By Kyle Kulyk

As the saying goes, where there’s smoke, there’s fire and lately there seems a lot of smoke centered over Nintendo, with good reason. Recently, Nintendo revised their annual forecast, predicting profits to plunge to 27 year lows on the news of losses related to the 3DS, waning Wii sales and foreign exchange concerns. It’s difficult to discuss Nintendo’s future without having die-hard fans descend on you like a pack of furious monkeys, but I feel the games industry and gamers alike should be concerned about what this could mean for the iconic company and the impact on the industry.

There’s no denying that the Wii was a runaway hit, however with Wii sales beginning to fade Nintendo has readied its replacement in the Wii-U. The Wii-U looks to match other current gen consoles graphically, but it will use both Wii controllers and a giant, expensive looking iPad like controller. Now, correct me if I’m wrong, but does anyone else see this as an issue? Growing up with three other siblings, I can only imagine the chaos in presenting us with the choice of one giant, special controller with everyone else receiving regular controllers. I’m all for teaching children the value of sharing, but let’s be realistic here. Analysts have also expressed their concerns and investors began to dump Nintendo shares en masse after the Wii-U’s reveal. Does the Wii-U even have a shot at the Wii’s level of success, or will it be passed up as being nothing more than the Wii HD with an ipad attachment?

And what if the Wii-U doesn’t match the Wii’s success? Nintendo has faced struggles with home consoles before and pulled through. Many considered the Gamecube a blunder with complaints of it being too “toy-ish” and for not offering the technical advantages available from their competition, but Nintendo pulled through. What’s different this time?

I think the main difference this time, and the real reason we need be concerned for one of the industry giants is due to changes in the portable gaming market. Portable games have been Nintendo’s bread and butter for some time. Even back when the GameCube was attempting to wrestle out a corner of the market, Nintendo leaned on excellent sales from their GameBoy and GameBoy Advance platforms, both for hardware and software sales. The GameBoy Advance didn’t even begin to decline until its replacement, the Nintendo DS, became available and the DS picked up the Nintendo revenue torch and ran with it despite what many considered a lacklustre launch.

Unlike the GameBoy Advance, however, the DS has begun its sales descent well ahead of the launch of the 3DS, which is a large part of why Nintendo found themselves forced to slash their forecasts. The DS’s sales decline coincidentally (or not) coincided with a surge in another device. The Apple iPhone. That’s why as a long-term industry watcher I think Nintendo is in trouble. The DS’s replacement, the 3DS, has already received a massive price drop to spur sales while agencies like Reuters are describing the device as a “flop” amidst complaints of a lacklustre software line-up and confusion regarding the safety of 3D displays and children’s eye development. Industry analysts are already predicting far fewer 3DS units sold compared to the DS’s accomplishments, so where does that leave Nintendo? If the 3DS is unable to find a foothold in a new market where casual gamers can find their gaming fix via their cell phones and if Nintendo is hit with a double whammy if the Wii-U fails to capture consumers – where does that leave Nintendo?

It was heresy in the past to even suggest that Sega might be forced to withdraw from the console market, but we all know what happened there. Could we see Nintendo become a software only company with Mario and Link making appearances on Sony’s Playstation? Might a partnership with another company to create a unified console take some of the burden off Nintendo when it comes to the enormous costs associated with new hardware development? Might we see Nintendo apply their portable gaming expertise to the Android and iPhone markets or will Nintendo merely weather this storm? No matter what happens, my gut tells me we may witness a shift within the games industry sooner rather than later.