Nintendo has officially announced the Wii's successor, meaning the Wii will be on its way out in the coming years. It's time to look forward, and see where the future takes us, and what Nintendo needs to do to keep competing in today's market. They're not just competing against the 360 and PS3. They'll have to compete with the successors to those two consoles, as they'll likely release during the lifetime of Nintendo's upcoming console.
Nintendo will be announcing their next generation system in the wake of a substantial financial loss. Their most recent fiscal report shows net income is down roughly 66%. While the newly released 3DS and Legend of Zelda: Skyward Sword will certainly improve their situation, they aren't sure-fire fixes. It's also important to keep in mind, just as their fiscal report notes, that the recent earthquake and tsunami in Japan are going to have some effect on all this. How substantial that effect is is unknown, but it needs to be kept in mind.
One aspect in which Nintendo is generally agreed to be lacking is their relationship with third-party developers. It's a rocky one, and after the Wii it'll be very difficult to build a strong relationship working forward. Nintendo's focus, in regard to software, has been on first-party titles for a very long time. Their fiscal report mentions their commitment to their so-called “evergreen” titles. However, while Nintendo developed software is often quite enjoyable, they cannot support their consoles alone. They need developers like EA, Capcom, Square Enix, and Ubisoft.
On the Wii, the sales weren't there for any full-fledged support, and Nintendo's largely to blame. Part of the fault lies with the Wii itself. It doesn't have the graphical power of other systems, which is great if you're a smaller developer but restrictive for anyone with a substantial amount of money to throw at a project. However, that's a very small part of the problem. Thinking back on any E3 or similar event, the difference between Nintendo and Sony, for example, is immediately obvious.
Sony's events will talk about the upcoming Final Fantasy title, another Killzone, Metal Gear Solid, Ratchet and Clank, and the list goes on. These are all third-party games that Sony gives their full backing and support. In contrast, Nintendo conferences are all about Zelda, Mario, Donkey Kong, Kirby, Metroid, and the like. These are all first-party titles. If anything has been learned from the Wii, it's that third-party developers almost only succeed on it when they're making the next game in a Nintendo franchise. The main exception to this was Metroid: Other M, and that is largely the blame of the very divisive reviews the game saw. Even taking that into account, Other M certainly didn't do badly. It just didn't do as well as Nintendo had hoped.
This behavior exhibits a basic flaw in Nintendo's way of thinking. They either have an incredibly distrust of third-party developers, or have become so reliant on their own titles that they're afraid of the risk of supporting anyone else's. Either way, this is something that Nintendo has to change in the future, else their next console will be forgotten the moment Sony and Microsoft reveal their own next-gen consoles. At this year's E3, the thing to watch for will be what Nintendo says to look forward to for their console. If we don't hear about a substantial amount of third-party backing for the device, the system may be dead in the water in the eyes of many studios. A quick look at the 3DS, already loaded with third-party remakes, shows signs that many may still feel unsure just how much support they can expect from Nintendo in the future.
It's not just developers that Nintendo seems skeptical of, at times. They certainly seem wary of the average user. The bloated mess that is Nintendo's Friend Code system, and the weak online support their games generally have almost feel like an attempt to protect Wii users from the ever-present threat of each other. That absolutely must not be the case with the Wii's successor. Multiplayer and online is more crucial than ever to video games. It's one of the basic building blocks many games rely on. Sony's online network going down for a week has many users in full panic mode. Such a strong response to the loss of this feature proves that it is a major component of modern gaming. EA Sports, at a recent event, emphasized their commitment to online and multiplayer. A company as dedicated to that goal as they are is going to be reluctant to put much focus on a system without that support.
Nintendo's ability to innovate may be above and beyond that of Sony and Microsoft, but Nintendo lacks the basic foundations that allow Sony and Microsoft to succeed. Either Nintendo will fix this, or their weak fiscal year will be repeated in the very near future, if not worse.