Nintendo Wii-U Causing Profit Downturn

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Nintendo has just posted its third consecutive operating loss, and executives are citing the Wii-U as the cause for the downturn. During the last fiscal year, the Wii-U gaming console only garnered 2.72 million sales of its software, and sold only 18.86 million units.

The $300 handheld gaming system launched in November 2012 as a response to the successful Wii console, but unfortunately it has made very little impression on costumers. The release of family and friend oriented games and a radical price deduction wasn’t enough to generate consumer interest in the console, which failed to reach Nintendo’s targeted recovery cited by President Satoru Iwata in January as, “a large margin.”

Nintendo’s 3DS, which incited something of a profit renaissance, was also significantly low in year-to-year sales. All of this has accrued in the company taking a net loss for its fiscal year of $228 million—a marked improvement over last year’s negative $358 million battering, but it is still a reprehensible loss. By comparison, the PlayStation 4 -designed and distributed by Sony- has been amassing record-breaking sales. The success has been attributed to three critical reasons: specifications, price, and the console’s predecessor: the Play Station 2. The unit, designed by Mark Cerny, wields an unprecedented power despite its sleek and slender casing. With this in mind, the price of $400 is perceived as a steal to video game enthusiasts of all levels of fervor. The PlayStation 2 was revolutionary upon its release: attracting the top video game developers to make games for the system. The PlayStation 4 has reintroduced that developer interest from giant established industry developers and new faces to the game developing industry.

Nintendo’s Wii-U, to compare, lacks irresistible specs. It’s in the same category as the previous generation’s Xbox 360 and Playstation 3. The Nintendo’s tablet pack-in raised the price for the system to $350. Then the tablet became a less than popular feature. Nintendo’s game selection has always been supported by its original successes (Mario, Mario Kart, Donkey Kong, Pokemon); their strategy has always been to update and repackage these franchises with each generation, and it has been successful thus far. But now considering that the most awaited games for the Wii-U, an open-world sandbox Pokemon RPG and a new Mario Kart iteration, have not been released with the console, fans are not motivated to purchase: as they have been for years with previous Nintendo systems.

But Nintendo is preparing to bounce back from the slump. On Wednesday the company estimated an operating profit of 40 billion yen ($394 million) to be gained by March 2015, opposed to the 21.2 billion yen figure estimated by a selection of professional analysts surveyed by Thomson Reuters. Nintendo stated that the profit will be reached by doing the same thing that has always made their company successful: developing and distributing unique games with familiar and beloved characters. Their focus is not on what Microsoft and Sony are investing in, powerful engines to create groundbreaking graphics, but rather exciting gameplay and inspiring community amongst gamers worldwide. Nintendo has hinted at a slew of new games that will reignite interest in not only the Wii-U, but other Nintendo consoles such as 3DS, and boost its profits.

By Andres Loubriel

Sources:
TIME
FOXBusiness
PCMagazine

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