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Is a 200% Sales Increase Enough to Save the Wii U?

Video game sales tracker NPD Group recently released its retail numbers for the month of September. Industry sales were up 27% year-over-year largely thanks to the blockbuster performance of Grand Theft Auto 5 from Take-Two Interactive (NASDAQ: TTWO  ) . Nintendo's Wii U console also enjoyed a bump after a price drop and bundling with The Legend of Zelda: The Wind Waker HD. In fact, Wii U sales saw an approximate 200% month-over-month increase. Is this the type of performance that Nintendo (NASDAQOTH: NTDOY  ) needs to get the system back on track?

How big is the bump
After the release of the NPD numbers, Nintendo's press release touted its 3DS handheld's position as the best-selling hardware for the fifth straight month; it also announced a 200% increase in Wii U sales. The NPD Group releases its numbers only to subscription holders, who are not supposed to disclose them publicly, though leaks are not uncommon. Going by the rumored 31,000 unit performance for the console in August, that brings the Wii U's September sales to somewhere around 93,000 units.

Even if numbers were substantially north of that figure, tripling the Wii U's August sales would not represent a great performance. In August, the Microsoft (NASDAQ: MSFT  ) Xbox 360 was the best selling console on the market with 96,000 units. A three-fold increase in this number brings you to 288,000, which would be a small increase over the console's September 2012 sales of 270,000 units. This is notable because the 360 had already been on the market for almost seven years at that point and console hardware sales were already contracting; for instance, the Xbox 360 sold 438,000 units in September of 2011. The fact that the Wii U is struggling to match the numbers of a system at the tail end of its life cycle is telling.

Going down
Hardware sales were down 13% from September of last year. This decline comes despite the Wii U's move to a more attractive price and the launch of a GTA5 PlayStation 3 bundle that propelled the Sony (NYSE: SNE  )  system to the top console hardware spot for the first time in 32 months. The Xbox 360 had previously been the best-selling home console hardware and it has shown a strong grip on the North American market, even amid declining sales. It's also worth noting that the Wii U wasn't available until November of last year. Its presence has clearly done very little to prop up hardware numbers.

Stealing the spotlight
September's biggest success story was undoubtedly Grand Theft Auto 5. The game generated a billion dollars in revenue within its first three days on the market. To give an idea of just how big of an impact the title had, overall retail software sales were up 52%, with Grand Theft Auto 5 accounting for over half of September's dollar sales. The game is exceeding even the rosiest expectations and it has had a noticeable effect on Take Two's stock price, which is up over 50% on the year.

Grand Theft Auto 5's performance is an indication that AAA console software is still a viable and attractive prospect for companies that are equipped to pursue it. While the last generation saw the deterioration of mid-tier game development, high profile series like Call of Duty and Grand Theft Auto are more successful than ever. The absence of Grand Theft Auto 5 on the Wii U platform highlights a glaring problem. When Nintendo first began explaining the device to the public, there were assurances that the system's HD graphics capabilities meant that it would receive most of the biggest third-party titles. To miss out on what is likely the biggest title of the year is damaging. Nintendo should have incentivized Take Two to ensure that Grand Theft Auto 5 hit its platform.

The percentages that matter
The 200% Wii U sales increase shows at least some level of market receptivity, but not enough. The console's lineup for the holiday season isn't strong enough to turn things around. Titles like The Legend of Zelda: The Wind Waker HD and Pikmin 3 were positioned as major releases, but their sales have not delivered on that promise. That leaves the upcoming Super Mario 3D World to drive system sales. Mario titles have great draw, but not enough to save an ailing system. 

Nintendo's stock has fallen roughly 11% since the launch of the Wii U. With the company set to release its second quarter earnings on Oct. 30, it could take another big hit. The relatively small impact of the price drop and Zelda bundle means that Nintendo is going to miss its nine million unit Wii U sales target by what is likely to be a spectacular margin. The console's performance could have CEO Satoru Iwata looking for a new job.

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Comments from our Foolish Readers

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  • Report this Comment On October 27, 2013, at 4:56 PM, cootdog123 wrote:

    Not no not hell no but hell fricking no.

  • Report this Comment On October 27, 2013, at 5:28 PM, speculawyer wrote:

    "The game is exceeding even the rosiest expectations and it has had a noticeable effect on Take Two's stock price, which is up over 50% on the year."

    Actually, it hasn't. Yeah, the it is up for the year but all the game company stocks are. And it has not gone up since it proved to be even bigger than anticipated. Heck, the TTWO only has a $1.5B market cap despite this single game bringing in more than $1B in 3 days.

  • Report this Comment On October 28, 2013, at 4:55 AM, sypoth wrote:

    a 200% increase on abysmal is still dismal. I don't expect this to be sustained considering the lack of games or the lack of hardware significantly different than what is already available for less in the PS3 and 360 and still one generation behind the PS4 and the Xbone. Nintendo has come to rely on gimmicks to sell their junk, then they populate it with shovelware and games we've already played a hundred and fifty times in the 80's and a few million more times since. Seriously, how many times is there going to be a princess kidnapped by a monster and you have to travel across a magical kingdom to save her? That right there is the plot for 90% of the Nintendon't games out there, and the gimmicks and out of date hardware as well as the licensing fees and the limitation of having Nintendon't proof screen ever game and dictating what changes must be made to the game have made it unprofitable to develop for their consoles.

    The proprietary hardware locking and excessive lies about it don't help either, how many times did they say the Wii can't have dvd playback because it's hardware is lacking only for someone in less than 30 minutes of that very comment put a dvd movie in one and have it play flawlessly and all it took was a simple software mod that gave playback controls and flipped a software switch that disabled movie playback? Yes that really did happen and on more than one occasion.

    Nintendon't care about their customers outside of how many slobbering salivating fanboys are willing to slap down large sums of money for something they tried so hard to play up as something it is far from even attempting to be. I am willing to bet apples to oranges that this so called increase is fanboys trying to build up more hype and a craze like what happened with the Wii before people became sick of the shovelware and had realized that was all the system really offered outside of a few first party games and heavily amputated and watered down attempts to port over a high quality game by simply going out and blowing as much money as they can on buying up a console that is the biggest failure since the N64. And that was indeed a massive failure despite what many will try to claim, Nintendo themselves said that if it wasn't for Pokemon they would have gone under at that time because hardware sales were mostly replacement controllers and in order to move the system they had to make it the first one they didn't sell for a profit, that and developers left them in droves due to the cost of cartridges over disks leading to a severe lack of games for the system. The N64 was much like E.T. where many consoles were actually just tossed in a land fill because there was no way to move it.

    If Nintendo wants to survive and prosper they need to leave the console market, the only console that was profitable since the SNES was the Wii which nobody can move due to the overstock of used systems from people selling them in droves from frustration due to lack of games, Then they only have one choice, move to and concentrate on the only market they have dominated since they entered it, handhelds. If they still want to have console games they should 3rd party it to the ones out there, either that or they could just rip off my idea of making a kit that will allow them to connect their handhelds to a console of your choice and play an expanded version of a game on the console.

  • Report this Comment On October 28, 2013, at 7:42 AM, Ichyichy wrote:

    Sypoth that is Bull, if u had a clue u would know that in Mario 3d its not about the princess.

    By the way the weakest wii u sales were in japan, if u look at the new wii u bundles in japan, each bundle is on amazon japan top 100, before non was in the top 100.

    Nintendo has momentum right now, they also will come with a New skylander bundle.

    Wii party u just launched, wii fit u comes, mario 3D World comes next month as well as Mario and Sonic at olympic games...

    Even call of duty ghost will come

  • Report this Comment On October 28, 2013, at 8:00 AM, Ichyichy wrote:

    Zacks changed the Nintendo stock rating from hold to strong buy

  • Report this Comment On November 03, 2013, at 3:30 PM, Stealth2k wrote:

    no point in reading these articles

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