As Wii U fails, Nintendo re-evaluates itself

Nintendo’s Wii U is a flop.

There is no other way to describe the latest gaming console from the video game company that has endured extreme highs and lows throughout its history.

Nintendo Co. President Satoru Iwata recently forecasted that the company was taking an immense 25 billion-yen ($240 million) annual loss due to an apathetic audience for the Wii U.

Sales data estimates that approximately 4.3 million Wii U consoles have sold worldwide since its release in November 2012 through December 2013, falling seriously short of Nintendo’s expected 9 million units sold by its 2014 fiscal year.

Sony reports the PlayStation 4 has sold through 4.3 million units in various regions that do not even include Japan, and Microsoft claims to have shipped over 3 million Xbox One units worldwide. Because both the PS4 and Xbox One were released in November 2013, the troubling Wii U numbers have been harshly put into perspective, especially since the Wii consoles massive success — with over a 100 million units sold worldwide.

The Wii U has Iwata re-evaluating Nintendo’s business model after staggering losses. There has been a groundswell of speculation that Nintendo should move into the mobile games market, where it is believed the company has lost the most market share since so many of its games are family-oriented. “Given the expansion of smart devices, we are naturally studying how smart devices can be used to grow the game-player business. It’s not as simple as enabling Mario to move on a smartphone,” Iwata said at a press conference.

Aside from catching lightning in a bottle with the original Wii, Nintendo has lost its touch with current video game industry trends, but staunchly marches to its own beat. Having long struggled with third-party support on gaming consoles, Nintendo continually alienated publishers by forcing them to make games on proprietary cartridges or mini-discs. Despite the Wii’s initial success, sales declined toward the end of its life-cycle as Nintendo fell back into the trap of relying on first-party games that come few and far between. Between the Wii and Wii U, smartphones and tablets using Android and iOS platforms were released and have been established as viable gaming platforms, especially for family-oriented games.

Losing the casual gamer has been a big blow to expectations, and the hardcore gamers simply aren’t enough to boost third-party support. Games like Super Mario Bros. and The Legend of Zelda simply aren’t enough to right the Wii U ship. Even with Nintendo’s long-time innovation of fun and gameplay, the company has been relying on rehashed releases of popular games.

What can Nintendo do to stay in the hardware business? The most obvious first step is a price cut for the Wii U. It worked for the 3DS, which also suffered a very similar performance upon its release but is now Nintendo’s best-selling hardware. Secondly, Nintendo has to release more games, especially since it’s reportedly sitting on $8.6 billion of cash and equivalents, with no debt. Getting more third-party support, specifically exclusives, would also help with the Wii U perception among hardcore gamers. Nintendo employed a similar tactic with the GameCube when it secured third-party exclusives like “Resident Evil 4” and “Metal Gear Solid: The Twin Snakes.”

Bottom line, Nintendo has to be willing to progressively reinvent itself, and Iwata can no longer keep his head in the sand in regards to the Wii U’s perception and performance. The company needs to get back to being innovative and creative or explore mobile gaming. The latter seems most likely to save its fortune.

Reach the reporter at michael.jerome.martin@asu.edu or follow him on Twitter @NefariousMike