Nintendo is letting a select few get their hands on the high-definition Wii U and its video touchscreen controllers for the first time at the Consumer Electronics Show in Las Vegas this week. All Nintendo's let on so far, mostly through a presentation at the Electronic Entertainment Expo last year, is that its sizable touchscreen controller has motion control, a front-facing camera, a microphone, speakers, two circle pads, a directional pad, Bluetooth and the ability to display games while something else is on the television.
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Much else beyond that is a mystery. Nintendo has implied that early software will include an installment of Ubisoft's Assassin's Creed series, Tecmo's Ninja Gaiden 3 Warner Brothers(TWX) Interactive's Batman: Arkham City and a homegrown Super Smash Brothers title. None of it has been seen yet. Nintendo's promised downloadable content, but has implied that the Wii U lacks a permanent hard drive. Considering the audience that drove sales of 90 million Nintendo Wii's worldwide didn't care much about third-party games and tech specs to begin with, it probably won't care that they aren't confirmed for the yet-to-be-released console that's been a non-factor since it was announced last summer."The casual consumer, the primary Wii target audience, is generally unaware of these types of announcements," says Jesse Divnich, vice president of insights and analysis at video game research firm Eedar. "Announcing new hardware doesn't typically have a negative impact on legacy console sales."Nintendo, however, has plenty of reason to worry. Since Microsoft(MSFT) released the slimmer, more stable version of its Xbox 360 in 2010 and Microsoft and PlayStation maker Sony(SNE) introduced motion control devices that same year, Wii sales have been on the downswing. Worldwide Wii sales for the half-year ending in September were down from 4.97 million units in 2010 to 3.35 million last year. Wii game sales, meanwhile, dropped from 65.2 million units to 36.5 million during the first half, though the end-of-year number may be bolstered a bit by the more than 1 million copies of Legend of Zelda: Skyward Sword that Nintendo sold during the holiday season.That sales drop is just one nasty blemish on Nintendo's far uglier big picture for 2011. Overall sales were down 41% as Nintendo's net loss grew to $925 million. That forced the Nintendo to seriously reconsider its July forecast of a $263 million net profit for the fiscal year ending in March. The company now expects a net loss of roughly that much.
1 2 3 Next › Last »Video game analyst Michael Pachter of Wedbush Securities believes that backdrop puts a whole lot of pressure on Mario and company's new console.
"Wii sales continue to decline, and combined Wii U and Wii sales will have to be greater than Wii standalone sales in 2011 to justify the new product launch," Pachter says. "I think that the Wii U is really interesting and innovative, and think it will sell well initially if the price point is right, but if it is more expensive than the PS3 and Xbox 360 with less software, its long-term success will be an uphill battle."
If gamers have a cheat code Nintendo can use to get around pricing the Wii U out of the running, they'd best enter it now. Pricing hasn't exactly been Nintendo's strong suit lately, as evidenced by the uproar it caused by introducing its Nintendo 3DS handheld for $250 last year when the Wii, Xbox 360 and the high-end smartphones that are the 3DS' chief mobile competitors were going for $200 and the 3DS had few games available. Even after Nintendo dropped the 3DS' price to $170 and the the bare-bones DS Lite's price to $100, the two systems combined sold fewer than 5.7 million units in the first half -- or less than the 6.7 million units the DS sold alone during the same period in 2010. Even with titles such as Mario Kart 7 and Super Mario 3D Land now on store shelves, 3DS sales didn't cross the 4 million mark until just before 2012. That's a better pace than the Wii's first nine months of sales but still below the six-month DS total in first-half 2010. For a bit of perspective, the DS was the top-selling console of any kind back in 2008. As the Wii U enters a video game industry where console sales continue to slide and overall sales have stagnated over the past two years, according to NPD Group, the DS offers a valuable lesson about handling change in the gaming world. Even before the 3DS launch, the DS has seen Apple's(AAPL) iPhone and Google(GOOG) Android devices whittle its share of the mobile gaming marketplace from 70% in 2009 to just 57% in 2010, according to Flurry Analytics. Though the DS and 3DS are about to get more competition when Sony releases its PlayStation Vita handheld this year, the smartphones should concern Nintendo most. NPD Group found that downloaded games for mobile devices represented just about half of all video game downloads in 2011. As a result, 40% of all gamers with mobile devices say they spend less on console games. While this affects the PS3 and Xbox 360 in similar fashion, the growing download deficit is particularly punishing for Nintendo after it basically ignored downloadable content beyond old Nintendo games for the Wii.
« First ‹ Previous 1 2 3 Next › Last »"Nintendo has been left out of online because it's made almost no effort," Pachter says. "It isn't clear to me that they are doing much different with Wii U, given that the device has no hard drive. That makes game downloads a difficult proposition."
If the Wii U doesn't prove Pachter wrong, Nintendo could be leaving millions on the table. According to Divnich, the percentage of HD console owners who buy songs, game maps and other downloadable content has risen from 34% in 2009 to 51% in 2011. Eedar estimates that those downloads will add up to $875 million in North America for 2011 and will surpass $1 billion this year. Divnich ups the ante by estimating that the 49% of gamers who don't buy downloadable content would generate another $600 million in revenue per year.
"Nintendo operates at its own pace and I expect the Wii U to have a vast, robust and enjoyable online network," Divnich says. "I don't believe they've ever made online functionality a centralized focus on their consoles, but going forward they will."Those downloadable content estimates didn't include the Wii and would grow only if Wii-exclusive gamers made the switch to a high-definition Wii U. That's not exactly a stretch for Nintendo, especially since casual gamers ignored fanboy hardcore gamers' criticisms of the simplistic Wii to fuel sales that still outpace that of the second-place Xbox 360 by more than 40 million consoles over their lifespans. Pachter asserts that the Wii U isn't significantly more powerful than the Xbox 360 or the PS3 and that it's basically a catch-up to the current generation of consoles, but Divnich thinks that may be all Nintendo needs. "With so much time, investments and resources that go into creating and launching new hardware, failure is generally not an option. You can't just simply walk away from a failed console," Divnich says. "The Nintendo Wii U will be around for the next five years, and whether it has a rocky start or not, Nintendo will stick to their guns and do everything it can to ensure it is a success."Divnich's prediction, and likely Nintendo's dream, is that Wii-like success is the best-case scenario for the Wii U and that the console has the potential to put Nintendo back on top. Given Nintendo's recent track record, however, Pachter warns it may take a little more to save the princess this time around."Best-case, all third-party publishers support the device, it's better graphically, and it's priced competitively," Pachter says. "I'd say that is a low probability." >To follow the writer on Twitter, go to http://twitter.com/notteham. >To submit a news tip, send an email to: tips@thestreet.com. RELATED STORIES: >>How Nintendo Can Stay On Tip After E3>>5 Stubbornly Standalone Tech Toys>>5 Relics Of The 80s That Aren't Coming BackFollow TheStreet.com on Twitter and become a fan on Facebook.
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