Ben Kuchera

The 3DS is doing great, the Wii U is circling the drain, and Nintendo is in something of a pickle

The 3DS is doing great, the Wii U is circling the drain, and Nintendo is in something of a pickle

Nintendo has a mixture of good and bad news for the first quarter of fiscal 2013. The company posted a net income of ¥8.62 billion, which translates to slightly under $88 million.

Luigi’s Mansion: Dark Moon sold over 1.4 million units worldwide. The latest Animal Crossing game sold 3 million units in Japan last fiscal year, and has sold an additional 1.54 million units worldwide since its launch in the United States and Europe.

Nintendo sold 1.4 million units of the 3DS hardware, and 11 million units of software worldwide in this quarter. The company’s portable business, and the associated first-party games for those consoles, continues to do well.

The bad news can be found in Nintendo’s Wii U sales. You could say that the company is struggling to sell the hardware, but that’s something of an understatement. “Flatline” might give a better idea of how the console is doing.

The perils of doing nothing

It’s not hard to see where the problem lies. This is the paragraph of the report dedicated to the Wii U:

With respect to Wii U, New Super Luigi U, which is add-on content for “New Super Mario Bros. U released simultaneously with the Wii U hardware last year, was released, and Game & Wario, released in Japan in March, was released overseas. The worldwide sales of Wii U hardware and software were 0.16 million units and 1.03 million units respectively mainly due to the release of few key first-party titles this quarter to strongly drive the hardware sales.

So just over 1 million units of software were sold for the Wii U, in total, for this quarter. Worldwide. If you're a third-party developer or publisher, you are seeing these numbers and running the other way. If you're NIntendo, apparently the plan is to do nothing and hope things pick up?

You could argue that this isn't a fair assessment; you can't rush software out just because a console is struggling, but there has long been evidence that Nintendo failed in the basic planning of the Wii U.

The system was sent to reviewers lacking most features of the firmware, and in fact that update came to the system long after the units have shipped to retailers; the first interaction customers had with the hardware was the lengthy installation of the firmware itself. Software support, from both Nintendo and its partners, has been anemic at best, and non-existent at worst.

Systems don't sell without games to play, and Nintendo is caught in the terrible chicken and egg problem of having a system that isn't selling due to a lack of games, and a lack of games due to the fact the system isn't selling. There are more franchise games coming this year, but without a price drop or a stronger variety of third-party games, a new Mario game may not be as helpful to prod sales as the company would like.

Nintendo has an amazing back catalog of games, but we know that the strategy has long been to release those at a trickle, and cede the retro market directly to pirates and emulators. Nintendo's history of popular, high-quality games is an amazing weapon in any console war, and the decision to keep it locked up for a future battle is baffling.

So what can be done?

We talked about some of the boneheaded moves made by Microsoft when it comes to marketing, and Nintendo shares the same trap in many ways. I love my Wii U, and play it often; the ability to play games on the tablet-style controller while leaving the television free for the kids or my wife is a huge selling point, as is the ability to play multiplayer games where it's possible to hide information from the other players.

Andrew and I discussed this a bit in the past; Nintendo can do things that the other consoles can't due to that second screen packed into every system.

These features aren't being discussed, they're not being leveraged, and Nintendo itself doesn't seem to know what to do with the hardware. Nintendo has to begin making games that use the hardware in ways that its competitors can't match, and it has to do whatever it takes to get third-parties to do the same thing.

Nintendo won't be able to fight Microsoft or Sony on power, and probably not even features on a long bullet-point list, but if it begins to deliver games that could only work on the Wii U and then sells those games effectively to players… well, things could turn around. A price drop is also not a terrible idea, especially since Sony so radically changed the next-generation landscape with that amazing $399.99 price point announced at E3.

Nintendo has a limited time to move the needle when it comes to the Wii U, as the holiday season is going to be dominated by the console launches of the Xbox One and the PlayStation 4; the less powerful and barely selling Wii U is going to seem like old news if something isn't done, and quickly.