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Nintendo showing signs of vulnerability

By on December 1, 2012
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Since the launch of the Wii, Nintendo has been on top of the world. The company’s (at the time) innovative console outsold Microsoft’s Xbox 360 and Sony’s PlayStation 3 month-to-month with few exceptions from its launch day until well into the fall of 2010. After that, the Xbox 360 began competing for the top title on a monthly basis until it got a stranglehold on the market for 18 consecutive months through to June of 2012. That isn’t to say that the Wii wasn’t successful during that time, it still managed to go head to head with the PS3 in 2011, with both companies selling around 4.5 million consoles. The Xbox 360 might have been a couple million ahead, but Nintendo’s bread and butter has always been the handheld scene. With all of these combined sales, including hardware and software, no one could light a match up to 2010.

Last year was a transition year with the rest of the market finally catching up to the sales giant. Many expected Nintendo, once again, to jump ahead of the competition with the launch of the Wii U, but for the first time, it wasn’t so. The Wii U only managed to sell around 400,000 in its first week – and that’s an optimistic guess on Nintendo’s part. Reggie Fils-Aime, president and COO of Nintendo, said that the console was “essentially” a sell-out, with retailers struggling to stock their shelves. However, as time goes on, it’s becoming more clear that demand is no where near as high as it was six years ago.

The perceived lack of interest may be due to bad planning on Nintendo’s part. The publisher made a point to make the price as low as possible, and part of that deal was shipping a mere 8 gigabyte hard-drive with the standard bundle. (Note: this is seven years after the Xbox 360 launched with a 20 gigabyte HDD). Some local GameStop employees are reporting that buyers are electing only to buy the 32 gig version, which runs $50 more. Sure, both system allows gamers to use their own external storage, but the casual market Nintendo aims to persuade isn’t made up of the same gamers complaining that Microsoft won’t let them use their entire terrabyte HDD.

Wii U’s launch-week numbers likely reflect the reluctance of buyers to purchase the cheaper model. Nintendo blames its less-than-stellar sales on its limited production, though the general feeling around Internet forum is that demand is lower than expected. It doesn’t help Nintendo that its launch week coincided with the week of Black Friday, in which Microsoft managed to sell 750k Xbox 360′s. This was more than the Wii and the Wii U combined, and the Wii U only topped its predecessor by 100k at 400k units sold.

To top it all off, the 3DS continues to struggle. If the initial price cut wasn’t enough, rumors are circulating that there is another one coming in the near future. And it didn’t fair any better during Black Friday, where the DS once again managed to outsell its successor by 75k units. It’s not doing horrible, but compared to where it stood just six years ago, it has fallen a long way. One would expect a straight upgrade to sell better than the hardware it was based off of and that’s what Nintendo expects. Not only did the 3DS cause a drop in the company’s profit margins, but it wasn’t until ” sometime between April and September 2012″ that Nintendo expected it to finally begin being profitable. Another price cut, this soon, could once again cripple the company’s gains.

But there is hope, and it comes in the form of the Wii Mini. Sure, Nintendo markets it as a cheap way to get your hands on some of the Wii games before it’s too late, but at the moment it’s only available in Canada, which is a sure sign that the company doesn’t want to dive head-first into the product with questionable sales potential. Maybe the folks at Nintendo are wising up, but the specs of the console certainly aren’t something to brag about; it doesn’t even come with Internet capabilities. Had it launched last year, we’d be looking at a much better situation, but just weeks after the launch of the Wii U, most are seeing this as a simple cash grab.

In the end, it’s too early to tell where Nintendo stands, but the indicators aren’t reassuring. It’s been a long time since Wii’s huge success. It was almost unbelievable at the time and it remains so now. The big question is, will someone be able to capitalize on the open door? Sony has its hands full trying to spark something–anything–with the abysmal performance of the Vita, so all eyes turn to Microsoft. Will the 720 make an early arrival aned create the family experience its predecessor has so desperately tried to become, or will the PlayStation 4 be the go-to console for the disenfranchised Nintendo fans?

Dillon has been writing for almost half a decade now and has slowly worked himself up the ladder. At one point he single-handedly covered PAX East and E3. (Yeah, he's kind of awesome.) The staff might still consider him a baby, but you can find him and his witty sarcasm on Twitter @Kamikaze8.
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