NPD just released its December console numbers, and while Nintendo was able to eclipse the performance of the Wii in revenue terms, there is no doubt the overall demand in the first few months of the Wii U’s release was softer than that of the Wii.
But if it was able to beat revenue, all is good, right? Wrong.
The reasons Nintendo should be worried are as follows:
- When the original Wii was released, Nintendo was up against a brand-new Playstation 2 and a year-old Xbox 360. This time around it’s the only game in town as far as new consoles, and demand was still down versus the Wii.
- Wii U units were in abundance at retail during the holiday season, which to me meant demand was not exceeding supply. Contrast this with the Wii release, where Wii units were going for double the retail price on eBay.
- There is just no buzz about the Wii U. While it almost seems quaint now, one can recall real consumer excitement and buzz about the motion-sensing controllers of the Wii. Speaking of controllers . . .
- There’s confusion about the Wii U game pad. This might be temporary or it could be a real problem, but at first glance many consumers don’t seem to get the game pad. They’re not entirely sure if it’s a touchscreen, they’re unsure if it works with other controllers, and they certainly don’t seem to be all that excited about it after years of exposure to smartphones and tablets.
The bad news here is that Nintendo’s competition is as tough as ever. Microsoft is busy working on its next-gen console, rumored to be coming during the 2013 holiday season. The same goes for Sony, and with the current gen Xbox 360 outselling the Wii U this holiday season, I can only imagine what may happen if Microsoft drops the price of the 360 to $99 next holiday season.
What should Nintendo do to recover? It’s really not clear. Getting the TVii service up and running was an important step because video-streaming services and second-screen interaction are requirements now for new platforms. But in reality Nintendo is not leading in this regard; instead it’s only trying to catch up to Microsoft’s current-generation technology.
I think the only thing that could spur sales in the near to medium term outside a price cut (which is clearly not going to happen in next six months) is increased market awareness and a blockbuster game, two things that Nintendo is no doubt working overtime on.