Mario and the mouse: Nintendo’s future

When talking about the most successful companies in history, it’s hard not to start with the mouse.

Starting from a simple love of drawing, Walt and Roy Disney took some simple animated short stories and managed to turn them into one of the largest and best-known companies in the world.

I doubt you could have predicted what Disney would become in 1923, how could you? The leap from doodles to theme parks and cruise lines was not a straight line, but it was always based on an unparalleled drive to be as successful as possible, in every way possible.

It wasn’t enough for Disney to just make popular cartoons. It wanted to do everything right.

And it has done so for the past decade. After some missteps in the 1990s, Disney (NYSE: DIS) stock has been going in a straight line. A decade ago it was trading at about $40. At the time of this writing, it’s at $178.35.

So, there are worse companies than Disney to emulate. And, that’s likely why another well-known name in the entertainment space seems to be gearing up to be “the next Disney.”

I’m referring to Nintendo. Like Disney, the creators of an iconic character – Mario – are looking to move beyond their core business to become something much bigger.

If you’ve invested in Nintendo, you may have been a bit frustrated last week when a bad review at E3 sent the stock (TYO: 7974) down slightly. Normally, you’d like to see a rally after a trade show of E3’s influence, but instead Nintendo went from $581.69 to $577.90 on the week.

However, if we focus on the video game side of things, we’re missing half of the Nintendo story. As I wrote last week, the era when the big three video game companies (Nintendo, Sony (TYO: 6758) and Microsoft (NASDAQ: MSFT) looked to each other as an indication of their health is probably over. Rather, they are all looking at slightly different markets.

In Nintendo’s case, they are focused on branding. They want to create theme parks, merchandise, movies and TV shows that tap into the characters and the nostalgia that exists around them in people around the world.

Kind of like what Disney did all those years ago.

It’s hard to imagine a company that has been more successful over the past 30 years in carving out a niche in the public imagination than Nintendo. So, while we can’t know if they will be successful in their efforts to become another Disney, I think we can safely assume that a slightly mediocre presentation at an E3 isn’t going to be the indication that they aren’t.