Wii-U boat torpedoes Nintendo's '¥20bn profit' into ¥20bn loss
Time to get off that go-cart, Mario, and get a real job
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Facing a looming $219m loss, Nintendo today restated its mission “to pursue its basic strategy of compelling products that anyone can enjoy, regardless of age, gender or gaming experience”.
This is marketing speak for targeting occasional players, in particular the very young and the old, folk who might not normally be expected to cough up for gaming products and certainly not the very latest ones. But it also revealed this strategy may not be working.
Paving the way for Nintendo’s full-year results, due to be announced after the firm’s current financial year closes on 31 March 2013, Nintendo President Satoru Iwata revealed that Nintendo now expects to make a ¥20 billion (£139.4 million) loss and not the ¥20 billion profit it previously forecast. This despite a falling Yen, which increases the money Nintendo makes from overseas sales. Sales to gaijin account for 70 per cent of Nintendo’s business.
Nintendo’s ‘games for all’ approach emerged in the middle of the last decade as the company’s penchant for games based on cartoon-like characters, in particular its iconic Italian plumber, Mario, began to appear to be unable to hold their own against more bellicose and more realistically rendered rivals on consoles from Sony and Microsoft.
The strategy served Nintendo well during the early years of the Wii, launched in 2006, as it reached out to younger and once-in-a-while players with its wave-your-arms control system that neatly replicated the swing of a bat and the turn of a steering wheel. It also did a nice trade selling non-gaming products like Wii Fit, an exercise program, to the overweight and wheezy.
Can Mario keep leaping?
The problem for Nintendo is that many of its target players are precisely the kind of people who have increasingly turned to smartphones and, more recently, tablets for the occasional gaming joys. Gadgets like these can provide similar motion-controlled gaming experiences to the Wii and, more to the point, allow the player to snatch a few moments’ flinging fowl in Angry Birds, a hugely popular phone game, during breaks and commutes.
That is driving casual gaming out of the living room. Wii sales were down from 8.96 million units to 3.53 million between Q4 2011 and Q4 2012. Worse, Nintendo’s new console, the Wii U, which attempts to replicate the joys of gaming on mobile devices with a tablet-style controller, sold even less well: just 3.06 million units in the quarter. It is Nintendo’s first console for 16 years to play host to a Mario game written specifically for it.
Nintendo now reckons it will have shipped just four million Wii Us by the end of March, down from the 5.5 million it previously forecast.
The company’s many fans may look it its handheld consoles, the old DS line and its more recent 3D-enabled successor, the 3DS, to take up the slack. Nintendo says it shipped 153.67 million DS devices up to the end of December 2012, but sales are falling: fourth-quarter shipments of its DS line combined fell from 4.64 million units in 2011 to 2.15 million in 2012.
The 3DS fared better, with Q4 sales up 11 per cent year on year, from 11.43 million to 12.71 million. But that’s still far behind 217 million smartphones that shipped in the last three months of 2012, according to market watcher Strategy Analytics. Indeed, Nintendo now reckons it will ship closer to 15 million 3DSes during FY2013, fewer than the 17.5 million it forecast during its last guidance statement.
The company also blamed the reversal of its fortunes on the slow release of the big name games that some punters buy consoles just to play. It said it sold 11.7 million Wii U software boxes and downloads in Q4 2012 - on average, 3.8 titles per console - and expects full-year shipments to hit 16 million - four titles per console. The software totals include bundles, though not all Wii Us come with software.
Tablets are already out-selling notebook computers in many territories, and most observers expect demand to continue unabated through 2013. Apple and Samsung may have recently sounded notes of caution that the smartphone juggernaut is beginning to slow, but hundreds of the millions of these devices will ship during the year nonetheless. That is only going to make it harder for Nintendo to attract casual gamers to its consoles.
Mario may soon need to go back to his day job. ®
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COMMENTS
The Wii-U isn't something I'd touch. That's pretty telling for a Nintendo product, given that I've owned most of the things they've pumped out over the years and been pretty happy with them.
The "screen" controllers are too expensive (the backward compatibility might be there in some games but there's no real guarantee of that, and thus it's much more expensive that the Wii was for many years in comparison). The Mario game is too much about having two half-decent players trying to do everything on the same screen (which is not the thing to do in the casual market, because it either gets crowded, or you have to suffer fools, quite a lot). And I haven't seen much else that actually entices (about the only other thing I've stumbled across is that zombie game, and that's just NOT something that anyone who owns a Wii for casual gaming will rush out to buy - wrong genre, too much stress on quick action, etc. from what I saw).
As such, I honestly haven't even looked at it in a shop. I have a Wii, it does for what I bought it for (quick, cheap console to plonk a child in front of, or to bring out at random dinner parties where random adults - mostly non-gamers - just want to bowl a few balls on something they understand even if they never game). I don't see the point of the Wii-U.
Can I even transfer my store games from Wii to Wii-U? How does that work? Do I have to abandon the games I bought on the store for the Wii?
Personally, I think Nintendo would have made a lot more money with a Wii (or Wii upgrade) that allowed multiple Wii-Fits, had HD graphics and let you use an Android / iPhone app to turn them into additional controllers (or even screens, maybe) over Bluetooth (though that would have hit their controller sales, it would have made the console much more appealing, especially in the "we need one more controller for everyone to be able to play" scenario).
I didn't "get" the Wii-U. I owned a Gameboy, a SNES, an N64, a Gamecube, and a Wii. But I don't "get" the Wii-U at all.
I really wish people would stop doing this
"The 3DS fared better, with Q4 sales up 11 per cent year on year, from 11.43 million to 12.71 million. But that’s still far behind 217 million smartphones that shipped in the last three months of 2012, according to market watcher Strategy Analytics."
When you can make phone calls, plan appointments & meetings, send emails, send texts and take camera-quality photos with a 3DS, then it will be a fair comparison. But as it stands now, it's like comparing a car with an iPod. Both have the capability to play music but they're for two completely different purposes.
Compare like with like, please.
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