Wii U has a lot of catching up to do with Xbox, PlayStation

Microsoft and Sony have made some major strides in online streaming and multimedia with their current gen of consoles.  The Xbox 360 has undergone a major dashboard overhaul, added a ton of apps, and gives users access to a ton of online content with the press of a button.  Similarly, Sony offers plenty of online products via the PlayStation Store.

Nintendo, on the other hand, has a lot of catching up to do.  If they plan for the Wii U to compete with the likes of Xbox 360, PS3, or any future consoles that may come, then Nintendo "desperately needs to play catch-up on the online, connected, and streaming multimedia fronts."

"Nintendo's not unaware of the challenges it faces, but traditionally it's been a company that in the past has been very profitable and has very cleverly straddled the line between game and technology toy," said marketing expert and industry analyst of TechSavvy Global Scott Steinberg. "They've almost been operating in a different market entirely. They've had their loyal fan base of Nintendo fans, they had family-friendly content which they've been content to pump out, and they've always gone a different direction, in most cases, from the industry at large."

In an interview with Industry Gamers, Steinberg says:

I think where they overplayed their hand was in allowing the Wii to sit too long without a major refresh. When it was put to Reggie Fils-Aime last year around, they had a very aggressive idea in mind. The plan was for the 3DS to be the most widely distributed 3D viewing experience, because 3D TVs were so expensive. Here's this thing you can hold in the palm of your hand, they were going to stream videos to it, and there was going to be a lot of content available. The execution wasn't quite so smooth. Today I still don't know quite how many 3D movies, I think that people don't realize that they have a 3D viewing screen in the palm of their hand, there's not a lot of content available in 3D.

They're aware of the challenges, but every organization is different. Some are driven by engineers, some are driven by financiers, some are driven even by developers. Ideally, tomorrow's console sits somewhere at the nexus of all three existing systems. Each has its strengths, but if I had to place my bets, I would say that Microsoft has been the most forward-looking of all three manufacturers; through a combination of skill and luck, Microsoft has very effectively positioned itself to lead the way forward through a combination of services, content and new hardware accessories – Kinect being the notable example.

Nintendo President Satoru IWata did admit that Nintendo has struggled to establish its online digital games business, citing that online transactions are "not simple enough" for the typical Wii user.  In an meeting with investors at a Tokyo financial briefing, Iwata said he hopes the Wii U's new built-in Near Field Communication technology will help simplify the entire online purchasing process.

“It is said that with each extra step [in purchasing DLC], the number of consumers drops by one-tenth,” Iwata told investors in a Tokyo financial briefing last week.  “Our challenge is how to improve such steps one by one.”

Iwata made it clear, though, that Nintendo will make the move with online services "when the time is ripe."  Iwata admitted fears of losing current consumers who may not have internet connection.

“Unless the timing is right, we will lose the consumers who do not have an Internet connection," he explained.  “We have not gone so far yet because our developers have a belief that our products should be available to as many people as possible.”

Unfortunately for Nintendo and the Wii U, Sony and Microsoft aren't waiting.