It’s been a bipolar year for Nintendo, but things seem to be getting back on track – yet how long will it last, and can the company keep the momentum going?
ony and Microsoft are absolutely killing it – their rivalry is comparable to the Apple/Google war, or the Amazon/eBay grudge match: both sides of the battle may be pitted against one another, but the constant struggle for superiority keeps the companies on their toes, perpetually trying to outdo one another with tech, hardware and software. Nintendo – an outlier on the mainstream console market for some time now – constantly tries to break back into the mainstream, but the Wii U seems to be a millstone around the company’s neck.
“In a very rare occurrence for the videogame industry, Wii U shipments actually declined in 2013 compared to 2012, despite only being available for one quarter of 2012,” explains Gartner analyst Rob van der Meulen – whose company forecasts console production numbers in relation to market events. “[As a result], we have reduced our forecast for the 2013 through 2017 period, primarily due to lower expectations for the Wii U as the console has failed to gain traction with consumers. Strong launches in 4Q 2013 from Sony and Microsoft with PS4 and Xbox One, respectively, were not enough to offset the weakness at Nintendo.” Consequentially, Gartner altered its forecasts – dropping the number of predicted Wii U units to go on sale by 4 million over a four-year period, claiming “it’s unlikely the Wii U will recover,” while conversely increasing predictions for the Xbox One and PS4 since Gartner “expects these consoles to benefit from Nintendo’s weak showing with the Wii U.”
Traditionally, Nintendo has been incredibly reliant on hardware sales – typically 55 per cent of the company’s net revenue is derived from sales of handhelds and consoles. The Wii U decline has been compounded by the falling sales of the 3DS, too, which has suffered a 40 per cent decline in sales over the last fiscal year. That said, as of 30 June, Nintendo had sold 44.14 million 3DS units, which isn’t bad when you consider the overall handheld market has been hit by a 57 per cent decrease over the last hardware generation (and Sony won’t release the sales figures of the Vita).
The hit the Wii U took after the launch of rival consoles last year has staggered the company, but it has by no means routed it: in fact, it’s galvanised Nintendo’s resolve, and after a strong E3 showcase, the company’s stock value climbed from around -20 per cent to -15 per cent (and has held at that position too; not bad going in the space of a month).
There are myriad reasons for this recovery – the effect of Nintendo’s nostalgia-hitting franchises can’t be underestimated. “Super Smash Bros. for Nintendo 3DS is already in the hands of more than 2.8 million people worldwide, and the road ahead looks great,” reveals Nintendo of America’s executive vice president of sales and marketing, Scott Moffitt, presumably referring to the upcoming Wii U release of the game (pegged for 5 December). “Nintendo’s holiday software lineup is more than impressive, and our Amiibo figures start a new chapter in the world of Nintendo interactive entertainment.”
Nintendo is listening intently to its fans; the Japanese manufacturer knows its catalogue of familiar titles inspire a fervent fandom, and by keeping its ear firmly to the ground, more opportunities arise for it to turn nostalgia into profit. For example, Super Smash Bros. Wii U is launching alongside a retro-styled GameCube pad: something marketed to the hardcore fanbase as an accessory they couldn’t possibly go without. Nintendo likely hopes its Amiibo venture will bolster the install base, too. Following in the footsteps of Skylanders and Disney Infinity – franchises that have taken advantage of the gaming-accessory market for great profit – Nintendo’s plan to merchandise its iconic characters will be another string to its first-party-focused bow. Considering each figure costs $12 (inevitably translating to an inflated £10), Nintendo could potentially have a real money-spinner on its hands with Amiibo – especially alongside a format-wide character roster celebrated by Smash Bros.
Captain Toad also received a vague European release date for January earlier this October – another strong, first-party title Nintendo is likely to see a lot of buyer activity evolve from. Then there’s the now-yearly Pokémon release the company can look forward to in November, which – if last year’s figures can be replicated – is set to boost 3DS sales by over 250,000. Compound that with the upcoming launch of the confusingly titled New 3DS and Nintendo has the opportunity to stem the haemorrhaging sales of the 3DS that have been dwindling by the month over the past year. While the company could be accused of cannibalising its own market (upcoming games such as Xenoblade Chronicles 3DS can only be played on the New hardware), die-hard Nintendo fans will still want to invest in the console – it’s just another example of how Nintendo is masterful at extracting as much profit as feasibly possible from its tightest demographics.
Nintendo knows that it operates on the casual market, and its insistence on scheduling all of its releases for the holiday period is a canny move, aimed at attracting the bored youth with hours to kill. After all, that’s when consumers are both most likely and most willing to shell out. The younger audience, after all, doesn’t typically have money of its own to spend…
“The Wii U’s release schedule is vastly superior [to the Xbox One and PS4],” explains veteran games industry analyst Michael Pachter, “But its installed base is vastly inferior, so unless a lot of people who don’t own Wii U hardware get off the couch and buy a unit, [their schedule] isn’t going to help them much.” If the likes of Sonic Boom, Xenoblade Chronicles X, Captain Toad, Kirby And The Rainbow Curse, Yoshi’s Wooly World, Mario Party 10, Splatoon, Devil’s Third, Mario Maker or The Legend Of Zelda can persuade customers that haven’t already fallen for the Wii U to finally bite the bullet, Nintendo could reassert itself as a prime contender in the currently Sony-and-Microsoft-dominated console market, and perhaps win back some of the third-party support they’ve been steadily losing over the last two years.
Nintendo’s seeming distrust of the third-party publishers perhaps dates back to its survival in the games-industry crash of 1983 – where it vowed off third-party support in the wake of Atari’s failures and the influx of cheap games saturating the market (provoking Nintendo to begin its still-operational ‘Seal of Approval’ branding). It was a bold move, and one that arguably saved the company from bankruptcy, but times have changed, and the current market revolves around the strength of the third-party game – something Nintendo perhaps needs to reconsider.
Nintendo may have been knocked off its feet by the surprisingly strong launches orchestrated by its competitor companies, but the Japanese veteran isn’t that easily defeated. We’ve heard Nintendo referred to as the Smaug of gaming, sitting atop its Wii-built millions and waiting. Nintendo has been in the videogame business since the Seventies, and has proved a lot more durable than its historical rivals (a fact that Sega, Atari and – to a lesser degree – Activision can attest to).
Find out what we thought of Bayonetta 2, Super Smash Bros and Pokémon Omega Ruby/Alpha Sapphire in our reviews