Dear Valued Visitor,

We have noticed that you are using an ad blocker software.

Although advertisements on the web pages may degrade your experience, our business certainly depends on them and we can only keep providing you high-quality research based articles as long as we can display ads on our pages.

To view this article, you can disable your ad blocker and refresh this page or simply login.

We only allow registered users to use ad blockers. You can sign up for free by clicking here or you can login if you are already a member.

Apple Inc. (AAPL) Is Moving Into Video Games

The last six years have been terrible for Nintendo Co., Ltd (ADR) (OTCBB:NTDOY)‘s shareholders. After peaking in 2007 with a market cap near $85 billion, Nintendo has steadily collapsed and has now lost over 76% of its value over the last five years.

Unfortunately, this could be the beginning of the end for the once iconic video game company. Apple Inc. (NASDAQ:AAPL)‘s coming entrance into the video game market, a fairly likely possibility, could signal the end of Nintendo Co., Ltd (ADR) (OTCBB:NTDOY).

Apple Inc. (NASDAQ:AAPL)

Nintendo’s business model is becoming obsolete

Ironically enough, Apple Inc. (NASDAQ:AAPL) and Nintendo Co., Ltd (ADR) (OTCBB:NTDOY) have similar business philosophies. Both believe in marrying hardware with software, and maintaining strong control over their devices. Consumers buy Apple devices to get access to their operating systems (iOS, Mac OS); likewise, gamers buy Nintendo’s consoles to play Nintendo’s games.

But because Nintendo Co., Ltd (ADR) (OTCBB:NTDOY) is strictly a gaming company, it is increasingly unable to compete with its more diversified rivals. Nintendo’s latest console, the Wii U, is underpowered compared to the upcoming PlayStation 4 and Xbox One. At the same time, Nintendo’s online services — an increasingly important part of the modern video game experience — have been widely criticized.

While Sony pushes into streaming games and Microsoft bets on the power of the cloud, Nintendo Co., Ltd (ADR) (OTCBB:NTDOY)’s latest console looks almost like a relic of a foregone era. Is it any wonder that sales of the Wii U have been so poor? From April through June, Nintendo sold just 160,000 Wii Us — less than the 210,000 the original, 7-year old Wii sold.

Nintendo’s savior has been its handheld, the 3DS. Since May, the 3DS has outsold all other video game consoles in the US, and has been one of the top selling consoles in the world. In addition to the console itself, 3DS game sales have also been strong.

Apple is moving into video games

Nevertheless, Nintendo’s future looks to be dire. While many might be inclined to see Sony and Microsoft as dooming Nintendo, Apple Inc. (NASDAQ:AAPL) stands as a far more menacing threat.

For a while now, Apple Inc. (NASDAQ:AAPL) has been making gaming a more prominent focus of its iOS efforts. Strategically, this makes sense: According to a Business Insider study, 43% of the time people are on mobile devices, they’re playing games. When it introduced the iPad 3, Apple dedicated an entire portion of its presentation to the gaming capabilities of the tablet. But as any gamer knows, touch screens are far from ideal — without buttons and joysticks, games are limited in their complexity.

Enter iOS 7. The next update to Apple Inc. (NASDAQ:AAPL)’s mobile operating system, set to be released this fall, includes support for third-party controllers. An iOS device, combined with a controller, would make a formidable hand-held gaming console. But Apple’s efforts could even extend to the living room. Apple executives, including Steve Jobs and current CEO Tim Cook, have hinted quite strongly that Apple is planning to release a television set. Piper Jaffray analyst Gene Munster believes consumers will be able to buy Apple’s TV sometime in 2014.

A TV with iOS and controller support could wreck havoc on the existing video game industry, at least according to one of the creators of original Xbox, Nat Brown. Apple’s iTunes open model software makes the process of creating and publishing games easy for developers, and bringing that model to the living room could be a tremendous success.

The importance of the casual gamer

While Brown believes that Apple could threaten the entire video game establishment, Nintendo in particular would be exposed. In general, Nintendo’s games tend to appeal to a more casual audience, the sorts of gamers that would be inclined to play on an Apple TV.

DOWNLOAD FREE REPORT: Warren Buffett's Best Stock Picks

Let Warren Buffett, George Soros, Steve Cohen, and Daniel Loeb WORK FOR YOU.

If you want to beat the low cost index funds by 19 percentage points per year, look no further than our monthly newsletter.In this free report you can find an in-depth analysis of the performance of Warren Buffett's entire historical stock picks. We uncovered Warren Buffett's Best Stock Picks and a way to for Buffett to improve his returns by more than 4 percentage points per year.

Bonus Biotech Stock Pick: You can also find a detailed bonus biotech stock pick that we expect to return more than 50% within 12 months.
Subscribe me to Insider Monkey's Free Daily Newsletter
This is a FREE report from Insider Monkey. Credit Card is NOT required.