Nintendo Co Ltd on Tuesday unwrapped a new touchscreen controller as part of its next-generation Wii aimed at winning back hardcore gamers from rivals such as Microsoft Corp's Xbox, drawing praise from gaming critics but disappointing investors.

While the first new gaming console in five years fell short of being the game-changer the original was -- luring millions of new casual users with its simplicity and motion-control -- industry executives and analysts gave the Wii U's touchscreen controller the thumbs-up.

Shareholders were underwhelmed, however, pushing the company's stock to a five-year low on concerns its strategy is too focused on hardware as the gaming market shifts to social networking.

Industry critics in early reviews praised the innovation embodied by the separate device, larger than Apple Inc's iPhone, but smaller than the iPad. It has a touchscreen, camera and video-call capability, plus an array of buttons and functions that might entice gamers who play longer and more intensely.

Nintendo retains the lead in gaming hardware, but is struggling to win users from Microsoft and Sony after the disappointing introduction of its 3DS handheld device. Gaming executives now hope the new Wii can jumpstart a $65 billion video games industry -- surpassing Hollywood in size -- still struggling to rebound from the recession.

The entire console is still under development, but is expected to go on sale between April and December 2012. No price has been set, but some speculate it could move for $299, or about the same as an Xbox twinned with a Kinect motion-sensing system.

The controller is a breakthrough, said Sterne Agee analyst Arvind Bhatia. Overall, Wii U looks good, but I have to say I wasn't blown away.

That is a far cry from how the Wii took the industry by storm after its November 2006 launch, bringing motion control to gamers accustomed to joysticks and mice. Whether its latest gadget can win over a notoriously fickle market remains to be seen.

Nintendo shares in Tokyo slumped 5.5 percent to 16,880 yen, a level last seen before it launched the original Wii in 2006.

Investors said they needed more details on price and other specifications and that they were worried Nintendo remained too centered on hardware as the gaming market increasingly shifts to a software battleground.

Although some experts seem to like the new device, I expected Nintendo to move more into the social networking business, said Mitsuo Shimizu, deputy general manager at Cosmo Securities in Tokyo.

It's a warning from investors that the company should reconsider its business strategy and move more aggressively into social gaming operations.

Though it may not repeat the first Wii bonanza, the new Nintendo device, nonetheless, will exert some pressure on traditional console rivals such as Microsoft and Sony Corp to come up with new systems.

It's smart for a number of reasons. There are two levels of interface, the touchscreen for casual gamers and the buttons for more core types, said Ricardo Torres, editor-in-chief for popular games site They have a lot of games core gamers care about.

It's like a sandbox for developers. It's up to them to decide the experience that works best.


The new console is the first Nintendo device to support high-definition graphics and will sport a microprocessor or brain from International Business Machines Corp and graphics processors from Advanced Micro Devices Inc.

But it was the controller that stole the limelight on Tuesday.

Its 6.2-inch touchscreen works like a second display and can show the same images that are on the TV screen or provide gamers with additional information, giving them an edge over competitors.

The Wii U's controller can also be used to make voice calls and run old Nintendo games. It has motion-sensor capabilities and works in conjunction with existing Wii controllers. With its array of buttons, the device could appeal to hardcore gamers who could use it for first-person shooter games.

The device also acts as a stand-alone gaming gadget. It can, for instance, continue running a game on the touchscreen while someone else watches TV. But it functions only in wireless connection with a Wii U console.

It's still a tethered experience so it's not fully tablet-like, said BMO Capital Markets analyst Ed Williams. But without a doubt, they are ahead of their peers and are putting themselves in a different position. But what we still need to see is how it will go over with consumers.

The initial game line-up announced at the E3 videogame show suggests Nintendo is trying to woo hardcore gamers back to the fold, with popular first-person shooters such as Ubisoft Entertainment SA's Ghost Recon, Sega's Aliens and Electronic Arts Inc's Battlefield 3 on the slate.

There are so many developers already responding to creating new games for the videogame system we are proposing with Wii U, said Nintendo global president Satoru Iwata. It can satisfy all tastes with deeper gameplay actions.

With more than a year to market, Nintendo could still make modifications and the game slate might change.

Sony began selling its PlayStation 3 in November 2006 while Microsoft's Xbox 360 became available in November 2005. Both have sold steadily and neither hardware maker has revealed immediate plans for new consoles.

This week, Sony announced plans to begin selling a handheld, 3D-enabled games device for $299 -- which critics immediately deemed too pricey.

Nintendo is ahead of the curve for once, said Wedbush analyst Michael Pachter. It can do anything a tablet can do and people might be asking, why can't my iPad 2 do this kind of gaming too?

(Additional reporting by Tim Kelly and Antoni Slodkowski in Tokyo; Editing by Edwin Chan and Joseph Radford)