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Last week, when Nintendo announced positive news surrounding its well-received handheld console, the Nintendo 3DS, I wondered aloud why the Japanese company neglected to mention the performance of its other console, the Wii U. Well, now we know why: Reuters reports that poor sales of the Wii U led to a third consecutive year of loss for the console, and Nintendo has cut the console’s sales forecast of 9 million down by 70 percent, to just 2.8 million units.
It’s a crushing blow to Nintendo, which also adjusted its projected sales for the 3DS to 13.5 million from 18 million. The company now expects an operating loss of 35 billion yen ($335.76 million), a far cry from its initial forecast for a 100 billion yen profit.
Nintendo President Satoru Iwata released a statement regarding the Wii U’s poor traction:
Wii U sales, on the other hand, showed some progress in the year-end sales season as we released various compelling titles from the summer onwards, launched hardware bundles at affordable price points and also performed a markdown of the hardware in the U.S. and European markets; however, they fell short of our targeted recovery by a large margin.
It seems that the company’s late-year adjustment in price to the Wii U — bringing the Premium version of the console down to $299 and basically eliminating standalone versions of the Basic — didn’t stoke as much interest in the area where the Wii U is performing worst: the U.S. and Europe. According to VGChartz, the overall lifetime sales of the console remain the worst in Nintendo console history — just 5.3 million sold, compared with the original Wii’s 100 million sales record.
Many outlets, like TechCrunch, say that Nintendo’s troubles are a cut-and-dry issue: the company’s console market is facing a tight squeeze from next-gen consoles Xbox One (s msft) and PlayStation 4 (s sne), while taking a beating from mobile on the other side of the spectrum. However, I’d venture that it’s more complicated than that.
Both the Wii U and the Nintendo 3DS are odd birds that add novelty functionality on top of already successful hardware systems — the best-selling Wii and DS consoles, respectively. The Wii U has the added misfortune of appearing like a nonsensical add-on (Why can’t you just attach the new controller to the old system?) with the same interface, inputs and menus. Combine that with Nintendo’s notoriously slow software cycles, propelled largely by the fact that the company does most of its game library in-house, and the Wii U looks like a novelty console built on the Wii with very little games that actually take advantage of that novelty.
To put it plainly: Nintendo failed to iterate significantly enough with the Wii U, and it’s paying the price with laughably diminished sales.
While the Wii U is on an upswing, largely due to the success of Super Mario 3D Land and the added incentive of a console on a price drop, it will likely get swallowed up as the fervor for its competitors reaches fever pitch. I think it’s right to cut the console’s life cycle early and go back to the drawing board, but I don’t think Nintendo should abandon the hardware market outright.
The Wii U’s complete and utter failure (one that makes even the 20 million-sold Gamecube look like a success) to reach audiences is a lesson that Nintendo was bound to learn at some point in its existence. Now, it needs to focus on the right level of innovation, and a console that is a hard departure from the legacy of the Wii.