Is Nintendo Reconsidering the Wii U? [Nintendo Pulls Wii U from GCom]

We are wondering: Is Nintendo still certain about the appeal of its Wii U console? The company has just pulled the device from the display of Europe’s most significant video game trade show later this month.

Nintendo confirmed that it has decided not to show the Wii U at GamesCom 2011 in Cologne, Germany (August 17 – 21). The company also canceled all press events surrounding the Wii U and simply said that “security concerns” are the reason why it can’t show and discuss the Wii U.

Security concerns? Seriously?

The Wii U was met with enthusiastic first look reports when Nintendo showed a rather half-baked device on June 7 at E3 in Los Angeles. The console was far from being ready for prime time, but was pitched as Nintendo’s next idea how the company aims to transform the traditional video game console at home. Analysts, however, were generally less excited and we have to admit that we also have concerns about the relatively bulky touch screen game controllers that may not only be expensive, but may also alienate Nintendo’s current customer base of Wii lovers.

We don’t know whether this is the case, but we do know that Nintendo’s previous confidence in its ability to transform the video game market has cracks. The 3DS has completely missed its mark – it was priced wrong and Nintendo could have invested in a technology – 3D- that may not be worth as much as it thought and a dramatic price cut is now put in place to save Nintendo from a catastrophic blunder. Since the release of the Wii in 2006, the video game market has changed and has become incredibly competitive. Nintendo may be strong enough to survive the 3DS, but it may not be able to survive a failure of the Wii successor.

The console following the Wii will have to address the market the Wii so successfully created and expand on it by fixing the errors Nintendo has made with the Wii: The Wii U will need many more third-party games and have more hardcore gamer appeal. In the end, all those casual gamers that are in love with Wii Bowling are unlikely to buy many games – hardcore gamers are the lucrative customer base Nintendo really wants. However, giving up the casual gamer may be a dangerous game and Microsoft is just waiting to attack Nintendo and steal casual gaming customers who are willing to move up, and who are willing to spend more money on hardware, content and services. Nintendo has more than 60 million Wii customers and it should try to keep as many of them as possible.

The Wii U is, in this view, a very controversial console. It will be tough for Nintendo to explain the value of a tablet controller, if it could have integrated the existing DS with the Wii and if we think about the fact that a 2 player system Wii U is unlikely to cost less than $400 – $500. There was nothing wrong with the Wii controller and a simple evolution could have been a recipe for success: A tablet is more complicated and clumsy to use, it will limit the number of people who are able to use such a tablet (young kids, for example, are not likely to enjoy a bulky tablet as a controller) and is, in our view, the wrong way to go for Nintendo.

Pitching a Wii U that changes the Wii’s model of success may be an overly risky move for Nintendo at this time. We have heard before that Nintendo may be reconsidering the tablet-style controller and possibly making it optional. Nintendo’s unexpected decision to pull the Wii U from GamesCom 2011 will fuel more speculation that the console could be changing.

Security concerns? We don’t buy it.