After primarily standing on the sidelines and insisting that its Wii U strategy was sound for the better part of a year, Nintendo (NASDAQOTH: NTDOY ) has taken action to improve the system's value proposition. The company has implemented a series of bundles in major territories and is increasing marketing efforts in the hopes of bettering the system's profile and saving it from an early demise.
Nintendo has gone so far as to package some of its biggest titles with the system, inviting new gamers to embrace the Wii U ecosystem but also compounding the losses incurred with each system sold. Will Nintendo's value-adding bundles carry Wii U through a crucial sales period?
More for your money
The varying software bundles that Nintendo has made available in different territories provide an indication of where the company believes the device needs the most help. While North America has received The Legend of Zelda: The Wind Waker HD and New Super Mario Bros./Luigi U bundle at an MSRP of $299, better bundles are available in Japan and Europe within the same relative price range. That's not to imply that the system has been performing adequately in North America. Nintendo reported only 230,000 units sold in the territory over the last six months.
In Japan, weekly Wii U sales dipped below 3,000 units before the introduction of its latest bundles. The slightly cheaper bundle includes digital versions of New Super Mario Bros. U and Wii Party U, a Wii Remote Plus, and a 30-day subscription to Nintendo's Karaoke service. For an extra 2,000 yen or approximately $20, consumers have the option to purchase a bundle that also includes Wii Fit U and a Fit Meter.
Total Wii U sales climbed to approximately 39,000 for the week these SKUs were released, then fell to approximately 18,000 units in the subsequent week. Neither Sony's (NYSE: SNE ) PlayStation 4 nor Microsoft's (NASDAQ: MSFT ) Xbox One will release in Japan this year, so Nintendo will enjoy the small luxury of having the next-gen market to itself for the time being.
Nintendo's European disaster
Without a doubt, Europe has proven to be the weakest territory for the Wii U. Over the past two quarters, the system has actually posted net negative sales, a decidedly bizarre feat in the modern gaming market. European retailers sent at least 20,000 Wii U's back to Nintendo in the last quarter, bringing net sales over the last six months to approximately negative 10,000.
A series of bundles and a holiday marketing push should help to drive the system to positive sales in Europe for the next quarter. In addition to a New Super Mario Bros./Luigi U bundle, the region now has a SKU that includes Wii Party U and Nintendo Land and a SKU that packages Nintendo Land and Ubisoft's Just Dance 4.
If Europe as a whole seems inhospitable to the Wii U, performance in the U.K. has been downright catastrophic. Some retailers have stopped stocking the system altogether, and the country undoubtedly accounts for much of the negative sales movement in the territory. Possibly, as a response to this abysmal performance, the U.K. is the only country to receive a bundle that features the system's flagship holiday title, Super Mario 3D World. The bundle also includes New Super Mario Bros./Luigi U, a Wii Remote Plus, and a Mario hat.
Eclipsed by the competition
The Wii U's improving value proposition could not stop its sales in the U.K. from being quickly surpassed by the sales of the PlayStation 4 and the Xbox One. While broader European sales tracking for those systems exists in a somewhat imprecise state, it is very likely that this will soon be true across the continent. The PS4, in particular, appears to be off to a very strong European start, with reported sales of 700,000 units making it the fastest selling console in the territory's history.
Microsoft has yet to release European sales figures, but it is known that the system sold 150,000 units in its first week of U.K. sales. The company has stated it will sell every Xbox One it can manufacture for the holiday period.
Where will U be a year from now?
Nintendo's bundles are already having a positive effect, but it remains unlikely that they will drastically alter the trajectory of the system. The bundles are more indicative of the fact that Nintendo has abandoned its target of a 100 billion yen of operating income for the current fiscal year.
By bundling Wii U's biggest games with the system, one that already sold at a loss for the company, Nintendo is ceding the goal of short-term profits in hopes that it can legitimize the system in the minds of consumers. If the system's handlers are executing a long-term strategy, expect measures much more drastic than software bundling within the next year.