Nintendo’s Present & Future, Part 1: Why the WiiU Failed
The WiiU is a sales flop. Its initial release was mostly worldwide, save for Brazil, in November of 2012. As of March 31st of 2016, the WiiU has sold 12.80 million units worldwide (Nintendo). In comparison, Sony’s PlayStation 4 had sold 35.9 million units by January 3rd of the same year (Sony via PR Newswire) and while Microsoft doesn’t share its month-to-month system sales figures, the Xbox One’s sales numbers are likely around the 19 million mark as of April 2016 (EA via Arstechnica and Microsoft via Tech Times). Making Nintendo’s sales numbers look even worse is the fact that the Xbox One and PS4 were released in the West a full year after the WiiU – the systems hit store shelves even later in Japan.
As a result, Nintendo is shifting towards smart phones games and expects operating profit to rise through March 2017 as a result of this venture, as well as a result of the release of its new system, currently codenamed the NX. Nintendo hopes that the profit from smart phone games and the NX will make up for the expected nosedive in WiiU sales.
The forecast from Nintendo for WiiU sales this business year is 800,000. The previous year, 3.26 million units were sold. Nintendo is clearly shifting its focus, stating that WiiU production may end as soon as the end of 2016 (Gamespot). Looking at the number of consoles sold worldwide shows clearly why Nintendo is making this decision.
There are two major reasons why the WiiU disappointed in its sales. First, Nintendo’s marketing of the new console failed to explain its value to or create excitement among casual gamers, many of whom play video games irregularly and many of whom bought the Wii as their first console. The second reason has to do with video game players who play regularly and are knowledgeable about the gaming market and industry. For this sector of the market, Nintendo made many missteps – a lack of 3rd party game development and eccentric online infrastructure are two of the main ones – that placed the WiiU clearly in 3rd place in the console race behind Xbox One and PlayStation 4. By mismanaging the targeting of the WiiU to both casual and hardcore gamers, Nintendo failed to create a valuable console.
Let’s begin by looking at the market of casual gamers. Nintendo’s console before the WiiU, the Wii, has sold over 100 million units worldwide, and this impressive number was in part due to the Wii striking a chord with a consumer group that typically don’t buy video game systems. An older generation, along with younger consumers who had never bought a video game system before, were picking up the relatively inexpensive Wiis for the novel motion control, the numerous games focused on health or exercise, the large selection of highly rated Nintendo-made games, or simply because it seemed like practically everybody else had a Wii. Whatever the particular reason for the system’s success, what’s clear is that Nintendo was unable to match the raging popularity that they saw for the Wii’s launch with the 2012 release of the WiiU.
One reason for this may be that Nintendo’s marketing of the WiiU failed to both separate that system clearly from its predecessor, the Wii, and to properly explain the WiiU’s concept. One issue was the WiiU’s branding, specifically the similar name and colours used for marketing. At the time of the WiiU’s release, I was a sales associate at a video game store. A large number of consumers, particularly middle-aged ones who were owners of the Wii, were unclear on what exactly the WiiU was. Most thought that it was an upgrade to their current system and not a completely new one. These so-called casual gamers weren’t reading video game news or watching Nintendo press videos to get their information. Instead, their knowledge of the WiiU was based off what they saw, and most saw what appeared to be a Nintendo Wii with a new tablet-like device for a controller.
Nintendo’s legendary game designer Shigeru Miyamoto told Fortune that he believes that the poor WiiU sales numbers are in part due to Nintendo not properly explaining to consumers the value the new system held. In particular, an understandable description of the functionality of the tablet controller and how it interacted with the system was not well disseminated. In addition, at the time of the WiiU’s release, the functionality of tablets was growing exponentially. Measuring the utility of the WiiU’s controller with a screen to a tablet such as the iPad was an unfair comparison, but it was one that many consumers made, and one that the WiiU lost out on.
“I feel like people never really understood the concept behind Wii U and what we were trying to do,” Miyamoto told Fortune. “I think the assumption is we were trying to create a game machine and a tablet and really what we were trying to do was create a game system that gave you tablet-like functionality for controlling that system and give you two screens that would allow different people in the living room to play in different ways… Unfortunately, because tablets, at the time, were adding more and more functionality and becoming more and more prominent, this system and this approach didn’t mesh well with the period in which we released it.”
With the release of the Wii, Nintendo was able to find a new demographic in the market. This demographic of casual gamers grew an appetite for gaming, but it was between the release off the Wii and the WiiU when many of these gamers’ hungers were satiated by smart phone and tablet games. When the WiiU was released, few made their way back to the store to buy it, unable to see the value of a console with a tablet that seemed underpowered and had far fewer applications and utilities compared to competitors like the iPad.
Realistically, Nintendo was never going to repeat the incredible success it had with the Wii. The Wii was a market miracle that we will likely never see again in the video game industry. In part, the Wii’s popularity is thanks to a snowball effect of media coverage and public excitement for the system, as well as time and place, as much as its large library of games or its motion-controls. However, with its WiiU marketing failure, Nintendo incorrectly targeted the group of casual gamers that had bought a Wii to such an extent as to alienate them from the home console world.
That’s not all though. Nintendo also made several errors in judgment with the WiiU that turned away hardcore gamers, those who play games often and are knowledgeable about the market. The WiiU’s unique system architecture differed greatly from its competitor’s systems, as well as modern computers, which made it more difficult for 3rd party game developers to bring their games to the Nintendo system. In addition, a number of missteps were made with the WiiU by Nintendo in regards to the system’s online infrastructure and other modern features that have become baseline expectations from consumers.
While casual gamers were comparing the WiiU’s tablet controller to tablets like the iPad and deciding that Nintendo lost out, hardcore gamers would be disserviced in a different way by the implementation of a tablet controller. Aside from driving up the price of the console in comparison to a regular controller, the tablet controller pushed Nintendo away from PC-like system design. Consider comments made by developers who publish games for PC, PlayStation 4, and Xbox One, on the similar architecture between the three. Bethesda’s Todd Howard told the Telegraph, “[Xbox One and PS4] are very PC-like… The majority of our work works on all three. There’s still time spent on each, but not as much.” The similarity in architecture between PC and the two newest consoles doesn’t extend to the WiiU, in large part because the tablet controller necessitates a unique design of the consoles innards.
What this means is that game developers who weren’t Nintendo have difficulty porting their games from the PC-PS4-XboxOne architecture to WiiU, or at the very least, have to spend more time and money porting to Nintendo’s system. In addition, developers have to consider adding new features that make use of the tablet controller’s screen. In short, porting to the WiiU took much more time and effort than its competitors’ consoles.
In the first couple months of the WiiU’s life, Nintendo did see some large 3rd party developers port games to the system, but many of these games had been out on other systems for some time, and therefore weren’t necessarily new, even to WiiU owners. Additionally, a few of the 3rd party games available for WiiU – such as Mass Effect 3 and Assassin’s Creed – were titles nearing the end of their series run, leaving WiiU owners unable to play the complete storyline. With WiiU system sales lower than expected in its first six months on the shelves, the largest 3rd party developers abandoned the WiiU without much hesitation.
The decision by EA, Activision, Ubisoft, and other developers to abandon the WiiU redefined the console as a Nintendo-only system. And while there are a number of fantastic games developed or published by Nintendo for the system – Mario Kart 8, Bayonetta 2, Pikmin 3, Super Mario 3D World – there were simply not enough games hitting store shelves per month to keep WiiU owners happy. Especially when compared to the long list of highly-rated games for PS4 and Xbox One, the WiiU failed its consumers with its library of games.
Aside from the larger issue of unique system architecture, there are a few small matters about the WiiU that, although on their own are not impactful in a major way, culminate into a set of inconveniences that greatly annoy consumers and should have been avoided by Nintendo. Consider Nintendo’s ignorance of the importance of online gaming. Online chat while playing games is a rarity for WiiU games, with even the cartoon shooter Splatoon, Nintendo’s newest franchise, not supporting the feature. The WiiU’s online service fails to match the PS4’s or Xbox One’s functionality and ease of use. However, in a disheartening way, it hardly matters, since so few WiiU games even feature online functionality in the first place.
A larger issue with the online infrastructure of the WiiU is that Nintendo kept its Online ID system for online purchases. This means that any games bought digitally for the WiiU are registered to that console and not the online user profile. If the system breaks or is stolen, the digital software can never be recovered by the original purchaser. With PS4 or Xbox One, the user could sign in to a new system and re-download their purchased games. Nintendo’s oversight of this matter is inexcusable when we are three console generations into online play.
Similar to the Wii, Nintendo failed in creating a modern, user-friendly online experience on the WiiU. While the Wii’s lack of online functionality was remedied by regular releases of offline cooperative games, the WiiU was not able to replicate this. Nintendo either had to make games that delivered satisfying online content that would last over time, or fill the store shelves monthly with great offline games. Unfortunately, the company was not able to do either.
Admittedly, the past few paragraphs are more nitpicking complaints than concrete reasons for the WiiU’s failure. However, these small complaints encompass the larger problem of Nintendo’s inability to remain connected with current expectations for video game consoles. Weak online functionality and a myopic outlook on 3rd-party developer support are symbolic of this as well. Nintendo incorrectly evaluated the state of the modern video game industry and therefore underappreciated the value of these features, paying the price through terrible WiiU sales.
The WiiU is a failure, but it doesn’t have to be anything more than a speed bump in Nintendo’s timeline. While Nintendo was not able to properly target nor create interest among either the casual or hardcore game audiences, a proper mixture between a more modern philosophy on consoles and Nintendo’s usual unique ideas can lead them to success in the future.
Nintendo is already looking towards its new system, codenamed the NX, and in our next piece we will look at just exactly how the NX can succeed where the WiiU failed.