Nintendo Stock Value Drops 6.5 Percent After Switch Reveal, Some Analysts Doubt Its Appeal

Shares of gaming giant Nintendo rose in the lead-up to the Nintendo Switch reveal, but now that it's been announced, the company's share value has dropped. The Tokyo Stock Exchange has now closed for the day and Nintendo's share price was down 6.5 percent. This erases the $1 billion in market cap that Nintendo added when sales surged earlier this week.

The drop in share value could be attributed to a number of things. Dr. Serkan Toto, an analyst in Asia, says he's skeptical about the Nintendo Switch and its ability to reach a wide audience.

"Sorry, but is a portable/home console approach really that innovative in 2016? I am most concerned about the target group of the device: who else but die-hard Nintendo fans will buy the Switch?" he told GI.biz. "The Switch lacks a killer feature, and I think it will be very difficult for Nintendo to win back the casual gamers that are mostly on mobile now. In Japan, for example, the mobile gaming sector is already 2-3 times bigger than consoles. Even the PS4 struggles over here. It's going to be a huge challenge to try to reverse that trend."

It's been suggested that Nintendo's Super Mario Run for iOS could help draw people to the console business. But Toto thinks this may not happen. "I find it very difficult to picture a scenario where a critical number of mobile, free-to-play users converts to console and buy hard- and software for several hundred dollars upfront. Different markets, very difficult to bridge," he said.

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Superdata analyst Joost van Dreunen also said he questions the Nintendo Switch's broad appeal.

"I have my reservations with regards to the breadth of the audience it targets. The Switch will likely be most popular among a younger audience: its functionality is uniquely geared toward pre-teens and teenagers," he said. "While the device seems much less like a toy than we're used to from Nintendo, its features like backseat multi-player and the ability to have several people play using a single piece of the controller target Nintendo's traditional audience. The reveal video makes a lot more sense to me if you swap out all the adults in it with kids."

Another analyst featured in the story, Piers Harding-Rolls of IHS, said the Nintendo Switch looks like Nintendo's way of defending against the "increasingly robust encroachment of the smartphone and tablet gaming opportunity yet still appeal to traditional console gamers that are looking for a big-screen gaming solution in the home." The system is a console/mobile hybrid that you can play at home or on-the-go. Harding-Rolls said it will be important for the Nintendo Switch to "avoid delivering a substandard experience by trying to be all things to all users."

IHS is predicting Nintendo Switch will sell 2.85 million units worldwide at launch in March 2017.

The analysts in the GI.biz story were also asked about price and they all seemed to agree that Nintendo should not go higher than $300. Read the full GI.biz story here. For more on this subject, check out GameSpot's editor Q&A about what price Nintendo should sell the Nintendo Switch for.

For lots more on the Nintendo Switch, check out GameSpot's coverage in the stories below.

News:

• Nintendo Switch: Reveal Trailer and All the New Details
• New Mario Game Teased for Nintendo Switch
• Nintendo Switch Development Partners Include Skyrim, Resident Evil, Dark Souls Devs, and More
• Xbox Boss Reacts to Nintendo Switch Announcement
• Nintendo Switch's Amiibo Support Confirmed
• Skyrim Not Confirmed for Nintendo Switch, Despite Appearing in Video Reveal
• Nintendo Switch Could "Redefine" Gaming, Ubisoft Says
• The Nintendo Switch Dock Is "Not the Main Console"
• Nintendo Switch Price, Hardware Specs May Not be Revealed This Year

Features:

• Nintendo New Switch Console: Our Biggest Unanswered Questions
• How Accurate Were the Rumors About Nintendo Switch
• How Much Should Nintendo Switch Cost? -- GameSpot Q&A
• Analyzing the Nintendo Switch's Tegra Processor