Will Nintendo Attempt to Rebrand its Dying Wii U Console?

The Wii U console from Nintendo  (NASDAQOTH: NTDOY  ) looks like a certifiable flop after its first year on the market. Hardware sales have been slow across all major territories, and titles from some of Nintendo's biggest franchises have debuted to disappointing sales. The recent releases of the Sony  (NYSE: SNE  ) PlayStation 4 and the Microsoft  (NASDAQ: MSFT  ) Xbox One have highlighted a lack of consumer interest in Nintendo's console.

Even worse, price cuts and software bundles have not driven a substantial uptick in system sales, indicating that the fundamental appeal of the system is so lacking that an improved value proposition will not create the momentum needed to sustain the system. Will Nintendo attempt to rebrand its Wii U hardware and minimize its market share losses?

The next Dreamcast
NPD Group tracking puts Wii U's North American sales for the month of November at approximately 220,000 units. This lags behind the approximate 910,000 units that the Xbox One moved in the tracking period. Figures for US PS4 sales are less readily available, but it is widely-known that the system was the best-selling hardware for the month.

That the new consoles outsold the Wii U in their launch months is not particularly big news. What is shocking is just how close the Wii U's sales are to those of Sega's ill-fated Dreamcast. In its second November sales period, the Dreamcast sold a comparable 192,000 units in North America.

That Nintendo needs to initiate drastic action to preserve its position in the console market has become a foregone conclusion. The company's structure relies on drawing revenue from both handheld and console hardware, and it's become apparent that price drops and Nintendo's big franchises will not be enough to drive consumer interest in the system. The company needs to address the major issues that have plagued the console or risk cementing the idea that Nintendo no longer matters in the space. The company needs to ditch the GamePad.

Time for a new game plan
The Wii U's GamePad controller was introduced with the promise that it would enable "asymmetric gameplay" -- providing different user experiences and roles depending on which controller was used. The concept, questionable since its inception, now seems to have been abandoned altogether.

Very few games on the system make significant use of the GamePad, making the cost that it adds to the system difficult to justify. Conceptually, the controller has a good deal in common with the similarly named uDraw Game Tablet that helped to sink former publisher THQ. The GamePad has been rejected by the market. It's time for Nintendo to move on.

Identity crises
When the Wii U was first introduced, substantial confusion existed as to whether or not a new system was being unveiled or if the GamePad was merely an add-on for the existing Wii console. Everything from the familiar look of the new system to its poorly chosen name contributed to this.

If Nintendo were to create a SKU that ditched the GamePad, rebranded the package as Wii 2 or something more obviously iterative in nature, and featured a new casing for the hardware, it would have a shot at salvaging its Wii U investment. The system could hit retail at a sub-$200 price point with the GamePad sold as an optional controller, allowing Nintendo to sell its software to an expanded base and ride out a shortened console cycle.

A problem of vision
Second-screen gaming is not entirely devoid of promise. Sony hopes to normalize the feature by positioning its struggling VITA handheld as a PS4 accessory, and Microsoft looks to mine connectivity between SmartGlass and the Xbox One. Both of these companies had the good sense to position these features as ancillary rather than the defining elements of their new machines.

Nintendo's greatest strengths are its stable of valuable IPs and its ability to deliver quality software content. The GamePad is limiting the potential market for its franchises and causing their value to diminish. A hypothetical Wii 2 that jettisons the lumbering controller won't solve all of the company's console problems (such a move comes with its own branding and compatibility issues to consider), but these are desperate times and corresponding measures must be taken.

It's now or never
With the news that it took the PS4 and Xbox One a matter of days to eclipse Wii U's LTD in a number of territories, Nintendo cannot afford to ignore reality any longer. While it has publicly refused to acknowledge the gravity of the Wii U situation, the console's issues should have been readily apparent six months ago.

Given that generous timetable and Nintendo's statements that it takes approximately 1.5 years to realize a hardware revision, a rebranded Wii 2 could be ready for the 2014 holiday period. Failure to actualize this strategy likely correlates to forfeiting the console space for the next several years.

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  • Report this Comment On December 22, 2013, at 3:26 PM, umpire171 wrote:

    What a joke of an article comparing to the dreamcast and its dying off and yet it has some solid sales. but nope Nintendo the one going to be doomed all the freaking time. anyone with a brain new wii u was a new console. and for them to take away the gamepad and allow if other optitions the most stupid choice of all. I am sick of news and gaming sites bs. out of there mouths.

  • Report this Comment On December 22, 2013, at 4:19 PM, jkarma wrote:

    Typical post saying nintendo is at a slump.

    They will rise again with great games coming (hopefully within the next 6month - 1 year) , ssb, monolith soft's X, hyrule warriors, and many others.

    The one thing nintendo has that keeps it alive compared to other systems is it's first party games. While it does suffer from lack of 3rd party games, it's first party games are great and always has been their core with each and every system. they innovate their games with new ideas (some are gimmicks) with each game versus sony which has to find new "mascots" with each generation.

    most if not all the big name games/mascots from psx/ps1 era are non-existant. even some of the ps2 era mascots/games are not as big.

    So we'll see.. guaranteed nintendo will still be up there with the other two. and I don't have a wii u yet either..

  • Report this Comment On December 22, 2013, at 4:28 PM, wizardaeon wrote:

    Nintendo doesnt need to be number one. A business only needs a loyal fanbase to stay relevant. However, they are starting to look at what they need to do to compete. It took them long enough

  • Report this Comment On December 22, 2013, at 4:39 PM, ericsortzi wrote:

    With respect to the author, articles on gaming trends written by financial/economic folks always end up missing the point.

    Nintendo fails to sell Wii U's because third parties don't develop titles for the system. Third parties don't develop titles for the system because they are unlikely to sell well on the Wii U because of the largely non-existant installed user base. It's a visious and self-defeating cycle - and one Nintendo has experienced before in the not-so-successful GameCube era. The reality is, software sells systems... and Nintendo's Wii U simply doesn't have the software.

    This was much the case on the Wii as well, as third party titles tapered off and eventually became a rarety in the console's waning years. Aside from some stellar first party titles (as Nintendo is well-known for), not much of interest came out on the Wii. Third parties learned the lesson well, and the reception to the Wii U has been leuk-warm from this all-important publishing base.

    The Wii was a novelty that sold well despite having little redeeming value to the core gamer. The casual crowd that the Wii coveted has moved on to mobile games that don't require a fancy dedicated console to play. The core gamer went back to their Xboxes and Playstations, and now have a new version of those consoles to upgrade to. What Nintendo is left with are the users they had in the dying GameCube years... a small but faithful group that buys Nintendo's systems almost exclusively to play Nintendo's in-house games. For the big third party titles, those players will certainly be using their second (first) system from Microsoft or Sony.

    Despite the assertion of the author, the Wii U gamepad is not a deterrant to a successful console lifecycle. That'd be like saying the Kinect has been a hinderance to both the Xbox 360 and One. Like that peripheral, it is what the developers make of it. And the unique abilities of the gamepad, while under-utilized, provide ample opportunity for fun and innovative gameplay. Unfortunately, developers currently just don't care about trying, because developing any game for the system at all is simply not worth the cost.

    No, the problem with the Wii U hardware is the same as that of the Dreamcast. It's a half-step between console generations. Somewhat more powerful than the Wii that came before, but not nearly as powerful as we knew the PS4 and One were going to be. The Wii U is essentially what the Wii needed to be to jump into the HD era, and not much more. Nintendo's problem here, then is one of parity with other console manufacturers. A lack of parity both they and the core consumer base knew would exist even before the console and its more recent competitors were released. Nintendo made the same mistake that killed Sega as a hardware manufacturer. In order to get a jump on the competition and save on costs going into a new generation, it released early with a machine which lacked the performance jump expected from that next generation.

    In essense, Nintendo guaranteed for itself that noone who might otherwise wait to buy the PS4 or One would have a reason to buy a Wii U, other than for the chance to play a few venerable Nintendo franchises (only a few of which have seen NEW titles released on that console). Why would they? Better consoles with AAA titles, exclusives, and full third party support were just around the corner.

    No. If Nintendo is to salvage any place for itself in this console generation (which, despite assertions, officially started with the release of the PS4), it has to release a new console with technical parity to Sony's and Microsoft's new offerings... and they need to do it fast.

    Keep the gamepad, but better utilize it. Microsoft is doing wonderful things with non-traditional control mechanisms and a second screen experience. The Wii U gamepad can offer more, but needs to be better utilized.

    Specs need to be right where the other current gen consoles are, or close enough to allow third party porting of AAA titles. The system need not support high grade components, as noone expects a Nintendo product to be the powerhouse of the bunch... but if you want the system to sell, it needs to be able to play the latest games. And if you want the system to have the latest games, publishers both need to know the game can run (with minor tweaking) on your system, and that there will be enough people to buy it on that system to justify the cost of doing that tweaking.

    Nintendo will have to bite the bullet here and admit to the mistake of building a "half-generation console." Gamers will likely not take to well to having a console go obsolete after only a few years in service, so Nintendo's next offering will need to have architecture that allows backward compatibility with the current Wii U. Everything from the current slate of games to every app and every offering on Nintendo's eShop will have to be supported out of the box. Gamers will have to buy a new console to stay current, yes, but all their Wii U purchases should carry over and play on the new hardware - removing a bit of the sting. Upgrade costs for the console, as always, can be mitigated some by wide-spread trade-in programs available at many retailers.

    Dropping the gamepad, and the price, from the Wii U will not entice any more users to sign on to a dying console - especially while it's superior competitors are now dominating the market. Besides... Nintendo first party titles, perhaps the only real reason to buy a Wii U at all, make significant use of the gamepad.

    No... at this point, nothing short of a full do-over will work. Either way, Wii U's out of the fight.

  • Report this Comment On December 22, 2013, at 7:50 PM, Nocturneking wrote:

    Nintendo is having problems with the Wii U due to them not having a good lineup of launch games,not marketing the Wii U properly in letting people know that this is their Next Gen console although there are people who do not consider it to be so due to its specs and because of the Gamepad..According to what i have read third party game developers do not want to bother with having to come out with games that utilize the gamepad..it supposedly uses different coding than it would for the same game to be released on an Xbox one or Ps4...I think its time for Nintendo to go back to basics and come out with a system that has great games uses a controller and has some muscle behind it to be able to compete with Microsoft & Sony.

  • Report this Comment On December 22, 2013, at 8:16 PM, jgp97 wrote:

    Oh please. Remember when the 3DS came out? They promised that the 3D would add a new depth to gaming? Remember how during its first 5 months out it flopped? Then when Nintendo gave it a price cut and added great software, it soon dominated the video game market? The same can happen for the Wii U. The first year's sales were terrible, but now that it's rolling out new software that people want, the sales are picking up.

  • Report this Comment On December 22, 2013, at 8:41 PM, cfin2987 wrote:

    With all due respect to the author (which isn't much), this article is as biased and baseless as claiming an investment in Zimbabwe is solid. Who paid you for this anti Nintendo rant and why does the motley fool (fool indeed) have one of these anti nintendo articles EVERY DAY!!

  • Report this Comment On December 22, 2013, at 9:39 PM, mitch079 wrote:

    Pretty sure they write these Sony and NIntendo are dying articles because of this blurb in the italics after the article:

    "The Motley Fool owns shares of Microsoft."

    'Nuff said.

  • Report this Comment On December 22, 2013, at 11:58 PM, Relinquished wrote:

    This is all baseless conjecture.

    Really, these Wii U arguments are progressively becoming lamer as each day ticks by.

    Do not try to fool the consumers; we know what we want.

  • Report this Comment On December 23, 2013, at 4:04 AM, captAhab02 wrote:

    Thats all bull the wii u is selling great at the Moment.

    @Eric no1 Needs 3rd Party support when 1st Party games are better

  • Report this Comment On December 23, 2013, at 5:54 AM, puppybone69 wrote:

    I just love how all the Nintendo fanboys are as much in denial as Nintendo itself. These same fools will be the first to proudly proclaim all of the many reasons why Nintendo being a software only developer like Sega will be the greatest thing ever when it finally happens, and in the meantime they'll insist that it will never happen, until it finally does. They're even more of a joke than they think all the articles about the handwriting on the wall for their beloved master is. Yeah, the rest of us are totally convinced that the Wii U will suddenly start getting both first and third party games galore, and sprint ahead of Sony & Microsoft!

  • Report this Comment On December 24, 2013, at 11:32 AM, thai42o wrote:

    Most of these commenters are delusional. The Wii U or Wii 1.5 is horrible. Nobody wants it. People don't want to have different controllers to play with. It makes an uneven playing field. Also people don't want to have to move to play every game. Some games it works well for, like Tiger Woods Golf. But for the most part gamers want to sit on the couch and play game like normal. Which is why Microsoft and Sony didn't make their Kinetc or PS Move a requirement for games. They leave it up to the developer. I would love to play some of the new games that Nintendo is bringing out but I just don't want to be forced to stand and move while I play them. People have grown tired of interactive games as most of them don't work to the users expectations.

  • Report this Comment On December 25, 2013, at 6:31 PM, merkmerk73 wrote:

    Wii U had a bad launch, just like the awful launch the PS3 had.

    However, with the price drop and recent high quality offerings (NSMBU + Super Luigi U bundle, WW bundle, Super Mario 3d World is an A+ title) sales have spiked up this holiday season.

    It has never been a competitor to XBox or PS - nor does it want to be. Most middle class kids eventually end up owning both.

    Lots of people will get it for the new Smash, and the new Zelda, and there's a new Metroid in the works as well as the new Donkey Kong.

    So what if it ends up being 3rd place this cycle? Gamecube was 3rd place, and then Nintendo dominated in sales with the Wii. The DS is still a portable juggernaut.

  • Report this Comment On December 30, 2013, at 11:58 AM, anash91 wrote:

    Does this look like an investment article at all? Where is the cash flow amounts? How will this help me judge if a company is profitable enough? Is the Xbox and PS4 selling at a loss or are they making money on the consoles? Software sales are down, so do Sony and Microsoft get licensing fees?

    Thanks for not helping me invest and blindly stating that nintendo is losing. They aren't if they are making money. A console is only a flop is It loses insane amounts of money. I have a Wii U, and anyone who plays mine wants one... I don't think Nintendo has to worry, especially after the 3ds and now account merging.

  • Report this Comment On December 31, 2013, at 1:41 PM, SG77 wrote:

    I like how now since the wii u sales have spiked up, websites that bash nintendo (like fool here) have suddenly gone quiet on the topic.

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