New Super Mario Bros. U Screenshot

So… you probably heard the news already: Wii U sales for the month of January were less than 60,000 units. That's less than 12,000 units per week of the reporting period. That's also despite the Wii U being the first new video game console (non-handheld) since late 2006. This number should be addressed by Nintendo as "unacceptable" for the US market, which saw the Wii dominate the early and middle parts of this past console generation. Investors should be nervous that the US may not adopt the Wii U strongly enough before Sony and Microsoft present their new hardware, likely later this year. I know that I would be.

Having said that, let's keep some perspective here when discussing the Wii U in terms of mid-to-long term prospects.

First, and probably most importantly: It's far too early for Nintendo to take the Wii U out back and put it down. We're looking at three reporting periods. I know that the same attitude was taken with the Vita—which also strongly disappointed in January sales figures—but three months don't make or break a console. It's more than a stumble out of the gate; it's a blown engine on the first lap for Nintendo and it's up to Satoru Iwata and the rest of the pit crew within Nintendo to fix the problem and get back into the race. I think that things will get better down the line, but I can't say with confidence that it's going to be a huge improvement. Once we get into Q4 and we see new PlayStation and Xbox hardware, Nintendo could very well lose much of its retail advantages. On the flip side, perhaps consumers balk at pricing for these new consoles… or maybe the games library at launch for either or both isn't particularly deep. If that happens, and if Nintendo can convert promised software to reality, there's certainly a chance for Nintendo to move some decent numbers in Q4.

Second, there's a problem with too few games in the channel. Nintendo is working on this, but development is taking some time. Regardless of the reason for the delay in having these games ready sooner in the Wii U lifespan, it's reasonable to assume that we'll see more games in retail channels before the holidays and sales should hopefully ramp up a bit from Q2 on. Nintendo still has a problem with weak third-party support which puts them in a difficult situation. If these other publishers don't or can't come through with software, more pressure falls on Nintendo to close that gap and increase its quantity and production. I suspect that more third-party games will be coming, but it's possible that Wii U isn't a priority for publishers. Many of the biggest publishers are likely placing their bets on Microsoft and Sony, given recent sales performance. As long as Nintendo can handle the load and provide appealing games with some consistency, the Wii U will remain an option for at least some consumers.

Finally, if push comes to shove, a price drop has to be an option to spark sales, especially as we get closer to the other platform launches. Leveraging a price advantage over the competition may coax some fence-sitters to buy in, especially if the games library increases significantly later in the year. Nintendo most likely won't kill off the Wii U without at least trying the price cut option. I realize that Wii U is already selling at a loss, but combining a price drop with compelling games has worked for Nintendo before. That's not a guarantee that it works again, but I believe that it's at least possible that it will stimulate growth if it happens.

I see a lot of reaction to this story as a premature eulogy for the Wii U, and even for the console market at large. I believe that sales expectations must begin to be tempered for both. The Wii U most likely isn't going to be another runaway success like the Wii was, and several factors can be identified as reasons for continued contraction of the console market, as well. People bristle and get defensive about the rise of the mobile market, but it's getting harder and harder to explain mobile away as irrelevant and "not good enough." The truth is that mobile isn't "good enough" for a loud minority on the Internet. Many other consumers have embraced the mobile market as a cheaper way to play games and as a convergence point to do everything from talk on the phone to play games to watch movies. Mobile won't kill consoles. It might take some business away, but there will remain a market for console hardware and software sales for the foreseeable future. It's just going to be smaller.


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25 Comments on "Consoleation: January 2013 NPD hardware preliminary discussion—Wii-Oops"

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Wiggly Squid
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Wiggly Squid
3 years 3 months ago
Sorry it’s been a while since I was able to post. Real life and stuff. You know how these mega discussions go when everyone responds point for point 😛 [quote=Chi Kong Lui]Saying Sony has the better solution is bit pushing it when how many games right now are actually utilizing the feature? Based on the Vita commercials, I think the MLB game does, but outside of this and I think All-Stars, I can’t think of another games that uses it. And moving forward, how many other developers are going to use it when its optional? Historically speaking, you can expect… Read more »
Chi Kong Lui
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Chi Kong Lui
3 years 4 months ago
Some interesting quotes from Miyamoto in NY Times interview: [quote=”Miyamoto”]Entertainment is an unpredictable industry. Entertainment is this thing that moves around from place to place. You have a theme park like Disneyland, and that’s a form of entertainment. And at the same time you have small, downloadable software for your smartphone that you can play, and that’s entertainment. Nintendo’s stance, over all, is that we don’t know where entertainment will take us next. We look at it in terms of what kinds of experiences do families want in the living room in front of the TV? Because we don’t think… Read more »
Chi Kong Lui
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Chi Kong Lui
3 years 4 months ago
[quote=Odofakyodo]It’s important to distinguish between the words we’re talking about because “innovation” and “gimmick” are not the same thing. I am in total agreement that “innovation” is bringing something new to the market. But innovations have real value. That is different from a gimmick, which is a trick just to get people’s attention. A gimmick can be a new idea but generally has little or no value. The word “gimmick” has a negative connotation whereas “innovation” is a positive term. No company ever uses a gimmick as their long term business strategy. They never say “Our products are gimmicky”. They… Read more »
Odofakyodo
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Odofakyodo
3 years 4 months ago
I’m not sure how I’ve changed my message. It’s simple: When Nintendo comes out with a cheap box and supports it with a library of great games, they succeed. This is true whether or not they rely on gimmicks or true innovations. When they focus on hardware or non-gaming software they fail. It’s important to distinguish between the words we’re talking about because “innovation” and “gimmick” are not the same thing. I am in total agreement that “innovation” is bringing something new to the market. But innovations have real value. That is different from a gimmick, which is a trick… Read more »
Chi Kong Lui
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Chi Kong Lui
3 years 4 months ago
[quote=Odofakyodo]The problem with that thesis is what I’ve been trying to explain: Nintendo may have always had hardware differentiation but it did not always prioritize it over great games.[/quote] Despite how you’ve changed you message from earlier, this is statement I can accept, because I never said that Nintendo wasn’t about games. But the idea that NES and SNES were meant to be non-descript pure game playing machines just doesn’t follow the full history of Nintendo and its bit out of context (I’ll explain this last part below). [quote=Odofakyodo]Consider that the motion controls have remained constant–or gotten better–throughout the Wii’s… Read more »
Odofakyodo
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Odofakyodo
3 years 4 months ago
[quote=Chi Kong Lui] GBA “Connectivity” came much later in the cycle when the war was all, but lost. And saying it had 3D circuitry just proves my point that Nintendo has always been a company that prioritizes gimmicks to get its systems over with the masses. [/quote] The problem with that thesis is what I’ve been trying to explain: Nintendo may have always had hardware differentiation but it did not always prioritize it over great games. For the NES, Nintendo never intended R.O.B. to be a long term pillar of the system. They knew it was a marketing gimmick. Regardless… Read more »
Chi Kong Lui
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Chi Kong Lui
3 years 4 months ago
[quote=Odofakyodo]They think the Gamecube didn’t sell because there was no hardware gimmick. In reality the Gamecube had hardware gimmicks: 1) “Connectivity” via the GBA link cable, and (2) believe it or not, it had 3D circuitry built in so that “If you fit it with a certain accessory, it could display 3D images” (http://iwataasks.nintendo.com/interviews/#/3ds/how-nintendo-3ds-made/0/2).[/quote] GBA “Connectivity” came much later in the cycle when the war was all, but lost. And saying it had 3D circuitry just proves my point that Nintendo has always been a company that prioritizes gimmicks to get its systems over with the masses. [quote=Odofakyodo]Nintendo believes that… Read more »
Odofakyodo
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Odofakyodo
3 years 4 months ago
[quote=Chi Kong Lui] Dude even Miyamoto and Iwata were laughing at the lack of context and gross simplification of Nintendo’s business model and philosophy in the quote. Yes, they live off of the razor blade model, but at every iteration, Nintendo has always tried to innovate and/or create gimmicks to separate itself from its competitors. With the NES it was the R.O.B.. With the SNES it was the Mode 7 scaling. With the N64, it was the 3D anti-aliasing and batarang controller. GameCube was really the most generic platform they ever put out and in Nintendo’s mind, sold the worst… Read more »
Chi Kong Lui
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Chi Kong Lui
3 years 4 months ago
[quote=Wiggly Squid]The price difference in the two options is the price of the WiiU Gamepad ($100+, $125?, $150? In my cursory internet search I’m getting prices at least $140) v. the price of the 3DS ($169). So in theory for a marginal price difference the customer could have had a device that synced with the console (in the event you had to “share the TV”) plus all the benefits of having a dedicated handheld (with two screens, one of which is stereoscopic). How many customers would have liked to have that option? How many existing 3DS customers would have rather… Read more »
Wiggly Squid
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Wiggly Squid
3 years 4 months ago
[quote=Chi Kong Lui]How many people do you think will actually shell out an additional $200+ for a Vita. Lord knows how much PS4 will launch for. As for transferring data, its already a major pain in the ass for me to sync my iPod shuffle for new music/playlists in the morning when I’m rushing out to work. Last thing I want to worry about is waiting for syncing content nor do I want to play the exact same kinds of games that I do at home when I’m on the bus.[/quote] [quote=Odofakyodo]Apparently Jack Tretton didn’t even flinch when it was… Read more »
Chi Kong Lui
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Chi Kong Lui
3 years 4 months ago
[quote=Odofakyodo]The reason I mentioned the Gamecube’s price was not to attempt to derive the cost of the Wii U gamepad. I brought it up was to convey these undeniable facts: 1) The Wii U is more expensive than the Gamecube and the Wii. 2) The economy is currently worse than it was a decade ago. Given these facts, my own judgement is that this is a questionable business decision.[/quote] I wasn’t trying to determine the actual cost of the Gamepad either. I just don’t think a $40 difference in the case the GameCube (considering what you get in return for… Read more »
Odofakyodo
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Odofakyodo
3 years 4 months ago
[quote=Chi Kong Lui]So if the games were there, you’d say the $300 price tag was justified, but since the games aren’t, they should have junked the gamepad just to shave off $40? (Sorry, but I’m sticking with my numbers since the GameCube didn’t have built-in memory of any kind and it didn’t include a game either). I like the gamepad a lot and not only is it useful for downloading updates and making eshop purchases without having to switch channels, but it also adds functional non-gimmicky touch screen gameplay elements like what we see on the DS. And playing games… Read more »
Mousse Effect
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Mousse Effect
3 years 4 months ago

It should be noted that Skyward Sword sales are pretty low (on par with Spirit tracks!) and show a incredible shinking of the Zelda audience. Twilight Princess being multiplatform and one of the few launch titles for the Wii, I don’t think it’s fair to use it as an indicator of Zelda fatigue. If you look at all other titles, it’s downhill since Ocarina.

I still think the Wii U is awesome – playing ZombiU right now and loving the Gamepad.

Chi Kong Lui
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Chi Kong Lui
3 years 4 months ago
[quote=Wiggly Squid]How many people were actually clamoring for this type of thing anyways? Enough to base an entire console around it? It’s such a trivial thing that it seems quite possible in the past year and a half, after getting the idea from Nintendo, Sony decided to just tack it on to their next console along with everything else they were doing with the PS4.[/quote] The thing is while the gamepad is key selling feature, the console isn’t entirely based on that one feature the way the Wii was almost solely tethered to waggle. Like the glasses-less 3D feature of… Read more »
Chi Kong Lui
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Chi Kong Lui
3 years 4 months ago
[quote=Odofakyodo]Let me explain myself. I like both Mario Galaxy games and think they are good games, but I consider them a step below SMB3 and Super Mario World. I love Zelda 1, 2, Link to the Past, and even Ocarina, but starting somewhere with Ocarina the series de-evolved into a lame PC adventure game. I could elaborate more here if you want, but my overall point is that despite how many fans of both series are out there, the series have failed to sell hardware to the level that Nintendo needs. These flagship titles that take an insane amount of… Read more »
Wiggly Squid
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Wiggly Squid
3 years 4 months ago
This is a real interesting discussion, thanks guys. Overall, I agree with Peter and Odofakyodo’s viewpoints on the current situation of gaming, but I’d like to throw out some thoughts below about the Wii U: There are two main reasons the Wii U gamepad is intended to differentiate itself from the other consoles. First, it allows you to play console games on the gamepad so that the main TV can be used for other things. You have to admit, Nintendo seemed so proud of this at the E3 reveal over a year ago. Remember “Hey, it’s time to watch some… Read more »
Chi Kong Lui
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Chi Kong Lui
3 years 4 months ago
[quote=Odofakyodo]We agree that the $350 price point is just not cutting it for access to the current content (after all, Wii U sales are absolutely terrible right now). Now we can debate how much we are paying just for the controller (I would argue that the Gamecube is equivalent to at least the $350 price point since the it was the most powerful console of its generation), but the main point is that Nintendo could have shaved $100 off the price of its console by not attaching such an expensive controller to it. A controller that, in my view–and apparently… Read more »
Odofakyodo
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Odofakyodo
3 years 4 months ago
[quote=Chi Kong Lui]If the GameCube adjusted for inflation is $260, then we’re getting the Gamepad for a mere $40 since the GameCube is comparable to basic 8GB Wii U edition. You originally stated that launching at $350 made no sense, but as you said, if Nintendo is losing money, the price of goods are what they are, but we agree that its not about the hardware. Its about the content and you can’t justify any price point really if the content isn’t there.[/quote]We agree that the $350 price point is just not cutting it for access to the current content… Read more »
Chi Kong Lui
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Chi Kong Lui
3 years 4 months ago
[quote=Odofakyodo]It doesn’t matter what the critics say – it comes down to sales, and in that respect I think most consumers agree that the hardware and associated content isn’t worth the price. According to the Bureau of Labor and Statistics, $200 in 2001 (when the Gamecube launched) is worth $260 now. I have seen estimates that the tablet controller is about $100 itself. That about makes up the difference between the current price and the inflation adjusted price of the Gamecube. I agree that recycling older hardware has usually worked out in their favor. I am personally all for it… Read more »
Odofakyodo
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Odofakyodo
3 years 4 months ago
[quote=Chi Kong Lui]When you factor in inflation, I think the price of what you’re getting compared to the competition is justified. I don’t know if Nintendo is already taking a hit on hardware sales, but Nintendo’s philosophy of recycling/refreshing previous gen-tech usually works in their favor in the long run. Besides, even among Nintendo’s harshest critics (which there are tons), few have complained about the price.[/quote]It doesn’t matter what the critics say – it comes down to sales, and in that respect I think most consumers agree that the hardware and associated content isn’t worth the price. According to the… Read more »
Chi Kong Lui
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Chi Kong Lui
3 years 4 months ago
[quote=Odofakyodo]If the Wii U is another Gamecube, then Nintendo is seriously screwed. The Gamecube launched at $200 (iirc) in a good economy. Why would Nintendo launch the Wii U at $350 in a bad economy? Makes no sense. Personally I don’t see the second screen as a functional difference maker, at least not enough to make up the cost of the system. I’ll admit it has some potential, but I haven’t seen anything to justify the cost.[/quote] When you factor in inflation, I think the price of what you’re getting compared to the competition is justified. I don’t know if… Read more »
Odofakyodo
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Odofakyodo
3 years 4 months ago
Chi, I wish I could be so optimistic about Nintendo, or at least with respect to the points you raised. If the Wii U is another Gamecube, then Nintendo is seriously screwed. The Gamecube launched at $200 (iirc) in a good economy. Why would Nintendo launch the Wii U at $350 in a bad economy? Makes no sense. Personally I don’t see the second screen as a functional difference maker, at least not enough to make up the cost of the system. I’ll admit it has some potential, but I haven’t seen anything to justify the cost. Nintendo has shown… Read more »
Chi Kong Lui
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Chi Kong Lui
3 years 4 months ago
[quote=Dale Weir]While I do see the latter part of your comment being the case, it comes down to Nintendo pushing for that. It’s not just going to happen. These indie-style digital distribution models are in full effect on the mobile formats and with every generational advancement of tablets and smart phones, its easier and easier to overlook a Nintendo console as a home for those games.[/quote] That’s why in my comment, I wasn’t being specific about Nintendo necessarily having a lock on indie games. It’s a wide open field, but recent changes in Nintendo eshop policies and licensing agreements indicate… Read more »
Dale Weir
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Dale Weir
3 years 4 months ago
[quote=Chi Kong Lui]Worst case scenario, the Wii U will become another GameCube for Nintendo, but where as GameCube’s main market differentiation was a lunch box shape with handle, the second screen for the Wii U could be more of a functional difference maker as the DS has proven years ago. And while the Activision’s of the world may wait out for the PS4 and Durango, I think a majority of developers will find indie-style digital distribution much more attractive.[/quote]While I do see the latter part of your comment being the case, it comes down to Nintendo pushing for that. It’s… Read more »
Chi Kong Lui
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Chi Kong Lui
3 years 4 months ago

Worst case scenario, the Wii U will become another GameCube for Nintendo, but where as GameCube’s main market differentiation was a lunch box shape with handle, the second screen for the Wii U could be more of a functional difference maker as the DS has proven years ago.

And while the Activision’s of the world may wait out for the PS4 and Durango, I think a majority of developers will find indie-style digital distribution much more attractive.

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