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The horrifying Wii U sales collapse

Published May 21st, 2013 9:55AM EDT
Nintendo Wii U Sales Analysis
Image: Chris Sewell

There are rumors about Wii U sales in North America slipping below 40,000 units in April. But it’s a fact that Wii U sales in its home market of Japan spiraled below 7,000 units during the week ending May 12. This is an atrocious level. The ancient PS3 sold 12,000 units and the portable console champ 3DS sold 46,000 units during the same week. The PS Vita sold 12,000 units and even its predecessor the PSP managed to top 6,000 units. This means that the closest sales comparison to the Wii U is a Sony portable console that was replaced by a newer model more than a year ago.

What makes the Wii U performance such a horror show is the fact that its sales tanked before the next Xbox has even debuted. After Microsoft and Sony really start slugging it out in the media spotlight with hardware comparisons, game exclusives and pricing speculation, the Wii U is going to be starved of oxygen.

Nintendo does have the option of announcing a dramatic price cut since the value of yen against dollar has collapsed in recent months, moving from 77 to 102.  But this also gives Sony a chance to lower the PS4 price for its United States debut at the last minute should it want to hammer Microsoft. Nintendo is running the risk of an utter consumer confidence collapse over the summer months. It’s quite possible the company was lulled to complacency by the runaway success of its portable console in 2013. Now Nintendo is facing the possibility of a ruinously weak Christmas home console performance as Microsoft and Sony gird their loins for a titanic marketing spending duel.

Complicating matters for Nintendo is the rapid shift of consumer spending patterns. Combined spending on mobile game apps on iOS and Google Play platforms is now nearly three times higher than the consumer spending on Nintendo and Sony portable console games. The 3DS is still performing strongly for Nintendo but this would be a bad time to become completely dependent on a portable console system. By the Christmas of 2014, gamers may be spending 5 to 6 times as much money on mobile apps than on portable console games. Can the 3DS console still thrive in an environment like that?

After launching mobile game company SpringToys tragically early in 2000, Tero Kuittinen spent eight years doing equity research at firms including Alliance Capital and Opstock. He is currently an analyst and VP of North American sales at mobile diagnostics and expense management Alekstra, and has contributed to, Forbes and Business 2.0 Magazine in addition to BGR.