The Difference in Sony, Microsoft, and Nintendo's Reactions to Failure


Any company that competes in a space long enough is bound to come up against failure. As with any industry, success in the gaming business is about more than delivering hit products and services. It also requires the correct handling of misfires and the ability to rectify previous mistakes so as to improve the broader course. Sony , Microsoft , and Nintendo have all seen products land to less-than-stellar reception in the current hardware cycle. How do the three companies' respective approaches to failed products differ? Which of them are dealing with missteps in an effective manner?

Sony's handling of the PS Vita failure 
Sony's PS Vita is the follow-up to its successful PSP handheld. While the PSP endured problems with piracy throughout its lifecycle, the system went on to a healthy performance, selling more than 80 million units worldwide before Sony's recent and drastic shipment reduction. The PS Vita has failed to match PSP's sales performance across nearly every important metric. Exact hardware numbers for the Vita are difficult to find, largely because Sony has done an effective job of hiding them. Sales of the PSP and the PS Vita have typically been reported as a combined figure, but Sony's new handheld is well below 10 million sales after more than two years on the market.

With the Vita's bleak future readily apparent, Sony is taking steps to de-emphasize the device. President of Worldwide Studios Shuhei Yoshida recently indicated that first-party development for the system is on the decline, and the platform will be defined by indie titles and third-party games going forward. Additionally, SCEA President Andrew House revealed that PS Vita is now being viewed primarily as an accessory to the PlayStation 4. In the midst of dedicated handheld decline and the rise of mobile, Sony appears to have realized that its hopes of maintaining a healthy portable console have been thwarted.


Microsoft's reaction to Xbox One controversy and sales
When Microsoft first unveiled the Xbox One, it seemed bound for massive failure. The consumer and media outrage that surrounded system features like the online connectivity requirement, anti-used game measures, and mandatory Kinect connection threatened to erase most of the gains Microsoft had made in the previous hardware cycle. The extent of the negative feedback pushed Microsoft to rethink its Xbox One strategy and deliver a product that was much more in line with Sony's PlayStation 4. The initial debacle undoubtedly did damage to the company's gaming plans, but it appears that appropriate moves have been made to right the Xbox platform.

Microsoft's newest console was originally built to revolve around Kinect functionality. The Xbox 360 version of the camera had been enormously successful, and the Xbox One's handlers saw great value in the device as a multimedia navigator and enhancer. Unfortunately, the cost that the Kinect 2.0 added to Xbox One consoles made Microsoft's console $100 more expensive than PS4, a factor that has contributed handily to Sony's early sales lead. Working to correct this trend, Microsoft has recently introduced a Kinect-less Xbox One SKU at $399 and a more game-centric strategy for the broader platform.


Nintendo's reaction to Wii U sales and apathy toward the GamePad
Nintendo's Wii U console is sure to go down as one of the company's biggest missteps. While there are many elements contributing to the console's dismal performance, the GamePad is the one that will prevent the system from reaching even the GameCube's meager sales. On the heels of its incredibly successful Wii console, Nintendo sought to recreate that system's performance by once again emphasizing an innovative controller device. The obvious error in this strategy is that the GamePad has failed to inspire any of the interest and wonder created by the Wii Remote.

The bulky GamePad contributes substantially to Wii U's retail price, but there has been little in the way of software that makes compelling use of the controller. Rather than de-emphasize the GamePad, Nintendo has stated that it is concentrated on improving the value of the device. Legendary game designer Shigeru Miyamoto showed three new prototypes at E3 designed to prove the bulky controller's worth. Unfortunately, the fact that the company brought concept demos -- rather than actual games -- to demonstrate the appeal of the GamePad at the Wii U's third E3 indicates that not even Nintendo has a firm grasp on what to do with the device.

Foolish thoughts
Failings aside, Sony and Microsoft have shown a willingness to react to unpleasant market realities. Nintendo, on the other hand, seems intent on staying the course, even when its strategies are not producing the desired results. The company may believe that not dropping the GamePad will create more faith in future hardware releases, but its insistence on sticking with the controller is suppressing hardware sales and limiting the reach of the company's software. Nintendo has repeatedly stated that it prides itself on innovation and product distinction, but sometimes reactive moves represent the best available strategy.

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Keith Noonan has no position in any stocks mentioned. The Motley Fool owns shares of Microsoft. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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