The Wii U Is In Trouble Right Now
A Sales Trend Op-Ed
By: Lawrence Napoli
My day job has me working in retail and the city in which I live (Buffalo, NY) is one that I would qualify as a metropolitan area far more dependent on home entertainment than the average “bigger” city in the United States. There aren’t many things to do besides dinners and movies, half the year is virtually shut down due to winter and our sport teams, well; the best they ever accomplished was losing in championship games (which BTW, happened a LONG time ago). Thus, I view the local sales trends of electronics in a community like this to be quite telling of North American trends when it comes to the video game industry.
Yay! I have something to do Friday night!
I remember when the Wii was released in November of 2006 and how rabid consumers were in acquiring units. There were lines every day in front of the store and people were quite sensitive to being denied their Wii’s when their “online sources” clearly stated our location had units on hand. Nintendo will always be popular thanks to Mario and Zelda (but really Link) and the fact that the GameCube was such a disastrous venture combined with the alternative at the time being a $400-$600 investment in a PS3 set a very favorable sales scenario for the good folks at Nintendo Land for the Wii. The Wii marketed itself to the non-core gamer right off the bat with immense success thanks to the pedestrian simplicity of its motion control system. It was literally sold on grandparents who could tolerate this manner of devil’s box in their apartments because it afforded them the pleasure of no-effort bowling via Wii Sports while giving the grand kids another reason to stop by every once in a while. It was cheap, it was new, it was something different, it seemed fun and all of its software was priced $10 less expensive than the competition. These are the reasons why the Wii (a non HD console) dominated this last generation in terms of sales.
Nintendo: a brand safe for children and geriatrics.
That is until April of 2012 when Nintendo reported its first annual loss since 1981. According to the LA Times, Nintendo recorded a $534.6 million loss on $8 billion in revenue. Last year, it recorded $960.5 million profit on $12.6 billion in sales. The sales were clearly slipping for Nintendo earlier in the year, and you can attribute that directly to a lack of quality software releases to keep consumer confidence up. But, perhaps Nintendo was merely biding its time so as to shift its attention to the release of a brand new console this past November which would solve all its fiscal troubles, right? The Wii U had 7 days of sales in November and in that first week, 425,000 units were sold according to Digital Digest, but that’s off the pace from the Wii’s 475,000 unit mark in 2006. Yes, yes, the Wii U is $50 more expensive at launch than the Wii, but it also has zero competition as XBOX 720 and the PS4 are slated for release next year. There’s no question that the Wii U’s launch was impressive, but I can’t help but think Nintendo was looking for better numbers than these. Plus, one must take into account the honeymoon grace period of new electronics. Nothing about the Wii U’s sales thus far indicate anything more than the newness of the product rather than its uniqueness to account for its popularity. Anything can sell as a flavor of the week for the short term, but sales over a year or longer are attributed to good merchandise.
People were excited about Wii U . . . at one point.
So the Wii U is selling units right now thanks to no console alternatives, but are these enough preemptive sales to be relevant when placed next to the 720 and PS4? Obviously, Nintendo thinks so as being the first console to incorporate tablet technology continues to shout, “Hey we’re Nintendo and we do different things like this!” That’s wonderful, but for real world consumers, tablets, e-readers and smart phones are also competitors to home consoles because they are still electronic forms of entertainment despite being mobile devices. If Nintendo truly believes that consumers do not recognize a clear distinction that separates these technologies, Satoru Iwata, Nintendo’s President had best begin preparing his golden parachute. The novelty of Nintendo’s tablet integration wears out pretty quickly when everyone realizes it can’t do too much without its home box being plugged into the wall. Perhaps this is Nintendo’s way of acknowledging the fact that consumers enjoy using their mobile devices in the comfort of their own homes, but without the independent functionality of a 3DS, the Wii U’s tablet isn’t impressive and certainly not a system selling mechanic akin to motion control.
Maybe I shouldn't have said the Wii U would have a less than stellar start.
I invite the reader to jump on eBay so as to observe the price gougers attempting to make a quick buck off the Wii U. During the release week, consumers saw ridiculous price hikes by those who were fortunate to purchase a unit on a first come/first serve basis. As of this article’s writing, the 126 auctions featuring mostly Wii U Deluxe bundles are plentiful and almost all of them are trending well below reservation prices set by the sellers. The gougers will be lucky to have sold their investment for the same price they purchased it and do you know why? People are having no problems finding the Wii U at any retailer because they are simply not flying off the shelves. Apparently the Wii U’s system shortage as reported by IHS Screen Digest didn’t take into account a lack of consumer interest as Nintendo attempts a sales goal of 3.5 million units before the end of 2012. I was amazed at how fortunate I was to get my hands on a Wii U because it was something new. However, I soon realized I had no use for this device and knew of no one that would accept this as a gift. I returned my Wii U a week later and I wasn’t the only one in line doing so.
The Wii U: a less than thrilling experience?
If the Wii U is not setting sales records now, at launch, with no competition, the only thing it will have left in its arsenal to remain relevant in the coming years is a significant price cut when the other consoles release in 2013. This will happen because Nintendo quickly slashed the 3DS price point when so few consumers were buying into it that PS Vita sales actually started gaining ground. The value of price cutting the Wii U will only be determined once we find out exactly what the 720 and PS4 will do and how much they will cost. If both consoles have miniscule advances in functionality and performance, both units will launch at higher price points and Nintendo has nothing to worry about. If both units do something much more (and I’m not even including the presumed Blu Ray playback on both units), regardless of price, Wii U prices will fall.
[[wysiwyg_imageupload:4762:]]The ultimate reason why I believe the Wii U is in trouble right now boils down to one thing: software. Sure, the Wii U has a very large list of launch titles, but how many of those are simple remixes of games that have been out on other systems, including its own in the Wii? Where’s the originality? Where’s that new system selling software that can only be had on the Wii U? That title was meant to be Zombie U, but has met with some very unimpressive reviews from multiple sources that highlight repetitive gameplay, zero story and an overall dull experience.
Games are the reasons why people purchase game systems and the decision to play a game on one platform vs. another is based on subtle nuances in hardware functions. People play PC for the best graphics and computing performance. People play XBOX for shooter popularity. People play Playstation for Blu Ray, free online and great exclusives. People play Nintendo for Mario . . . and that’s just about it. There is no evidence to suggest that this will be any different for the Wii U seeing how New Super Mario Bros. Wii U is its best seller. Further evidence to suggest the Wii U’s software woes come from James Hardiman from Longbow Research who calculated a 1.2 software tie per system sold at launch. Only the PS3 had a worse tie-ratio with a rate of 1.1 with the original Wii showing 2.0 and the XBOX 360 blowing everyone away with a rate of 3.9 at launch. If the Wii U isn’t selling any software for its system now, can we expect the real games to come out next year when consumers know more complex, satisfying and adult-oriented games are typical of XBOX and Playstation?
Nintendo isn’t dead and the Wii U could be a system worth investing in; just not right now. It remains to be seen if Nintendo can think outside the box enough with its first party licenses because it clearly has no interest in giving third party developers real support. A Pokémon MMO would be amazing. Another Mario based RPG would be incredible. These are the sort of ideas that Nintendo fans want with a new system, but all that’s been delivered thus far is redundancy. But of course, the only thing Nintendo is more intimate with than Mario IS redundancy: Nintendo DS, DS Lite, DSI, DSI XL, 3DS and 3DS XL come to mind. What would Nintendo’s next iteration be in the line of Wii and Wii U when the hardware differences are equally subtle?
[[wysiwyg_imageupload:4764:]][[wysiwyg_imageupload:4766:]]<-- In case you were wondering about your options for next year.