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Analysts chime in on Wii U's mid-term forecast
Analysts chime in on Wii U's mid-term forecast
November 16, 2012 | By Chris Morris

November 16, 2012 | By Chris Morris
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The Wii U is going to be a big seller this holiday season. That's about as bold a prediction as saying Black Ops II will top the November NPD charts.

But what happens when Santa returns to the North Pole and the first wave of consumer fanaticism has started to calm down? That's when Nintendo's new system will really be put to the test.

"Scarcity during the holidays of 2012 will stoke pent up demand all the way though spring time of 2013," says John Taylor of Arcadia. "Where it's going to get to be a little more challenging is around the May time frame or when warm weather shows up again. I think Nintendo is going to really need to demonstrate what is truly amazing about this by that time."

"Naturally there are enough curious gamers and Nintendo fans that will want to try it out - and that will eat up the initial supply," agrees Colin Sebastian of R. W. Baird. "The real issue comes in about six months. You'll know more positively at that point how the console is viewed by consumers."

Pretty much every analyst who covers the video game industry is wary of spring 2013 for the Wii U. But none is more vocal about it than Wedbush's Michael Pachter.

"The Wii U will quickly lose positive momentum from its launch due primarily to pricing," he said to investors in a recent note. "We believe there are already a number of cheaper, comparable alternatives."

Pachter's got some executive heft behind his pricing complaints. Ubisoft CEO Yves Guillemot, one of the Wii U's most ardent supporters in the third-party publishing community, has also expressed concerns with the system's price.

Ubisoft, in fact, is about the only publisher so far that has shown a willingness to go "all in" with the system. And that lack of excitement from other third parties is only stoking analyst concerns about the system's long-term software potential.

"I think there's room for Nintendo this year, but it's very much their audience," says Eric Handler of MKM Partners. "Can they expand beyond that audience? All of the third-party publishers are being very cautious with the Wii U. We're not seeing many Wii U specific titles. They're ports. No one is really pouring a lot of money into it right now. … Third-party publishers recognize that Nintendo garners the lion's share of the software market for its own platforms. And it's very tough to change that."

Further complicating things is the lack of a real non-gaming appeal for users. While console owners – both mass market and hardcore – are using their game systems for other entertainment choices more frequently these days, the Wii U doesn't really offer much to differentiate itself from current offerings.

That could discourage sales to casual gamers – and it's a problem that could dampen sales of the next Xbox and PlayStation down the road, too.

"Half the time people are using their consoles to do things other than play games," says Taylor. "And all of the existing platforms do that just fine. … The thing that made the PS2 this amazing addition to someone's living room was that it doubled as a DVD player, which few people had at the time. So a lot of people bought that for secondary purpose. In the case of the new platforms, everybody's already got streaming access to Netflix through their existing box."

Despite the hurdles, though, no one is counting Nintendo out. The company's base audience hasn't wavered – and there are fewer things in this industry that are more certain than the success of a Mario title.

But is that enough? With investors spoiled after the unprecedented success of the Wii, any step backward will be viewed as a failure – and luring a mass market audience that has become used to $5 games back to a system that charges $60 per title will be a challenge.

"There's still a core market for Nintendo," he says. "It just remains to see how big that core audience is. … The Wii U really needs to find a market beyond the Mario crowd."

At the same time, the company has to demonstrate to those potential buyers why the Wii U is a must-have system.

"One thing that could keep demand strong well into the summer is a new game we don't know about –and anything's possible," he says. "The other is if Nintendo is successful in explaining to people why the asynchronous play and the tablet are really, really fun. Nintendo needs to demonstrate that the tablet, dropped into a 3D world, enables the user to see things and do things that are otherwise not possible on any other system right now. If they ramp that into a fun factor of 10X and communicate that, I think they can sustain the momentum."


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Comments


Francisco Javier Espejo Gargallo
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WiiU has a log run before Durange and Orbit comes out. During this time Nintendo will play a stay-steady rithm with software and price will be high until both rivals come out onto the market. Then, WiiU price will be reduced creating the same effect as 3DS vs Vita, with lots of pleople holding from buying the new systems until they lower their prices, like tons of people are waiting for a price release of the Vita.

The smart move from Nintendo that is killing the Vita can be replicated easily with the WiiU vs Durango/Orbit.

Johnathon Swift
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You mean... next year? That wasn't a lot of time for the 360, it's not going to be a lot of time for these consoles either.

Kellam Templeton-Smith
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There's not really anything comparable between this and the 3DS vs Vita scene-that really boils down to "$250 for Mario or a something that plays iPod games with a few extra buttons" (which was just DS vs PSP part 2).

Not sure why people are so desperate to have Nintendo create a monopoly in gaming.

Daniel Rossi
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"While console owners – both mass market and hardcore – are using their game systems for other entertainment choices more frequently these days, the Wii U doesn't really offer much to differentiate itself from current offerings. "
Curious, I thought that Nintendo TVii and Miiverse where Just For That, actually.

Leon T
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I think the the touch screen motion controller that comes with every system has more to do with making it different. Miiverse and Nintendo TVii add to that. The first party software and any third party exclusives ( times or whatever) also help of course.

Ronaldo Fernandes
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It will depend on the games Nintendo is readying to keep the steam as Orbis and Durango are released. So far, we have only seem games to be released until the next e3. I wouldn't be surprised if they might go for two or more heavy weights, such as a new 3D Mario and a Metroid for late 2013 and try to steal the show.

Rolf Moren
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Given that Nintendo already are selling at a lead-loss for the Wii U hardware I'm not entirely sure that the Orbis and Durango is going to be that much more powerful than the Wii U at a competitive price point. The technological gap between the Wii U and its competitors is probably going to be less than last generation, meaning that most games will probably be ported and published to the Wii U this time around. Especially since the AAA game will probably at least double its dev costs. Few can, at that point, afford to ignore a million selling platform.

Kellam Templeton-Smith
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Stop using the selling it as a loss as a comparison-until we know whether or not Sony and Microsoft's next efforts will have ludicrously expensive screen-based controllers, it's completely facile.

Harlan Sumgui
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@rolf, the touchscreen eats up approx 35-40% of BOM. Shift those resources to ram/cpu/gpu, and the wii u could have been quite formitable. However, Nintendo rightly or wrongly believes they need a hook to sell their gear. It worked with the wii, failed with the 3ds, and the jury is out on the wii u.

Bob Johnson
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@Harlan

It don't fail with the 3ds in Japan. It is selling quite well there. 3ds isn't so hot in the west though.

Chris Hendricks
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I don't think Harlan's arguing the sales figures for the 3DS. It's performing decently worldwide (if not spectacularly). I believe his point was the Nintendo counted on the 3D feature to be a major hook for the system, when in fact many have bought the 3DS without caring about the 3D aspect.

Kellam Templeton-Smith
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Yeah, the 3DS would have sold just as well, if not better if it was just the DSHD. The diversity and breadth of fun titles on Nintendo handhelds have always been their selling point, and why they've always dominated their more advanced competition (the multi generational backwards compatibility has always been in their favour too).

Bob Johnson
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@Hendricks

Nintendo said sales in the West have been challenging. And if the hook is failing then ....
what conclusion do you come to? I certainly wouldnt argue the two are unrelated.

A W
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The future looks bright for Nintendo.

Ricardo Barnhill
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Nintendo very much reminds me of Apple. They're a quality organization that makes great products and serves a very loyal fanbase. And like Apple, they aren't impervious to the market. It took Steve Jobs' return to resuscitate that company, and with Nintendo, its going to take a bit more then an earlier release and inevitable price drop to compete IMO.

The PS2 slayed Nintendo and made it out to be a kiddie console, which was not good for an audience demanding maturer games. Nintendo still has this problem (of being seen as a 'kiddie' console compared to the other consoles) but they rebounded spectacularly by essentially creating the casual gaming audience. The obvious question is of course, will that work this time round? I don't think so, at least not in the US.

The problem is that Nintendo lacks any hype. What are we getting excited for? A tablet screen? People have several of those. An upgrade to HD? Sorry but that party has been thrown. Nintendo made a gamble to compete with a different audience, and not just on hardware, and it paid off, but it seems to have done so only in the short-run. Microsoft and Sony can hit the casual gaming market just as easily now--and possibly more effectively when considering Kinect. If there is one thing the US loves, its hype, and without something simple to look at and say "Woah the previous one was X now its Y!" Nintendo just doesn't have that hype factor. Mario is an icon, but so was Sonic. Perhaps the software company that happens to do hardware should think about just doing software.

I don't know how Nintendo is going to leverage its market share with the Wii U, but clearly their strategy is going to need to set up something if their newest console can only compete with the current gen of consoles. Looking at some of the information for the newest Xbox tells me that in ~2 yrs Nintendo is going to blown off the map. Will the casual gaming audience who bought a Nintendo stick to their guns, or will there be resentment when everybody else has an Xbox or PS and those with Nintendo miss the party yet again?

Joel Nystrom
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"Perhaps the software company that happens to do hardware should think about just doing software"

Lots of people are talking about this now, how Mario should be on the iPhone etc. But I'm not so sure, they've made their fortunes on owning the medium - Just like Apple is right now. Why would they set their aims lower than that?

Kellam Templeton-Smith
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I think it's more that Nintendo needs to stick with a market-it's had a hard time deciding each console what market it wants to go for, since the N64 definitely had a broad range, but yeah, was painted as the kiddie console. The Gamecube definitely seemed like it wanted to be taken more seriously, and felt like it suffered on both ends in terms of key/quality titles. The Wii shifted back to catering to the casual audience...and now the WiiU is back to straddling the fence.

They're also the only company that really gets away with polished nostalgia-Skyward Sword was praised for how innovative it was, but it felt like the iteration that should have come out after Majora's (in terms of gameplay, as Wind Waker is still superior to most of them in other areas). It's hard when I play a Mario game (especially NSMB) and can't tell if I'm genuinely enjoying it, or just love how familiar and comfortable it is, being more or less the same thing we've been playing for 20 odd years.

Kelly Kleider
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Prachter is the anti-Nate Silver

Eric Schwarz
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It's hard for me to believe this thing is launching soon. I have barely seen a shred of marketing for it.

Chris Hendricks
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Oddly enough, this actually makes me optimistic about the Wii U. The fact that there's been so little marketing of the Wii U, and yet the system is highly preordered (according to a different Gamasutra article) means that the first experience of many people from a Wii U will be inside someone's home. If the Wii U is as good as Nintendo would like us to believe, then word of mouth will do all of the advertising it needs.

That said, I certainly don't expect the Wii U to match the Wii's total console sales. I just don't see it likely to have two perfect storms in a row.

David Holmin
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I'm not an expert on these kind of things, but why market it further before release when pre-orders are practically sold out?

Kellam Templeton-Smith
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@David

Well, do we have any indication how the pre-orders compare to the Wii? Eg. are they less sure of this, or did the Wii do so well that Gamestop got a much larger initial order? Without knowing what the actual numbers are, that's kind of a dead end for speculation.

As to your actual question-when is building brand awareness -ever- a bad thing? No one said "Well, we're sold out of Tickle Me Elmo/Furby/Buzz Lightyear/Wii, let's pull our ads!" All it does it build up even more demand for it.

I honestly won't be shocked if it stays pretty hard to get for the first several months, but it's not really going to be indicative of how the console will fare this time next year, or the year after that-I'm willing to bet sales within 5 years will probably only be fractional compared to the Wii.

Bob Johnson
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It is all about word of mouth. If the tv remote features, the 2 screen multiplayer gameplay and continuing your game on the controller etc pass muster with the initial wave of buyers then that will be passed on and the system will continue to do well.

If not then the opposite.

It will be much easier to predict next week when the rest of us get our hands on a Wii U. I see the potential on paper. Just a matter of how well it works in person.


The price is an obstacle on paper. That obstacle could remain next week. Or go away if the system proves to offer a lot of value for your $350.

Competition next year remains an X factor. What will the next 360 and PS3 look like? Will they be released next year? We know they be more powerful but will they copy Nintendo's controller? What other features will they include? What price points will they be released at? ....

Nintendo has done well over the years using their strategy of "you only have one chance to make a great game." They also nurture their golden geese. They generally don't release more than 1 maybe 2 iterations of a big franchise per platform per generation. They consistently give consumers new ways to play their games every generation. They maintain distinct gameplay amongst their franchises. That strategy isn't always going to be hip. But it is timeless.

Cordero W
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More Nintendo Doomsday articles. Next.

Chris Hendricks
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It's more of a "Nintendo has a chance to be doomed, and here's why." Those I'm okay with.

GameViewPoint Developer
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Nintendo's strength has always been it's software/characters etc, that's where it's future lies. They got lucky with the Wii. Nintendo's core audience now plays on mobile, and they never really had the hardcore players anyway. They should of gone the whole hog and released a proper portable (3G/4G whatever) console, basically a Nintendo version of the iPad, that way they would of got their core audience back. The games world needs Nintendo and I hope the new console does well for them, but it's hard to see a place for it in the coming years.

Christopher Enderle
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Isn't the Wii U Gamepad basically a Nintendo version of the iPad?
Considering the Wiimote got an update, I wouldn't be surprised if Nintendo intends to frequently update the Gamepad. If people are willing to buy a new iPad every few months, why not a new console peripheral that does the same (and connects to their home console)?

GameViewPoint Developer
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I wasn't aware you could play games on the Nintendo Gamepad, without the Wii U?

Bob Johnson
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Wii U is its own beast. I would not say it is Nintendo's version of an ipad. It really just plays off some of the things Nintendo has brought to market in the past. They brought touchscreens to gaming before Apple. They have dabbled with some 2 screen gaming stuff.

Michael Pianta
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I recently wrote a blog post about Nintendo's approach to hardware development. I'm not an expert really, just a life long fan/observer, but I think I have some insights. It's longish but if you have a minute check it out and comments are welcome: http://anothercastle64.blogspot.com/2012/11/understanding-nintend
o-part-1-tech-over.html

Thom Q
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"We believe there are already a number of cheaper, comparable alternatives."

Like what? He's not talking about the PS3 or Xbox360.. Maybe's he's talking about tablets.. I hope not, since tablet gaming is Mobile gaming, and not console gaming, plus the Ipads are more expansive then the Wii-U.. Maybe he's talking about some chinese Wii-U clone that hit bootlegger markets at a $100 a pop??


"Further complicating things is the lack of a real non-gaming appeal for users"

Yes, lets try to do the same thing that worked once, 10 years ago.

GameViewPoint Developer
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The new iPad has a lot of processing power, and even the iPad mini will be able to handle 2D games and some 3D as well, so I'm not sure I see the divide between console and mobile anymore, it's just games.

warren blyth
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@GameViewPoint Developer :
can you point out an iPad game that does what wiiU does?

Real Racing 2 HD is the only I can think of that even tries. And I wouldn't say it offers the quality, control, or depth of ANY of wiiU's launch titles.

There is a pervasive sentiment that WiiU doesn't offer anything a tablet couldn't also offer. but - i don't actually see any tablets offering comparable experiences. so it strikes me as weird sentiment.

I think time will tell on this. (although, you could point to the joysticks and buttons and devoted video streaming tech as items that are not available on any iPad sp far).

warren blyth
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* I'd like to be a little obsessive, and note that the guy (John Taylor?) said "asynchronous" in his quote (in the final paragraph), while Nintendo says "asymmetrical."

not a typo.
it seems emblematic of Nintendo putting out a strangely complicated message, and it not being understood by analysts.

* (and to address the content of the article - I'll be very curious if Nintendo clarifies it's pitch for WiiU at E3. If so, it would seem to suggest they confused the message a little on purpose. to make it an enticing mystery to the public, and to keep their competitors from knowing how to handle them)


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