Nintendo worked hard in its past to gain its near monopoly with the original NES. It's good to have a strong history, but to rely on it to form a future for you is a mistake. In order to succeed, that hard work that helped you to form your past must be continuous. It's like the high school Prom King - he's now 20 years-old, living in a trailer with 15 kids. You can't simply win one battle and call it a day. A lifetime is filled with battles and you must adapt to them along the way.
If you keep reminiscing about your past, you're guaranteed to miss out on your future.