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Nintendo Stock Drops After E3 Showing

While many were impressed by the Smash Ultimate reveal at Nintendo’s E3 presentation, the rest of the presentation left much to be desired. And it would seem that stockholders share these concerns, as Nintendo’s stock has plunged a whopping 16% so far in June.

With stock gains from both Electronic Arts and Activision after their promising shows raised anticipation on many of their key projects, investors likely expected Nintendo to follow suit, revealing a host of new titles that promised to bring great experiences and, most importantly for stockholders, great profits. But Nintendo’s showcase took a different tone than the aforementioned two companies, or than Microsoft or Sony for that matter.

Rather than a rapid-fire display of title after title, most of the reveals were quite lackluster, save for Smash Bros. And while Smash Bros. is sure to pull huge profits for Nintendo, it ignores the “games as a service” trend that has been a buzz word for investors in gaming economics for some time now.

While the term may not be as popular among consumers, it makes sense for the big money: Offering a “service” rather than a one-time product drop speaks of consistency and a reliable profit to investors, just as it makes gamers confident that the “service” title will receive a steady flow of new content. Investors and gamers look at new game releases in almost exactly the same way: Gamers want them to be good because they want to enjoy playing them, investors want them to be good because good games sell well, which brings them more wealth in return.

And while Smash Ultimate looks to be a “good game”, it’s still just a single title in an overall underwhelming conference. ScreenRant, a gaming and entertainment news sites, had similar sentiments about the quality of the show: “In general, the reveals weren’t that interesting, with little to get the heart racing and a severe lack of information on such massive franchises as Pokemon.”

Pokemon, with its great history of successful sales and high-performance offshoots (Such as the massive success of Pokemon Go), is one of Nintendo’s guaranteed moneymakers for big conferences such as E3, but its underperformance did not sit well with investors.

To them, Smash is just one of the multitude of breadwinner copyrights that Nintendo has under its belt. Smash sits alongside the Super Mario titles, Pokemon, the occasional Metroid games, the highly anticipated Bayonetta 3 from Platinum Games, Mario Party (Which did receive a reveal, but was mostly deflated by the amount of time Smash was given at the conference) and more.

The length and many details shared about Smash Ultimate was also a problem in the reveal. While gamers may have appreciated all the information given, investors must constantly keep their eyes on the horizon if they want to ensure a consistent income. And it was explicitly stated by series creator Masahiro Sakurai that this reveal trailer contained most of the information for the new game, and fans should not expect a lot of big reveals in the coming months. This is a confusing decision by Nintendo, as consumer excitements degrades quickly, so it’s often smarter to save the biggest reveals for the moments before a game’s launch.

There are a few reasons why Nintendo might have revealed so much at the direct. One is that they were coinciding with the wishes of Sakurai, who has put a tremendous volume of work into this title. This is unlikely, however, due to the standards of Japanese work culture, and even if it is true, it’s a poor business decision. The other possibility is more obvious, and worse for Nintendo: They didn’t have much to show at the conference, other than Smash Ultimate. If Ultimate were to be removed from the presentation, Nintendo’s showcase was fairly poor. And while the appearance of a new Smash might be enough to make fans ignore that, investors are masters at uncovering the truth behind marketing ploys designed to grab consumer attention.

The new smash game might offer “the most smash for your buck” as Sakurai said in the game’s reveal, but those bucks aren’t big enough to satisfy the big money, and Nintendo might end up paying for their mistakes.

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