Nintendo shares tumbled for the second consecutive day Thursday after its second-generation Wii videogame console unveiled earlier this week disappointed the market, say analysts.
Despite the buzz surrounding the Japanese entertainment giant's Wii U at the videogame industry's annual trade show in Los Angeles, the console and its touch screen controller has left investors cold.
Nintendo shares dived more than 5 percent on Wednesday after the company unveiled the console at the Electronic Entertainment Expo, or E3.
The stock extended losses Thursday, closing 4.5 percent lower at 16,160 yen on the Osaka Securities Exchange.
The company's shares are now at their lowest since March 2006 before the launch of the original Wii console amid worries over its strategy at a time when online games and smartphones are taking market share.
Nintendo has not said how much it plans to charge for the Wii U when the new consoles hit the market next year to do battle with Microsoft's Xbox 360 and Sony's PlayStation 3 (PS3).
"I don't really see Nintendo's strategy yet," Hiroyuki Fukunaga, a Tokyo-based market analyst and chief executive of Investrust Inc, told Dow Jones Newswires.
"There are concerns that (the Wii U) may turn out to be expensive with the touch-screen controller," he added.
A key feature to the Wii U controller is a 6.2-inch (16-centimetre) screen that displays maps or other information to complement game play, acts as a touchscreen game board and serves as a second monitor.
A forward-facing camera allows for online video chat with friends while playing with or against them online using a television connected to a Wii U, which will boast high definition graphics.
"The product itself is not bad -- market expectations had been far too high," said Mitsuhige Akino, chief fund manager at Ichiyoshi Investment Management.
Nintendo is credited with opening the world of videogames to "casual" family players and with the introduction of motion-sensing controllers on the first Wii console launched in late 2006.
But while the company is hoping to attract more "core" gamers with its beefed up console, analysts question whether the Wii U or the handheld 3DS can once again capture non-traditional gamers won over by the original Wii who can now use their smartphones to play inexpensively online.
"The simplified, more intuitive action elements that are made possible by the design of the controller hold promise for reaching a broad audience," Jay Defibaugh, analyst at MF Global FXA Securities, said of the new console.
But he cited the risk of "significant cannibalization of the traditional game software market from social network-based and smartphone content".
Microsoft and Sony last year challenged Nintendo by adding motion or gesture-based controls to Xbox 360 and PS3 consoles, which boast more power than the Wii for richer imagery and more complex action.
-- Dow Jones Newswires contributed to this story --