January 31, 2013, 8:30 AM —
Last week Nintendo held one of their 'Direct' events intended to buoy up the spirits of early Wii U adopters. Wii U Direct focused on the incoming improvements to, and upcoming titles for, Nintendo's new game console.
It seems like Nintendo needs these changes as much as we do; the Wii U isn't selling nearly as well as the company had hoped, according to a financial report covering the nine months ending December 2012.
Between its November launch and the end of 2012 Nintendo sold 3.06 million Wii U consoles. For comparison, the original Wii sold 3.19 million units in its first holiday season and it was constrained by limited supply. Originally Nintendo had projected 5.5 million Wii U units sold by the end of March 2013 but it has now revised this estimate down to 4 million.
In other words, Nintendo expects to sell fewer than a million units during January, February and March combined.
Yesterday Engadget reported that the planned Netflix and Tivo integration into Nintendo TVii won't make it in January and are now expected in 'early 2013.' (The Wii U does have a Netflix app; it just isn't part of Nintendo TVii.) Google Maps also won't make January but I'm not sure that's really a system seller in any event.
As bad as things look for the Wii U right now, it's worth noting that the Nintendo 3DS didn't exactly burn up the charts when it first launched, but the handheld is doing much better now, with 12.71 million units sold in the 9 months ending in December 2012 (that figure seems to include both the original 3DS and the new, larger 3DS XL). The 3DS now enjoys a very strong software library with standout titles selling in the millions. For instance, New Super Mario Bros. 2 sold 5.96 million units worldwide, while Animal Crossing: A New Leaf sold 2.73 million units in Japan (it hasn't been released outside of Japan yet).
Nintendo has promised a pair of software patches to speed up the Wii U. Once these patches are in place and we start seeing regular software releases we will get a better picture of the Wii U's long-range potential, I think (I'm speaking as a gamer, not as a financial analyst). Nintendo may need a price cut to really goose Wii U sales, but as things stand now they're losing money on every Wii U sold so they may be hesitant about cutting the price as quickly as they did for the 3DS.
The good news is that for the nine months ending in December 2012, Nintendo generated a net income of 14,545 million yen. During that same period the prior year the company lost 48,351 million yen. It is forecasting 14,000 million yen in net income for the fiscal year ending in March 2013. The bad news is that Nintendo says its profit is due to favorable exchange rates due to depreciation of the yen.
Read more of Peter Smith's TechnoFile blog and follow the latest IT news at ITworld. Follow Peter on Twitter at @pasmith. For the latest IT news, analysis and how-tos, follow ITworld on Twitter and Facebook.