Wii U in Dire Straights.

This article kicks off the beginning of a 3-part article looking at the three new consoles. With the PS4 being announced next week, Nintendo are in trouble. The Wii U hasn't taken off as they would have liked and with new consoles coming, Nintendo should be seriously worried. In fact, latest reports indicates that Nintendo sold less than 100,000 units with a figure of 59,000 being mooted. This is shocking for a new console and Nintendo should seriously be worried. The Wii U is already being sold at a loss, presumably because of the high cost of the controller.

This graph courtesy of Ron Workmans blog, ( http://www.ronworkman.com/) highlights the trouble Nintendo are in. in the past 4 years sales and income has plummeted. The 3DS has taken a battering due to smartphone's and Nintendo's hope that the Wii U's innovative controller would lead them to the heights of the orginal Wii has not come to fruition.

The Big Worry

Some might say the Wii U has been out for a matter of months and therefore, they should be given more time to sort things out. It's clear to see now though, that Wii U will never reach the same popularity as the Wii did. The Wii did so well because of the innovative motion controller. Nintendo have gone for the same strategy but this time the casual gamers are nowhere near as excited as before and this,for me, provides the killer blow for Nintendo.

One year advantage?

The reason I really worry for Nintendo is that they have blown that year advantage. An opportunity that Microsoft used for the Xbox 360 to get some sort of foothold. Nintendo should have had a number of stellar games out during this year, yet Wii U owners have very little games to shout about.

The Position

What perplexes me is that they have a console that can't really be called next-gen or current-gen. Yes, it's slightly more powerful than the Xbox 360 and Ps3 but what about when the PS4 and next Xbox arrive? These devices will technically wipe the floor with the Wii U and will provide Nintendo with the same problem the Wii had once the hype died down. 3rd parties will be reluctant to release games on it while they focus development on the more powerful Sony and Microsoft consoles. The casual market is open to all now and Microsoft and Sony will make sure they take advantage of that market from the beginning.

Sony

Sony are going to hit next-gen hard with the PS4 and my next article examines this. That being said, Nintendo have got it all wrong. They never wanted to compete with Sony and Microsoft directly in technical terms, but the level of innovation doesn't catch the markets attention as it did with the Wii.

My Prediction

Nintendo start a big marketing push to combat the release of new consoles. Expect big games with a big marketing budget. Don't expect a price drop.

The next Xbox will pick up where the Wii left off and target the causal market leaving Nintendo in its wake.

The future looks bleak with both the Wii U and 3ds struggling too find a position in the market which appeals.

The next few years will be bleak for Nintendo. They might have already reached the point of no return. Will they be the next Sega? Leave your opinions on the comment section.

[Captain Tuttle]

Nicely written blog with well thought out, coherent arguments. I don't agree that MS is going to focus on the Wii crowd, the ones who bought it for Wii Sports. If they do target them specifically in any way it will be with services, not games. Both the PS4 and the Durango are going to be much more than just game boxes. Traditional gamers might not like it but there it is, it's happening as we speak.

Edit: And yeah, I agree with you about the WiiU, Nintendo is in big trouble with it. What a blunder. Sitting on that huge cash reserve and not doing anything with it, not investing in next-gen. Hubris at it's finest.

[jessupj]

I know a lot of Nin fanboys want to ignore the signs, but it's not looking for the Wii U.

They've hit the dead zone.

It doesn't appeal to the casuals because they don't care about gaming, they're not even remotely knowledgeable on the subject, most of them think the Wii U just a new controller for their current wii, and they have their tablets and smartphones anyway.

It doesn't appeal to the hardcore because they know it isn't a true next gen console, it's only slightly more powerful then the PS3 and 360. They can't get excited for "slightly better", so they will wait for the real next gen consoles that actually bring the industry forward, with better visuals, physics and gameplay possibilities because of the extra power..

It really only appeals to the Nin loyalists.

I think it will still be viable for Nintendo and make a comfortable profit in the end, but it definitely won't have anywhere near the same sales as the originial wii. A gimicky controller isn't going to work this time around, it seems.

[flyingmunky]

Lets just hope Nintendo can pull out of this without creating a virtual boy level disaster. They are going to have to start releasing more hard hitting titles and sucking up to 3rd parties if they want to survive this generation.

In any case it is pretty clear that they won't be hitting wii level numbers, but then again, I don't know if any console will pull that level of sales. For almost an entire year I remember the wii being sold out wherever I went, it was crazy.

[MacDonagh]

All of the big 3 have suffered losses.

http://uk.ign.com/articles/...

http://www.reuters.com/arti...

http://online.wsj.com/artic...

This isn't just a Nintendo problem. It affects all of them. With the current trend of accessible PC gaming, I can see more people ditching consoles in favour of the PC or the Steambox whenever that comes out.

[Captain Tuttle]

The IGN article states that MS's losses were due to a write down over a bad investment that they made (some kind of online advertising firm). According to that article the 360's division saw a 20% increase in revenue. Sony's losses in recent years have been tied to their TV division. The PS3 cost them buckets of money but it's been profitable for them for quite some time. And those consoles are OLD, the market is saturated with them.

The WiiU is a new machine and is supposed to have all of the excitement that something like that brings. It's a failure, as big as the Vita (for Nintendo bigger, they don't have anything else to fall back on like Sony). Nintendo is in alot of trouble.

[MacDonagh]

Microsoft's botched launch of Windows 8 and the consequences of attempting to follow Apple's business model of gaining money via the Windows 8 app store has/will result in a loss of consumer/designer confidence. It will be interesting to see what they come up with but the game has changed. All of the big three are going to have trouble reaching out and appeal to gamers unless they bring something genuinely new to the table. The good ol' days are gone and they have been for a long time.

The casual market has already crossed over to smartphones and tablets since they've become freely available. The hardcore market is migrating to PC now since Steam has become more and more popular and there are already 54 million active users using Steam with more people flocking to it once the Steambox is released. The next generation is going to be a generation of change and the big three (including Nintendo) will have to change with it.

[ZombieNinjaPanda]

"Don't have anything to fall back on like Sony"

What about the 3DS?

[catch]

While I agree that Nintendo could have and of course should have done more to ensure the first months after release would be more exciting for gamers I think that if you really take a look at the history of console launch periods they aren't in as bad a position as many make it out to be.

I am a huge advocate of the PS3 and the stellar library of games it has but are people really forgetting the abysmal first year or so it took to get going? I personally waited until the MGS4 bundle to pick one up and even then it took a while longer to really hit the stride it is in now.

As a WiiU owner I knew going into it that it would take a while for the games to start rolling in just like any other console but I am very happy with it. It was always going to be a console I played right beside the current ones out and the new ones to come. If gamers are really so concerned about what "generation" they are playing they really ought to invest in a pc. I can say with confidence that is where I will be buying my multiplats and will easily outperform whatever Sony or Microsoft has in store for their next systems. The exclusives are what make me really enjoy a console and nobody does those like Nintendo and Sony.

[AtomicGerbil]

Nintendo only have themselves to blame, they never made it clear to the masses what the WiiU was going to be and still fail to market it effectively. Like so many others it's not a big enough leap in capabilities for me to consider a purchase which is another blunder that can't be ignored.

Hopefully for Nintendo's sake they manage to get themselves out of this situation. I have to disagree where the 3DS is concerned though, I hear it's doing very well.

[arsenal99]

Some very interesting points. I think the main issue with the Wii U, which we haven't really seen before, is the way they have positioned themselves. They will always have the core gamer as long as they keep releasing their exclusives. I just don't see a market for them when the new consoles come out.

Sony learnt a lot with the PS3 and they won't make the same mistakes. Rumours such as the console being very easy to develop for is extremely encouraging.