What Happened to Nintendo Co., Ltd (ADR) (NTDOY)? Sony Corporation (SNE), Microsoft Corporation (MSFT)

If you invested in Nintendo Co., Ltd (ADR) (PINK:NTDOY) with American Depository Receipts (ADRs) in 2006, you were likely ecstatic as the stock climbed through the roof through 2008. What caused this beautiful rise? The introduction of the Wii, of course. But if you held on to the company, you’ve likely been continuously disappointed over the last few years, including 2012, which is when the Wii U went on sale in November. So what gives? What happened to Nintendo?

The short answer is nothing. And that’s the problem. Nintendo continues to do business and produce hardware and game software just like it always has. In a changing digital market, that’s no way to run a company.

A little history: While Microsoft Corporation (NASDAQ:MSFT) and Sony Corporation (NYSE:SNE) fought for the hearts and minds of hardcore gamers with the Xbox 360 and the PlayStation 3, Nintendo decided to go after everyone else. Instead of focusing on intense upgrades to graphics, Nintendo focused on ease of use and pretty soon grandparents were bowling with their grandchildren using the Wii’s incredibly easy and intuitive interface. It was a glorious moment in Nintendo history when they seemed to figure out what everyone else had been missing all along, everyone likes to play.

Fast forward to 2013. Microsoft and Sony have aging consoles and a lackluster stock performance for more reasons than just their game divisions. Windows 8 hasn’t pulled Microsoft out of a slump that’s been going on over the last year. With rumors flying that the new Xbox won’t play used games and Sony beating them to the punch with the PlayStation 4, Microsoft doesn’t look like the exciting player it once was. Meanwhile, Sony has its own problems, although last week’s announcement of the new PlayStation 4 did perk things up a bit. We’re likely to see more trading in both companies in weeks to come as people try to bet which console will win out, but it doesn’t look like it will be the Wii U.

Why not the Wii U? What went wrong? Why is it underselling? It should be going gangbusters as the first new console since 2006. The device itself works fine. It’s the existence of the device that’s the problem. Instead of being amazingly simple to use, the Wii U adds a level of difficulty that people who wanted the Wii in the first place don’t want. While the Wii U boasts full HD graphics, the Xbox 360 and PlayStation 3 have had excellent graphics for years; so hardcore gamers have little to gain by purchasing the new system. What about grandma and grandpa, shouldn’t they be ready for an upgrade? Not likely. Since Microsoft introduced the Kinect for the Xbox 360, allowing for play without using controllers at all, anything that has to be held in your hand for sports and dance games on family game night seems silly and antiquated. Worse the Wii U’s controller looks like a tablet, but you can’t take it with you and play in the car.