This holiday season, Nintendo Co Ltd faces a critical test with its Wii U video game console that is pitted against Sony Corp’s PlayStation 4 and Microsoft Corp’s Xbox One as it seeks to revive flagging sales.
Analysts say there is a chance for the Kyoto, Japan-based company to stage a turnaround as new game releases such as Super Mario 3D World and Wii Fit U could lift Wii U sales. Should lackluster sales persist, the company that shot to prominence in the 1980s with Family Computer consoles and Game Boy portables might be forced to reconsider the core of its business strategy.
Nintendo’s business, long associated with the hit games Super Mario, Donkey Kong and Pokemon, has been shaken in recent years as more people play games on their smartphone and tablets. So far, Nintendo has been steadfast in its refusal to adapt games for those devices.
The company reported an ￥8 billion (US$81 million) loss for the three months ending on Sept. 30. Quarterly Wii U sales nearly doubled to 300,000 units from 160,000 in the previous three months, but cumulative sales remained far short of the company’s goal of 9 million units for the financial year ending in March next year.
Toyo Securities analyst Eiji Sato said that Nintendo needs “killer content” for the Wii U to turn around its business after a weak lineup of game titles added to its woes.
That has caught the company in a vicious cycle because developers are reluctant to create games for a poor-selling console.
Most game creators are also pouring resources into mobile games that are easier and faster to develop compared with those for home game consoles, which take more time, energy and expenses due to the need for higher-quality graphics, Sato said.
Nintendo’s management principle has been to increase the population of gamers in the general public. When its strategy works, Nintendo wins big, as it did with the motion-sensing Wii in 2007, Sato said.
The Wii U, the successor to the original Wii, reached cumulative global sales of 3.9 million units at the end of September since its launch more than a year ago.
In contrast, sales of Sony’s PS4 reached more than 2.1 million after going on sale on Nov. 15, while more than 1 million Xbox One machines were purchased on the first day it hit the markets in 13 countries on Nov. 22.
The arrival of the PS4 and Xbox One leaves Nintendo in a “bad place in the console world,” said Steve Boxer, a game reviewer for the Guardian and an avid gamer.
“If I was Nintendo, I would be thinking very hard about some means of damage limitation,” he said.
On the latest Super Mario 3D World game, Boxer said it is a “very good game with classic Mario-type platform game action, but it doesn’t feel like it’s something new and fresh.”
However, Hirokazu Hamamura, president of gaming magazine publisher Enterbrain, said that the PS4 and Xbox One consoles are flying off the shelves because their core fans waited up to eight years for them to come out.
He added that their release was accompanied with strong game software.
What has been happening to the Wii U is very similar to Nintendo’s experience with the portable 3DS, Hamamura said.
The popular Nintendo handheld device had a suggested retail price of US$249.99 in the US when it first became available in March 2011.
After weak sales, Nintendo slashed the price to US$169.99 in August of that year. Strong software titles such as Mario Kart and Monster Hunter ensued and “3DS sales exploded,” said Hamamura, who added that Nintendo now has a pipeline of unreleased games for the Wii U.
Since September, the Wii U’s recommended retail price has been reduced to US$299.99 for the 32GB model in the US. It was US$349.99 when it debuted in November last year.
Another price cut is a strong possibility for the Wii U if sales stay sluggish, Sato said. However, Nintendo has ￥460 billion in cash and is prepared to survive a bad sales year or two, he added.
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