Nintendo’s Wii U Is Costing It Billions

Unlike video game publisher Take-Two Interactive (NASDAQ: TTWO  ) or Activision-Blizzard (NASDAQ: ATVI  ) , Nintendo (NASDAQOTH: NTDOY  ) only releases games for the consoles it makes, a strategy reiterated earlier this week by Nintendo of America's President Reggie Fils-Aime. In an interview with KING 5 News, Fils-Aime defended his company's policy, stressing that Nintendo will not be bringing Super Mario to Apple's iOS platform anytime soon.

While Fils-Aime makes some valid points about the unproven nature of mobile gaming monetization, iOS isn't the platform Nintendo should be focused on. Rather, Nintendo's continued support of its Wii U console in the living room is clearly costing the company billions of dollars in terms of lost sales

Grand Theft Auto 5 vs Call of Duty: Ghosts vs Super Mario 3D World
This becomes overwhelming evident when one compares the sales data of three of the fall's most anticipated video games: Take-Two's Grand Theft Auto 5, Activision-Blizzard's Call of Duty: Ghosts, and Nintendo's Super Mario 3D World. All three titles were designed for living room video game consoles, and all three titles received positive reviews. And yet -- sales data couldn't be any more different.

Grand Theft Auto 5 sold 11 million copies in its first 24 hours on sale, ultimately generating $1 billion within its first three days on the market. It was the top selling video game in both September and October, and only slipped to the five slot in November. By the end of its second month on the market, Take-Two said Grand Theft Auto 5 had sold 29 million copies.

Likewise, Activison's Call of Duty: Ghosts also did $1 billion worth of sales -- in its very first day. According to NPD, it was the best selling video game in the US in November, but ironically, that wasn't good enough. Sales of Ghosts were actually worse than last year's Call of Duty title, to the point where analysts at Cowen called it "troubling."

Super Mario 3D World is a masterpiece, but few will ever play it
But compared to Nintendo's Super Mario 3D World, Activision's game is a stunning success. In Super Mario 3D World's first week on sale in Japan, estimates pegged sales at just more than 100,000 and in the US, Nintendo admitted that it had sold only 215,000 units in its first 8 days on the market.

To be fair, both Call of Duty: Ghosts and Grand Theft Auto 5 are different types of video games -- Mario is a platformer, which might be less appealing to gamers in general. However, in the UK, Super Mario 3D World was apparently outsold by the PlayStation 4 launch title Knack -- notable because Knack, like Mario, is a platformer -- one that has received poor reviews.

On Metacritic, an aggregator of video game reviews, Knack has a score of just 55. In comparison, Super Mario 3D World has a 94 -- an almost perfect score. Grand Theft Auto 5's score is just marginally higher (97 for the Xbox 360 version), while Call of Duty: Ghosts' score is lower (78 for the Xbox One version)  but quality doesn't account for the vast difference in sales.

The Wii U is a failed platform
Rather, the extremely low installed base is to blame. When Nintendo reported earnings in October, it said that it had sold just 3.9 million Wii U consoles. Factoring in more recent sales estimates, Nintendo has sold just under 4.5 million Wii Us.

Even if every single person who owned a Wii U had ran out and bought Super Mario 3D World on the first day, Nintendo wouldn't have been able to even come close to Take-Two's numbers with Grand Theft Auto 5 or Activision's numbers with Call of Duty: Ghosts -- at the absolute max, Nintendo can sell just more than 4 million copies of a game that some have called a "creative masterpiece."

In contrast, Take-Two's game launched on the PlayStation 3 and Xbox 360. In total, those two consoles have sold about 160 million units combined. That isn't to take away from Take-Two's achievement -- capturing about 19% of the total installed base is still impressive, but it's far easier to generate so many sales when the platform is so much bigger. Activison's Call of Duty: Ghosts was launched on even more platforms, including the recently released Xbox One and PlayStation 4.

Going third party
Various observers have long called for Nintendo to consider going third party, but in light of the Wii U's failure, that suggestion seems more valid than ever before. Despite the fact that, as a video game maker, Nintendo to appears to be at its best, few gamers can buy the company's titles when so few of them own its hardware.

Think Nintendo's business will do well? Here's how to start investing
Millions of Americans have waited on the sidelines since the market meltdown in 2008 and 2009, too scared to invest and put their money at further risk. Yet those who've stayed out of the market have missed out on huge gains and put their financial futures in jeopardy. In our brand-new special report, "Your Essential Guide to Start Investing Today," The Motley Fool's personal finance experts show you why investing is so important and what you need to do to get started. Click here to get your copy today -- it's absolutely free.


Read/Post Comments (20) | Recommend This Article (2)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On December 21, 2013, at 1:33 PM, Twilord wrote:

    I am buying stock in Nintendo, everyone is down on them but they've set themselves up for an, at worst good, comeback next year.

    People are forgetting that Nintendo is suffering from starting a generation too early and thus being compared to the ongoing last gen, but Wii-U sales have risen sharply since the release of its rivals (thanks to it's no longer fighting shadows).

    Plus Nintendo are getting into their second year on the market when typically a consoles best games start being released while the PS4 and Xbox One will be suffering from the standard first year drought.

  • Report this Comment On December 21, 2013, at 5:51 PM, atomicdomb wrote:


    this is getting old guys -_-

  • Report this Comment On December 21, 2013, at 9:04 PM, TimeoutCorner wrote:

    This is a horrible article its literalluy lauphable. 1st off you are comparing 3d World on a new console that had bad 1st year sales and had around 4 million consoles sold to two games on MULTIPLE consoles two of which have around 80 million consoles sold and are actually trying to compare the sales of the three games as if its a fair comparison lol now thats pathetic. Then You go on to say the WiiU is going to fail when even in this article you show the WiiU sales improving greatly in just a few months from 3.9 to 4.5 million and growing fast since the release of new games and ACTUAL advertising by Nintendo.

    Then you try to compare a Knack game sales of the UK THE UK a country who has never been a Nintendo console buying country for gamers at least not for the last 3 - 4 consoles and thats not even debatable add to the fact that Knack was bundled with the console and some companies in UK where forcing costumers to either get Knack bundles or loose their pre order or not be able to buy a PS4 -which is actually being looked into because it is illegal lol

    lastly Nintendo does not rely on 3rd party they gave them aa chance with 3rd party after the launch of the WiiU, 3rd party failed them so now Nintendo is doing what they do best. Unlike Sony and MS who cant survive without 3rd party dont believe me look it up even you basically admit this by trying to compare 3rd party multiplats to exclusive Nintendo console sales..... Why because you know that PS and Xbox brand exclusive games pretty much dont sell near as good as Nintendo games which is why for the top 50 games of all time guess how many ARE NOT Nintendo lol, ill give a hint its a pretty pathetic number for Sony and MS. Even further when you see that some of the very VERY (and I mean VERY) few games from Sony and MS in the top 50 on their consoles are Multiplats

    Then when you look at how much money SOny lost on PS3 and they didnt stop losing moeny on it till around 2010 and you say Nintendo is somehow hurting lol even when they still somehow gained money with abismal WiiU sales becasue of the 3DS.

    Which further goes to my point 3DS how many 3rd partiues support that system?? Hardlly any and yet it still is killing teh sales. Wii how many 3rd party supported it yet killed in sales. FACT Nintendo can survive without 3rd party they dont need them they are just a bonus while Sony and MS cant live without them their software sales totals agree with this.

    Thanks that is all.. These fanboy Journalist try too hard sometimes lol

  • Report this Comment On December 22, 2013, at 5:06 AM, SilentG wrote:

    Regarding Knack, some of its sales are from PS4 bundles that included the game.

  • Report this Comment On December 22, 2013, at 11:23 AM, Brii09 wrote:

    A game for a single console that's only two years old didn't do as well as games that were multi-plat on consoles that have been around for years and have a well-established userbase?

    That's an incredibly misleading comparison and the author should be ashamed. Also, Super Mario 3d World sales have picked up thanks to the holidays, and it's now outselling Knack, I believe. Wii U sales as a whole have vastly improved. It will never be a juggernaut like the PS4 and Xbone, but it will do fine.

    And I can tell anyone from first hand experience that Mario 3D World is as amazing as the reviews claim. I'm a huge gamer on my own, but the Wii U has magically brought my family closer because of Nintendo's focus on games everyone can enjoy together. The visuals and aesthetics are stunning and the levels are unique and varied.

    Anyway, "Nintendo is Doomed" article is bad and the author should feel bad.

  • Report this Comment On December 22, 2013, at 1:45 PM, Holyfire wrote:

    Most 3rd party companies are dying quick smart. And that trend is set to accelarate this new-gen. Take-two and Activision, are a couple of very few examples that may survive. Even EA, nigh-on the worlds biggest publisher/dev company is suffering heavy blows right now, particularly with BF4.

    The article scorns Mario Worlds sales but also acknowledges its tiny install base. When PS3 and 360 phase out. Sony and M'soft will suffer the same install base issues of PS4/XB1.

    Considering Nintendo even now still profits better than Sony (in whole) and vastly better than XBOX division ever did (now at potential threat of sale) it's amazing how much bad news journo's dish Nintendo.

    PS3 did no better at this point, that cost Sony dollars they haven't recovered yet. Sony didn't get near this level of media blasting. And neither does the Vita while getting utterly obliterated by Nintendo, it's only direct competitor

  • Report this Comment On December 22, 2013, at 2:43 PM, Andaimaru wrote:

    I don't know why you keep bashing Nintendo. They're still doing better than Microsoft and Sony in terms of $$$. They're still making wonderful games and still making great consoles. They're not going to sell out and put Mario on an Apple device when they have their own handheld that is doing amazingly well to put their mascot on.

  • Report this Comment On December 22, 2013, at 7:45 PM, vincentle wrote:

    To be honest, Nintendo had always been a crappy company that make crappy games for 6 year olds. Hardware and software is horrible. Also, they don't have 3rd party titles. I will never buy from NINTENDO!

  • Report this Comment On December 22, 2013, at 10:00 PM, wizardaeon wrote:

    Twice in one day Ive read a fool article bashing Nintendo. Nintendo is no where near doomed. I think youre biased. The TV show with Adam Sessler "Xplay" did the same thing a few years ago and it was confirmed that Sessler hated Nintendo for personal reasons. If youre going to bash Nintendo, bash their business practices since the NES generation. Dont bash their quality. I have never lost a Nintendo console. Ive lost 3 each Xbox and Xbox 360, and 2 each Sony PS 1,2,3

  • Report this Comment On December 23, 2013, at 12:24 AM, Byuusetsu wrote:

    Wow, this is such an utterly awful article it's ridiculous it ever got published. You're comparing the sales of a game that is only on the Wii U with the sales of games that are on MULTIPLE LAST-GEN CONSOLES. Of course games on the last gen consoles are selling far more. Super Mario Galaxy sold 11.7 million and that's a far more logical comparison to make if you aren't clueless.

  • Report this Comment On December 23, 2013, at 2:40 AM, Bunnyking77 wrote:

    Nintendo has always been the wild horse, and it has always won and innovated. The same can not be said for Microsoft, which is everyone's sweetheart even though their console is inferior in every way to the PS4.

  • Report this Comment On December 23, 2013, at 4:13 AM, Robarino wrote:

    So the Wii U isn't number one, that doesn't make it a failure. Nintendo dominates the handheld console market.

    With less then 10% of the marketshare where are the Motley Fool articles telling Apple to get out of the desktop computer market? Because in business, you don't have to be #1 at everything to be successful. Think about it. Microsoft, Google, Apple, Nintendo, Sony...they're are successful in their own right.

    Motley Fool writes one-sided short-sighted articles designed to troll the ignorant and the uninformed.

  • Report this Comment On December 23, 2013, at 6:24 AM, Gordonk36 wrote:

    hi fellow fools i believe the wii u is doomed but not dead just yet maybe by the end of 2014 we will see the final demise of wii u.

    the only thing nintendo can do is redesign the console to the wii u advance like i suggested to them by making it the same processor and memory size as the competitors sony and microsoft that way they all have the same tech specs and no one can say that the graphics look different or not.

  • Report this Comment On December 23, 2013, at 9:29 AM, JulianM wrote:

    I'm not one to promote name calling but Sam you're an and all of the rest of the Doom and Gloomers...Is Nintendo struggling this gen yes they and that's partially their fault because they waited until the launch of these two behemoths before they really began advertising their new console but more importantly the real people to blame here are not Nintendo it's your 3rd party developers who have taken Sony's and Microsofts Money and they have decided for the most part to only develop for their consoles. The Wii U is a weaker system yeah may not have the gaudy spec numbers that these have but with the way the system is designed you can still make beautiful games on it and it's spec numbers are still way stronger than the PS3 and 360 which is still receiving some of these new games despite being weaker than the WIi U so let's stop that b.s. right as for this losing Billions of dollars yes Nintendo is still waiting for that Blockbuster title to help them sell consoles and when they get 1 major sell they are in the black versus Sony or Microsoft that need multiple blockbuster titles before they are in the black on their console sales...I also remember the Wii U being blasted for lack of launch titles despite but where are those articles for Sony and Microsoft you don't see them because they pay you to not post negative feedback on them...they hide their losses in their other divisions while Nintendo is right there for all to see...because they only make games...PERIOD.....Sony and Microsoft have ZERO innovation...they take the same franchises and sprinkle some new graphics on it and give it to you and you guys go nuts.....They release half ass games at full price...and then spend the next 5 months charging you for DLC...they release half finished games with so many glitches that it's truly amazing they are still in business...but yet they are because you so called Hardcore Gamers (which is a joke of a title because you only play online with your friends) this by definition makes you the most Casual of aren't hardcore your games are considered Hardcore because you get to shoot people in the head or blow them up and cut off body parts and this is not suitable for children....but hmmmm.....I remember back in the day when Nintendo used to get all of the same Violent games as everyone else....their version of the game came with all the blood and gore turned off yet if you wanted it on then you simply had to enter the code for that.....Nintendo is about Innovation Wonderful 101 best game I have played in years....the gamepad was the newest innovation created in years...that pad makes a HUGE difference when gaming...developers are lazy and if they would stop making 100M dollar budget games then games like the recent Tomb Raider which sold over 4 million copies wouldn't be seen as a failure....I mean seriously...did any of you really need a game to look any better than the Last of Us....No not really.....are these new games going to use the 8 Gigs and all this crap in these new systems...NOPE....they won't even get close....EVER....Nintendo is far from broke and even further from the Doom and Gloom of your get off your soap box and keep your fan boy conversations to yourself.....I have always owned all 3 consoles but with this new gen only the PS4 is going to make into my house along with the Wii U that I bought at launch and have enjoyed every minute of teenagers that love their PS3 and 360 only played the Wii U when they came up to visit because the games kept them engaged...they really liked the system which they both admitted they hadn't even considered playing it...and now they are thinking about getting one instead of either of the next gen big boys....I personally find that interesting....

  • Report this Comment On December 23, 2013, at 10:39 AM, jojosribshack wrote:

    This is not an unfair comparison because it is a comparison of financial viability. The author acknowledges all the discrepancies of comparing multi-platform games for systems that have been out for 8 years to a single platform game on a console that hasn't been out very long.

    HOWEVER, the comparison is valid because he is discussing profitability, not sales or popularity. The truth is that development costs for each of these games is astronomical. Which game is most likely to make it's money back and earn the company a hefty profit? Not Mario. Which was the better investment? Not mario.

    The point is, how can you spend $100 million or more developing a "masterpiece" AAA game when, at most, you can sell 4 million copies (that's if everyone who owns the system buys one, which never happens. Realistically, they can hope to sell 2.5-3 million copies)? It's not a viable business model is the point... And Nintendo cannot continue to do this for very long. They either have to find some way to get the install base up or else pull the plug and stop flushing money down the toilet. This is really a discussion about at which point a company in this situation should just cut its losses. Do they keep fighting and producing great games that can't sell well? Or do they cut the cord now and salvage what they can?

  • Report this Comment On December 23, 2013, at 2:57 PM, iljames989 wrote:

    To those that keep saying it's unfair that the author is comparing sales of games that are on multiple systems vs. Mario3d on just one...... THAT'S THE POINT!

    The author's main issue here is that by sticking with 1st party support on a video game system, Nintendo is losing a lot of sales.

    The author isn't saying, that Nintendo is losing because of bad game sales, he's saying that the bad game sales are due to the fact that the console hasn't sold and that this is hurting Nintendo in a way that doesn't affect other 3rd party developers.

  • Report this Comment On December 23, 2013, at 3:34 PM, jkdevore wrote:

    I have bought each of my systems since the N64 at launch. Every console has stagnating sells until the 2nd to 3rd year. Some are more successful than others and some stay that way until there are more titles being released. As far as the Nintendo is doomed articles, well let's just say that this has been going on since the N64 vs Playstation battle. It's an insane way of getting an ill informed view across. Lets look at the Xbox One and PS4 titles that are released right now compared to what the Wii U has out now...Wii U has a better selection of games that are rated Higher than most of what's on those other systems. I digress. Enjoy the games and systems for what they have. I am excited about my Wii U which I've had since launch. My PS4 I'm hoping for another LittleBigPlanet and Infamous Second Son. Xbox One has me enthralled with Killer Instinct and the inevitable Halo game that will be released. Each has their own merits and demises. No problem with any of them to me.

  • Report this Comment On December 24, 2013, at 4:58 AM, stpetersburg wrote:

    Wii U is like Scroge alienating others and dying alone. Too bad that Nintendo will not be saved by 3 ghosts.

  • Report this Comment On January 08, 2014, at 10:50 AM, Grendel wrote:

    Honestly, if Fool's analysis about Nintendo is any indication on how it evaluates other industry entities for investment advice, I question Fool's entire accuracy.

    I'll get my investment advice from someone else. It appears the only "fools" on this website are schmucks like me who read this garbage.

  • Report this Comment On January 13, 2014, at 9:14 PM, CatchTwentyTwo wrote:

    It is Nintendo's innovation that hurts them the most. The Wii was an ingenious idea that truly changed gaming, but it also alienated developers because it was so different from the Xbox 360 and PS3. From a developer stand point, I would make the game that can easily be built for 2 systems rather then 1, it just makes sense because you can profit from both platforms.

    Developers say it takes just as much time to make a Wii U game as a PS4 or Xbox One game, but the real question I have is how much time does it take to convert a Wii U game to being a PS4 or Xbox One game in comparison to just converting from PS4 to Xbox One? I would argue that there is a greater disconnect when the Wii U is added into the equation.

    Nintendo will always have a place in my heart, and I think the real questions that us fan boys need to discuss are: How can Nintendo turn this corner? What do they need to do to reach a larger audience? And who wants to Kart?

Add your comment.

DocumentId: 2773250, ~/Articles/ArticleHandler.aspx, 4/23/2014 12:32:17 PM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...