Sales of Nintendo's (NASDAQOTH: NTDOY ) Wii U have slightly accelerated since September, hitting lifetime sales of 5.05 million units, according to the latest sales data from VGchartz.
This keeps Nintendo's underdog eighth generation console ahead of Sony's (NYSE: SNE ) PS4 and Microsoft's (NASDAQ: MSFT ) Xbox One, which have respectively sold 3.35 million and 2.47 million units since their market debuts in November.
Of course, the Wii U arrived a year earlier, and it could only be a matter of time before it is eclipsed by Sony and Microsoft's newer consoles.
Nintendo's divisive Wii U. Source: Wikimedia.
To attract more gamers, Nintendo slashed the price of its deluxe 32GB Wii U from $349.99 to $299.99 back in September. There have also been recent reports of European retailers unloading the Wii U at $135 each.
This strategy bought it some time at the expense of margins, but Nintendo will have to make a lot of right moves in the coming year to remain relevant as an eighth generation contender.
In other words, 2014 could be the year that will make or break Nintendo -- so let's take a look at three top problems Nintendo should focus on to keep the Wii U alive.
1. More innovation, less gimmicks
One of the biggest problems with Nintendo is how it continually confuses innovation with gimmicks.
The original 8-bit Nintendo Entertainment System was innovative because it perfected the D-Pad and streamlined the quality control model for video games. Its successor, the 16-bit Super NES, succeeded because it offered better graphics and sound than its primary competitor, the Sega Genesis.
The Super NES: Plenty of power, less gimmicks. Source: Wikimedia.
When the N64 was crushed by the Sony Playstation during the fifth generation, however, Nintendo's philosophy changed. Still identifying itself as an innovator, rather than a follower, Nintendo drastically altered its hardware designs to simply be different from Sony. The N64's successor, the GameCube, notably used smaller discs and a clumsily designed, radically different controller.
Nintendo might have given up on intentionally doing everything differently if it weren't for the success of the Wii, which sold over 100 million units thanks to its innovative motion controls.
While the Wii was a huge leap forward for gaming, it fueled Nintendo's obsession with piling on hit and miss "innovations".
It added a touch screen, a second screen, and a microphone to the Game Boy to create the Nintendo DS. It then upgraded the DS with an autostereoscopic 3D screen to create the 3DS family. With the Wii U, it added a clumsy "second screen" feature that allowed gamers to continue playing on their personal screen while the TV was turned off.
While all of these added features made its consoles unique, Nintendo ignored two huge problems -- that its hardware wasn't as powerful as its rivals, and the non-standard visual/control schemes (3D, touch screens, microphones, motion controls) made it increasingly difficult to port over popular titles.
Those two factors caused many developers to ignore Nintendo's consoles altogether.
2. Nintendo's need for "killer" games
Hirokazu Hamamura, the president of Enterbrain (the parent company of gaming magazine Famitsu), recently stated what Nintendo faithful have known for years -- that Nintendo needs some "killer games" to succeed against its rival consoles.
Nintendo, for the most part, has done the heavy lifting in software by itself since many of its former third-party developers teamed up with Sony when it stuck with the cartridge format for the N64 while the rest of the video game world went with CDs in 1996.
Since then, Nintendo's top-selling titles have been dominated by its flagship cast of characters -- Mario, Luigi, Link, Donkey Kong, and Samus -- and not much else. The list of upcoming Wii U games for 2014 doesn't inspire much confidence, either.
Can these guys continue carrying Nintendo on their own? Source: Nintendo.
But just what "killer games" could be developed for the Wii U that could keep it relevant as PS4 and Xbox One sales slowly catch up?
Nintendo's recently announced crossover title with Tecmo Koei, Hyrule Warriors, combines the beloved characters of The Legend of Zelda with Dynasty Warriors hack and slash gameplay. In a previous article, I noted that these kind of crossover titles could win back some third-party developers, who would be willing to cash in on the popularity of Mario, Link, and Samus with fresh takes on the classic characters.
Moreover, the Wii U hasn't been completely abandoned by leading U.S. publishers yet. Activision Blizzard's (NASDAQ: ATVI ) Call of Duty: Ghosts and Ubisoft's Assassin's Creed 4 have both been released for the Wii U.
However, Take Two (NASDAQ: TTWO ) has no plans to release Grand Theft Auto V for the Wii U, and Electronic Arts (NASDAQ: EA ) has stated that it doesn't plan to support the console at all, citing its lack of focus on online multiplayer games.
To win over more publishers, Nintendo needs to focus on two things -- improving its online multiplayer options (with a free or subscription-based network) to compete with Xbox Live and Playstation Network, and ensure that "triple A" game makers don't intentionally overlook the Wii U.
3. Nintendo nostalgia isn't everything
Nintendo's biggest problem is that it relies on gamers' nostalgic memories to fuel its entire business. Mario, Zelda, and Metroid have become visual languages of their own -- every gamer knows to bump the block, bomb the wall, or to roll into a ball.
Nintendo excels at milking that nostalgia -- it knows exactly the right 8-bit sound effect or theme song to use to make a gamer feel like a kid again. While this is Nintendo's greatest strength, it also keeps the company from growing up.
Super Mario 3D World for the Wii U. Source: Wikimedia.
Since gamers are used to the conventions set up in its classic games, Nintendo's ability to evolve old franchises or create new ones is limited.
Similar to its hardware, Nintendo often uses gimmicks instead of true innovation to enhance the gameplay of its aging franchises. Mario might be tasked with watering plants (Super Mario Sunshine, GameCube, 2002) and Link could turn into a wolf (Twilight Princess, GameCube/Wii, 2006).
While these games are fantastic on their own, they ultimately represent fresh paints of coat over older games. The modern Mario and Zelda games, such as Super Mario Galaxy (Wii, 2007) and The Legend of Zelda: Skyward Sword (Wii, 2011), are still respectively built upon the more innovative foundations of Super Mario 64 (N64, 1996) and The Legend of Zelda: Ocarina of Time (N64, 1998).
Just like Disney (NYSE: DIS ) eventually expanded its world beyond Mickey Mouse and Donald Duck, Nintendo needs to widen its universe by introducing new characters and new genres. Repeatedly parading its flagship characters through the same fighting, sports, racing, and party games simply won't be enough to save Nintendo from Sony and Microsoft.
A final thought
In closing, Nintendo faces a steep uphill battle in the months to come.
Although Nintendo might not be able to outpace Sony or Microsoft for much longer, it could minimize the imminent damage by learning from the mistakes from the past.
What do you think, dear readers? Can Nintendo bounce back in 2014, or is it too little, too late for the iconic video game maker?
Welcome to the next level
Want to figure out how to profit on business analysis like this? The key is to learn how to turn business insights into portfolio gold by taking your first steps as an investor. Those who wait on the sidelines are missing out on huge gains and putting their financial futures in jeopardy. In our brand-new special report, "Your Essential Guide to Start Investing Today," The Motley Fool's personal finance experts show you what you need to get started, and even gives you access to some stocks to buy first. Click here to get your copy today -- it's absolutely free.
Subscribe via Email 
Subscribe RSS Comments Please leave your comment: 
68.6 (1y: +56%) $(function() { var seriesOptions = [], yAxisOptions = [], name = 'HLF', display = ''; Highcharts.setOptions({ global: { useUTC: true } }); var d = new Date(); $current_day = d.getDay(); if ($current_day == 5 || $current_day == 0 || $current_day == 6){ day = 4; } else{ day = 7; } seriesOptions[0] = { id : name, animation:false, color: '#4572A7', lineWidth: 1, name : name.toUpperCase() + ' stock price', threshold : null, data : [[1355464800000,43.94],[1355724000000,42.84],[1355810400000,42.5],[1355896800000,37.34],[1355983200000,33.7],[1356069600000,27.27],[1356328800000,26.06],[1356501600000,27.41],[1356588000000,28.3],[1356674400000,29.39],[1356933600000,32.94],[1357106400000,32.2],[1357192800000,36.35],[1357279200000,37],[1357538400000,36.57],[1357624800000,38.35],[1357711200000,39.95],[1357797600000,39.24],[1357884000000,40.02],[1358143200000,44.08],[1358229600000,46.19],[1358316000000,45.06],[1358402400000,43.52],[1358488800000,43.5],[1358834400000,44.14],[1358920800000,43.01],[1359007200000,43.25],[1359093600000,43.59],[1359352800000,40.02],[1359439200000,38.67],[1359525600000,37.09],[1359612000000,36.32],[1359698400000,35.07],[1359957600000,35.54],[1360044000000,35.75],[1360130400000,35.79],[1360216800000,35.92],[1360303200000,35.85],[1360562400000,36.09],[1360648800000,36],[1360735200000,36.4],[1360821600000,38.27],[1360908000000,38.74],[1361253600000,39.74],[1361340000000,37.78],[1361426400000,37.79],[1361512800000,36.79],[1361772000000,35.63],[1361858400000,36.13],[1361944800000,37.44],[1362031200000,40.29],[1362117600000,40.1],[1362376800000,41.06],[1362463200000,40.74],[1362549600000,41],[1362636000000,41],[1362722400000,41.5],[1362978000000,41.26],[1363064400000,40.38],[1363150800000,38.92],[1363237200000,38.55],[1363323600000,38.49],[1363582800000,37.91],[1363669200000,37.31],[1363755600000,37.08],[1363842000000,37.46],[1363928400000,38.16],[1364187600000,37.55],[1364274000000,37.28],[1364360400000,37.78],[1364446800000,37.45],[1364792400000,37.11],[1364878800000,38.02],[1364965200000,39.01],[1365051600000,39],[1365138000000,38.79],[1365397200000,38.39],[1365483600000,36.95],[1365570000000,37.2],[1365656400000,38.28],[1365742800000,37.38],[1366002000000,35.73],[1366088400000,35.97],[1366174800000,35.28],[1366261200000,35.14],[1366347600000,35.78],[1366606800000,36.03],[1366693200000,36.6],[1366779600000,37.27],[1366866000000,37.95],[1366952400000,38.27],[1367211600000,38.75],[1367298000000,39.71],[136738440000! 0,39.38],[1367470800000,39.75],[1367557200000,41],[1367816400000,42.64],[1367902800000,43.01],[1367989200000,43.66],[1368075600000,44.55],[1368162000000,43.22],[1368421200000,43.23],[1368507600000,44.86],[1368594000000,44.78],[1368680400000,44.14],[1368766800000,44.44],[1369026000000,49.21],[1369112400000,50.54],[1369198800000,47.05],[1369285200000,48.25],[1369371600000,47.65],[1369717200000,47.61],[1369803600000,46.59],[1369890000000,46.46],[1369976400000,46.67],[1370235600000,45.99],[1370322000000,44.59],[1370408400000,42.8],[1370494800000,43.51],[1370581200000,43.63],[1370840400000,43.93],[1370926800000,43.38],[1371013200000,45.27],[1371099600000,46.86],[1371186000000,48.33],[1371445200000,48.9],[1371531600000,49.55],[1371618000000,47.95],[1371704400000,46.19],[1371790800000,45.44],[1372050000000,43.55],[1372136400000,46.67],[1372222800000,46.17],[1372309200000,45.69],[1372395600000,45.14],[1372654800000,45.16],[1372741200000,46.39],[13728276000