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First-year Wii U sales suggest grim lifetime sales
by Matt Matthews on 12/19/13 10:22:00 pm   Expert Blogs   Featured Blogs

The following blog post, unless otherwise noted, was written by a member of Gamasutraís community.
The thoughts and opinions expressed are those of the writer and not Gamasutra or its parent company.

 

By now, the historically weak sales for the Wii U are old news, but today I want to follow up on an idea I'd been considering for a while but just hadn't had time to flesh out. The basic question is this: How much of a console's five-year sales are typically made in the first year?

If we look back to consoles launched since 2000 -- the PlayStation 2 and newer -- the answer is pretty straightforward. I've put the figures together into the diagram below.

As expected, there is a range of fractions here, and the fraction depends greatly on the kind of success the platform finds in the marketplace.

Take the PlayStation 3, for example. That's a platform that experienced an extremely hostile market during its first year. It wasn't until the first major revision, the introduction of the 40GB PS3 without backward compatibility in late 2007, that the system began to sell at a reasonable pace. Therefore, its first year was 11 percent of the system's five-year sales total.

In the case of Nintendo's Wii, the first year was extremely supply-constrained, and therefore it wasn't until Nintendo was able to fully feed hardware to retail outlets that its sales reached their full potential. In that case, the system's first year accounted for just 13.7 percent of the five-year installed base.

On the other end of the spectrum, the original Xbox saw over one quarter of its five-year total achieved in the first year. The explanation here is twofold: the system sold quite well out of the gate -- over 3 million systems in just 12 months -- but then was abandoned at the four-year mark when the Xbox 360 arrived in November 2005.

If the Wii U plays out between the extremes here, then its five-year sales total will be in the 12-13 million system range on the high end and in the 5.5-6.0 million system range on the low end.

Those figures are both terrible.

Take the struggle that Sony endured from November 2006 through October 2011, a period when it was constantly fighting for attention while both the Nintendo Wii and Microsoft Xbox 360 found great success in the U.S. market. In that period, the PS3 moved over 18 million systems in the U.S. But that would still put it six million systems ahead of the best case for the Wii U, in this model.

If, instead, the Wii U sales so far are really just about 25 percent of the system's sales through the end of 2017 -- well, at that point we're looking at a console that still beats the Dreamcast in the U.S. but just by a couple million.

Finally, there is always the case that history isn't a good guide here, that Nintendo's first-year sales will actually be less than 11 percent of its five-year total. Say, for example, that its sales right now are just 5 percent of the total in five years. Then we're looking at a system with an installed base of 28 million systems, which puts it in the same company as the PS2 and Wii.

Whatever happens next, Nintendo has to bend the sales curve here or it's destined for miserable sales of its flagship console. Like the rest of you, I'll be watching closely to see what Nintendo chooses to do at the end of January 2014 when they announce their fiscal third quarter results. That's the best opportunity they'll have to change the game.


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Comments


Dominic Obojkovits
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Your Maths is a little off there, considering that the Wii U sold 4.3 Million Units in the first year and the low end being 11% that would mean five year sales could be as high as 39 Million and on the other end as low as 19 Million. Both of which aren't deal breakers... Silly article...

MATHS:
4.3M = year one = 11%
THEREFORE 4.3/11 * 100 = Five year sales = 39 Million
4.3/22 * 100 = Five year sales at 22% = 19 Million

Matt Matthews
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U.S. sales only, so the math is right.

Using Nintendo's shipment figures would be foolish. Those are not sold to consumers, and have been historically much higher than actual sales. Just look at the North American shipment figures Nintendo reported, and how far behind actual NPD Group sales figures lag those shipments.

Jonathan Murphy
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I'll say it once and I'll say it a million times. Wii U is dead if Steambox does well. 2014 will define the rest of their sales. So get off your butts Nintendo! Hire someone to save your console.

I'll do it for $1 million. ... I won't get the offer. ):

Micah Betts
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I hardly see PC Gaming/Steam as a direct competitor to the Wii U. Wii U is the only place to get Nintendo's first party titles and other games that use the unique hardware, whereas there is a ton of overlap in the PS4/XB1/PC library.

Maria Jayne
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This is the problem with creativity, sometimes you hit the mark and make millions, but also sometimes you fail hard and nobody wants what you've made. It's a sad fact that in order to have anything interesting, you have to survive significant failures when being creative. I hope Nintendo recovers from this, the industry would lose more than just a competitor if they don't.

Cordero W
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In other news, more people join the Nintendo doomsayer cult.

Somara Atkinson
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I mean, if the billions of dollars Nintendo made from the DS and Wii evaporates overnight, this apocalypse could totally happen. Maybe the doomsayers know something we don't.

Leon T
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Yeah, but at the same time they act like the billions of dollars the 360 and PS3 lost is a good strategy.

Kevin Clough
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In my opinion, Wii U focuses on two segments - families and old school gamers. It seems like the family segment is shrinking with the rise of the tablets and smartphones. In my family for this Christmas we bought one PS4 (for me) and three tablets for the wife and older kids. I have given thought to getting a Wii U for the kids but I felt that tablets provided more overall value (i.e. reading books, watching movies, more educational apps, etc).

Thanks for the analysis of the Wii U numbers. I'm not counting out Nintendo yet because they always seem to have some tricks up their sleeves. They did manage to revitalize the 3DS and with the new low cost 2DS they are going to move a lot more units. I think their best shot is to release a Wii U without the tablet controller at a very low price point.

Sean Kiley
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The WiiU launched way before it was ready. Nintendo sells consoles with Nintendo software which was no where in sight at launch (they STARTED working on Smash Bros. when they revealed the console!).

Slash the price to $249 while giving us a proper Mario or Zelda. Bonus points if you can snatch up "The Last Guardian"

Phil Maxey
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I think I said almost a year ago that they need to sell the Wii U at a very low price to stand any chance of it getting decent traction in homes, when I say very low I mean $99. Yes that means Nintendo will probably take a large loss on each console but that has to be balanced against the Wii U hardly selling any from here out and the console fading into obscurity, which is exactly what is going to happen unless something changes.

The other option is they bring out a new console, if they do that it HAS to have visuals which match or exceed the Xbox One and PS4, otherwise we are right back where we started again.

Nintendo has some of the strongest brands in the video game business, but somehow they seem to have missed that most of their audience have moved onto mobile (via Facebook).

I think a low price Wii U would do well, and I think a current Wii U price new Nintendo console would do well, but I don't see a bright future for the current situation.

Leonardo Martinez
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No offense, but suggesting selling it at $99.00 sounds like the response of someone who will never buy a Wii U no matter what it offers. Although I do think one of its problems is the price, particularly considering it is old tech compared to the PS4 and Xbox One, $99 is simply put an invitation to financial suicide. Not even the stripped down versions of the Xbox 360 and PS3 sell at that price.

The $200-$250 range, on the other hand, sounds way more reasonable. Indeed, I wonder if they should have released it originally at that price point. While I doubt it would have repeated the success of its predecessor, and Nintendo would still have incurred in some big loses, the console would be in a far better position than now, and with a better chance of making up the losses with the sale of software and accessories.

Now, based on the sales reported on Japan by Media Create for the past few weeks, the console seems to be recovering some momentum for the holiday season. Itís refreshing given how bad it has sold for most of the year and the initially lukewarm reception of Super Mario 3D World (which despite the relative poor lunch, is holding its ground), but it is still not enough to make it a viable seller in the long term, so Nintendo will have to take some drastic measures next year or risk the Wii U falling into complete obscurity.

This, of course, doesnít necessarily spell doom for the company, as they have enough financial solidity and a still profitable handheld business (indeed, I would even argue that right now, the 3DS is their flagship console, not the Wii U) to keep them afloat for the next few years, so having a home console with only the level of success of the Dreamcast will not put them down for good. But they really need to prepare a better successor for the Wii U, and a better strategy for their home consoles, as the current one is clearly not working.

Cordero W
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@Leonardo: Why couldn't your post be the actual article we are reading now? We could be reading facts with some analysis of it rather than very old facts that this article is presenting, and with indepth explanation to boot.

Phil Maxey
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I agree with a lot of what you are saying, but how is nothing better than $99? which is exactly where things are heading. At the very least it might give them a springboard for users to upgrade to a new version of the Wii U whenever they get around to launching it. Or do you think that Nintendo is happy to have a tiny percentage of the console market share compared to Sony and MS? because I don't think they are.

Maybe the calculation is they will make more on selling a few Wii U's at the current price compared to selling a lot more at $99, if so fair enough.

Why would anyone buy a Wii U? The main reason the Wii sold despite it's dated visuals was because of it's novel controller, that novelty has now long since worn off and been replaced by kinect anyway. You might reply people will buy a Wii U to get access to the famous Nintendo brands, even if that's the case (and I'm not convinced it is for the current younger generations) why wouldn't they just play on a 3DS? which as you rightly suggest is what probably most Nintendo players see as the main console.

You have to look at who has been Nintendo's main audience over the years, and it's mostly been what people call casual/social gamers, this audience has obviously moved off of consoles and onto Facebook/Mobile, which is the direction Nintendo should of gone in 5-8 years back.

Like you say though it's not game over yet, and Nintendo could well bounce back with something special, but I think they need to go back to the thinking they had with the SNES/N64/CUBE.

Leonardo Martinez
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Itís not that the $99 price is unattractive per se. The issue is simply put that manufacturing costs, logistic costs, promotional and marketing costs, R&D, sales expenses, economies of scale, among many other supply chain related factors, just donít add up for them to sell the Wii U at $99 at the moment, and probably not even next year, at least not without hemorrhaging massive amounts of money that would erode the bottom line of the company.

I honestly donít know how much itís costing them to put a Wii U on the market, but given that they are still reporting losses per unit sale, and that they have not even cut the price to the more reasonable and convenient $200-$250 scale, I have to assume going below that level is just not possible without bleeding the bottom line dry. Even assuming they manage to grow the install base by taking such extreme measure, the gains obtained from sales of software and accessories might just not make up for the losses per console sold at the $99 level. Now, I suppose a lower price point from the $200-$250 level could be attained if they ditch the gamepad, but even then I doubt they would sell the console at $99.

In any case, Nintendoís main audience has always been kids, families and the old Nintendo fan. They managed to expand this audience with the Wii, the DS and the casual gaming boom, but while most of the casual gamers have gone away to other platforms, I donít think their primary audience has truly disappeared if the sales of the 3DS are any indication, not to mention that the SKUís for family and kid games on the NPD top ten on November tended to favor Nintendo consoles over the competition.

But if the Wii U is really so unattractive to the market as you point out, then there might be no point in sacrificing their revenues trying to save it. It would probably be better for them to endure the low sales for a couple of years, keep releasing first party games here and there to keep the fans appeased, then release another home console with a different strategy.

Somara Atkinson
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I've always wondered if Nintendo employees see all of these "Your company is doomed" articles, and how they feel about them. Maybe the veterans have an archive going back to the 90s and read them to the younger employees as campfire stories.

Kujel s
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LOL, that's a pretty funny idea and may very well be true :)

Jarod Smiley
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Well regardless of how well-off the company is, doomsday articles are perhaps are more to do with the idea that people are tired of Nintendo stuff only being on Nintendo hardware and that's the gist of your gaming library. I think because 3rd party support isn't like on Sony or MS platforms, people want their games on more machines, but then you have the portable phenomenon, and that just cancels all that Nintendo software talk completely out the window.

I think they'll be some really unique WiiU game, Ninty just tried to repeat Wii again and fuse a tablet into the experience, not really realizing the tablet is so popular because it is replacing home computers and laptops and doubling as a gaming machine. A good try Ninty, but they are usually hit/miss in the console space since there dominating SNES era. I really like that they take risk and try doing things differently. WiiU doesn't have to sell like the competition for Nintendo to support it, they have a 3DS/DS, just like Sony doesn't have to sell Vita's like the competition to support it, they have PS3/PS4.

I'm happy Nintendo is here to stay.

Joaquin Bello
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I think most consumers are waiting to see what happens, but I think Nintendo in the long run its the one with best chances of success. We can all agree that Nintendo has the most different console and software. If the life cycle of this generation its 10 years its probably that many users are going to buy two consoles. What do you think they are going to buy? more of the same or something different?

On the other hand Xbox one int the long run its the one with the worst chances of success. Bad publicity at launch, more expensive, you are buying a peripheral(kinect) that doesn't have any killer apps, not many exclusives and most of them don't give you a different experience( Halo similar gameplay to CoD or BF) and less market share with the introduction of steambox.

Its probably that Wii U price will drop, but its stupid to do it at the same time that two new consoles are release. You can expect a Wii U's price drop at the middle of the year when the novelty of the new consoles wears off.

warren blyth
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Agree with your first paragraph. But I think WiiU only needs to price drop to stay the cheapest option of the three (not to attract more buyers by price alone).

And despite all the online game press coverage of microsoft's mistakes with the xbone announcement - it still seems to selling in step with the PS4. (thus : it demonstrably didn't hurt them nearly as much as insiders want to claim it did? maybe we need to wait a couple months for the pre-order queues to go away, and see who is walking into stores to buy one. but. you'd think the enthusiast pre-orders would have been the most affected by early hype mistakes?)

I think microsoft's deep marketing pockets and deeply entrenched online-multiplayer community give it the best chance at dominating this generation.
(but my bet is that the ps4 and xbone will mostly be abandoned to the niche of filthy online-multiplayer crowd (call of duty), while everyone else on earth will be drawn to the renewed freedom and ease of pc gaming.)

Chris Hendricks
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Nintendo does have at least one thing going for it: many people don't know that the console exists yet. At a Christmas party on Saturday, I mentioned to someone that I'd just purchased a Wii U, and got the response "Oh, what's that?"

On one hand, that's bad, because it means that the message is not spreading nearly as virally as it did with the Wii. On the other hand, that's good, because it means that there are large numbers of people in its target market that simply haven't heard about it yet. If everyone had heard of the Wii U, and sales numbers were bad, Nintendo would be in a horrible position. Instead, they have a simple lack of awareness of the product.

The Wii U hasn't been rejected by the general population, just somewhat ignored, which is easier to fix.

Jay N
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To ignore something, you first have to know about it.

But yes, the populace being oblivious to the Wii U means that there is a potential for a re-launch at some point in the near future, but in order for that to work, Nintendo will need to carefully construct a product scenario that uniquely displays the console's hooks, or perhaps even creates new ones to take advantage of, in a way which appeals to the mass market without alienating its core audience.

That's a really tough sell, and one which I think the current leadership of the company might just not have the balls to make.

Jarod Smiley
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btw--why isn't Sony/MS/Nintendo tying there consoles to cell phone services like Tmobile and AT&T. I saw a deal for an Xperia Z and PS4 (Europe I believe) and I'm like "man, I would have a hard time not impulse buying that right now!"

I mean, Ipads/Android Tablets are actually pretty expensive, especially if you want some decent space, but they're still hugely popular because of the affordable alternative programs to acquire them. How many forum goers were perfectly happy with the announced price of Vita after seeing how beautiful the screen was? But $250 for a pure handheld gaming device was not something the general public was going to accept. I have an Iphone right now (though I prefer android) simply because I got one for $100, and I didn't even have to put down that, could have walked out with the balanced charged conveniently to my monthly bill every month. I think a deal like this for consoles would be pretty huge, especially with the increased presence of digital downloads and Sony/MS/Steam competing for best digital ecosystem.

E Zachary Knight
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Microsoft tried something like that with the 360. They announced it, launched it, then it went quietly into the night. I don't think American consumers are really interested in a subsidized subscription model for dedicated games consoles. It works for phones because that is how we have always done phones. I think it would require a major shift in consumer expectations to succeed.

Kenneth Blaney
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A major reason subsidizing with subscription deals works for phones is that after 2 years with a phone, the newer models are much, much better. However, in a game console, 2 years is less than half the expected life span. So, to an extent, you would be stuck with a subscription that is much longer for a video game console than a cell phone. This isn't bad in and of itself, but the current cell phone market already is experiencing backlash for long contract times.

Joseph Elliott
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One thing that might be worth considering is all the software Nintendo just launched in the past few months for the Wii U. I don't know how big of a difference it'll make, but suddenly the Wii U looks to be the most appealing console to me at the moment. I'm sure PS4 and Xbox One will have way more software in the end, but Nintendo has a lot of games I want to play right now.

I doubt anything will make this a stellar generation for Nintendo, but I wouldn't count them out completely yet.

Jarod Smiley
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I wouldn't count them out at all. What I'm seeing as far as sales go, is very worrying for MS IMO, not the company mind you, but the gaming division.

Early trends are saying that PS4 is a more popular console on a worldwide scale, and plenty popular in the U.S to boot. Now, I'm not saying which platform is even better at this point, what I am saying though, is both platforms are pretty similar. Gamers like to say "I buy all platforms" but it's just not feasible or ideal for many people. Even if I could afford (I usually can) all platforms, there's a slim chance I'd want an X1, Steambox, WiiU, PS4, 3DS, Vita, Tablet in the same time frame. It's interesting to see if the general public only picks one of the next-gen platforms and one as a second, perhaps a family console and a bedroom/man cave console. I think PS4 and X1 are just too similar this gen to really distinguish them, and if early trends are an example of what this gen is going to look like, I can't see X1 thriving if it's only popular in the U.S. There just can't be parity if these early trends become the standard, and if they do, WiiU ( a console with completely different experiences and exclusive software) will look a lot more appealing as a standalone platform or a second to PS4/Steambox/X1 as the main one.

Interesting time a head. But all that Nintendo software is looking mighty fine right now. A $250 price tag for WiiU I would have bought it already, but even at $300 with a few games, its looking like my first console I get with tax return money, and I love Sony, but there's simply more appealing software on Nintendo's platform right now. Mario Kart 8/Bayonetta/Smash/X all look fantastic as well for next year.

rafael moura
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First, let me say that im brazilian and my english could be better. Now that this is said, i would like to share with you my view on nintendo because ive had never seem a videogame site with so many inteligent and well articulated people :)

Well, the thing with nintendo is that only them know what they are cooking, and what might seem as weird strateging from the outside, might look more resonable from the inside.

First: we havent seen nothing yet. Super Mario 3d World is not it. It might seem to you as "the wiiu mario" but it isnt really. It shares a lot in common with the "new" mario series. It is more of hybrid 2d/3d-esque game then a true sucessor to mario 64 or galaxy. When nintendo starts showing its triple A software, its going to be much more amazing. Nintendo can and will make a mario game that will be not only amazing as galaxy but also deeply involving in a emotional way, as much as the best pixar has to offer. Im saying this because its going to be a very different storie when nintendo starts to show its guns...its that its hiding, probably to avoid using the strenghs of the wiiu too soon and let it die prematuraly as it happened with the wii. Thats why before we see the actual "zelda u", we are seinh hd remakes and Hyrule Warriors.

Second: motion control is not dead. The wii was not capable of realizing the full potential of motion control, but the wiiu may be. The future of game, at least for the next few years, is realistic interaction with the 3d space, in a way that only motion control will allow, and miyamoto has already hinted at a first person game that revolves on manipulation of objects with the motion plus, and he has also said that he has so many ideas for the gamepad that he didnt even knew where to start...but have we seen any of these ideas yet?

So, what i believe is that nintendo has many wonders to show us and that the wiiu will eventually be very succsessful, but people are not able to visualize that for the moment. Sorry if i sound like a lunatic or something .

Andrew Shaftling
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I can't help but feel that they're completely doomed at this point. Small user base, lacking catalogue and brand new consoles just out... The only thing they offer are exclusive IPs.


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