Is Nintendo's Wii U Mounting a Comeback in Japan?

The Wii U console from Nintendo (NASDAQOTH: NTDOY  ) threatens to be one of the company's greatest all-time failures. The system's first year on the market has returned mostly disastrous results, with Nintendo's statements and software output indicating that the company was having greater than expected difficulty with HD development. The company took significant action to improve the Wii U's value proposition by implementing price cuts and introducing a variety of bundles for the primary territories.

This strategy appeared to return largely disappointing results, as the arrival of new consoles from Sony (NYSE: SNE  ) and Microsoft (NASDAQ: MSFT  ) and dismal Wii U sales in Europe and America suggested that Nintendo's system was nestling into its deathbed. Recent sales reporting out of Japan offers what is by contrast a stark glimmer of hope. Can the Wii U find some manner of success in its motherland? What, if anything, does the system's recent bump mean for rivals Sony and Microsoft?

Here's looking at Wii U
Without a doubt, the biggest short-term issue facing Nintendo is the possibility that the company's home console hardware is fundamentally undesirable regardless of how it is priced or what the package includes. Prior to the release of two new bundles, weekly Japanese sales of the system dipped beneath 3,000 units, a dreadful figure.

The introduction of the new SKUs caused an initial uptick in sales that dropped off steeply in subsequent weeks. Coupled with disappointing sales for system-flagship Super Mario 3D World, the soft demand for the new bundles portended near certain doom. For those that decry the "Nintendo is Doomed" drum being too frequently beat, December's tracking provided a welcome respite.

For the first three weeks of the month, the Wii U has been the second-best-selling hardware in Japan, trailing only the company's own 3DS handheld. While the 3DS has been the standout winner in the region, outselling all other platforms' December numbers combined, the Wii U's relatively strong performance is still impressive given the track that it has been on.

While Sony's PS VITA handheld has outperformed the Wii U for most of the year, Nintendo's console outsold the VITA at a 2:1 clip in December. Posting approximately 49,000 units, 73,000 units, and 119,000 units in Famitsu's first three weekly tracking periods, respectively, the system has already eclipsed the 220,000 units that it sold in North America during the month of November. Given the difference in population, it would appear that the Wii U is resonating most strongly in Japan.

Feeling the holiday spirit
That Nintendo's systems have experienced a December sales surge is hardly without precedent. The company has traditionally enjoyed bigger-than-average upswings leading into Japanese holidays, largely due to its games and systems being bought as gifts for young fans. Still, sales during the Wii U's second Japanese December are tracking above what the GameCube managed in the same time frame. That's not to say that the GameCube is a desirable point of comparison, but its sales have otherwise been tracking ahead of the Wii U.

Sony's heartfelt concern
Nintendo might not be the only company looking at December sales for the Wii U as a positive indicator. One of the big questions facing Sony is whether or not Japanese gamers still have an interest in consoles. While the initial PlayStation 4 shipments are sure to sell out upon gracing Japanese shores in February, the system's long-term prospects in the region remain much shakier.

Japanese third-party publishers have shied away from console development, shifting their efforts to handhelds and mobile and leaving fewer triple-A titles to drive the adoption of new, dedicated gaming hardware. When Sony's President of Worldwide Studios Shuhei Yoshida said that his company needed Nintendo to be successful, this is exactly the type of scenario he meant.

Microsoft de-emphasizes Japan
While Sony appears to still have a good deal vested in success in Japan, Microsoft seems to have written off the region almost entirely. After failing to establish an audience with its Xbox and Xbox 360 consoles, this is probably the right strategy. Microsoft invested substantially to secure exclusive, Japanese-developed content for the 360 and had little to show for it at the end of the generation. Outside brands can be notoriously tough sells in Japan, and the Xbox One's software lineup and feature set suggest that Microsoft has realized that its efforts in Japan are largely in vain.

The long, hard road ahead
Wii U's better-than-expected December sales in Japan are a rare bit of good news in a year that has otherwise been dominated by the crumbling of Nintendo's console ambitions. The system faces a sparse release schedule in 2014 regardless of territory, a crippling factor that is symptomatic of poor third-party support. Decent holiday sales in one of three major territories will not shift its fate. Nintendo will still need to implement drastic measures in order to propel the Wii U past the GameCube's meager numbers. 

What are the Fool's favorite growth stocks?
They said it couldn’t be done. But David Gardner has proved them wrong time, and time, and time again with stock returns like 926%, 2,239%, and 4,371%. In fact, just recently one of his favorite stocks became a 100-bagger. And he’s ready to do it again. You can uncover his scientific approach to crushing the market and his carefully chosen 6 picks for ultimate growth instantly, because he’s making this premium report free for you today. Click here now for access.


Read/Post Comments (9) | Recommend This Article (3)

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 January 04, 2014, at 9:57 AM, Ebby720 wrote:

    Who cares....it won't save them.

  • Report this Comment On January 04, 2014, at 11:23 AM, targeyone wrote:

    "The system faces a sparse release schedule in 2014 regardless of territory..."

    Looks like there could be quite a few gems this year though.

    Bayonetta 2 looks like it's shaping up well, and Hyrule Warriors looks like it could be an interesting mash-up.

    Honestly though, Donkey Kong Country, Smash Bros., Mario Kart, and Monolith's X in 2014, and I really don't need anything else.

  • Report this Comment On January 04, 2014, at 3:34 PM, captAhab02 wrote:

    Ebby?

    They are saved, the Wii u will sell better than Xbox one this year

  • Report this Comment On January 04, 2014, at 9:00 PM, 2014 wrote:

    I think Nintendo is leaving Luck To This HOUSE. Jerusalem. Our House has always been a Nintendo House. To the Super, Cube, Wii and Wii U we always play. even after purchasing the ps4 our House still is Nintendo. thanks for all the Zeldas and the game pad is the best!

  • Report this Comment On January 04, 2014, at 10:41 PM, Bunnyking77 wrote:

    I love my Wii U, it is more innovative than any of the other consoles and has all the Nintendo exclusive games that gamers like myself can't be without. Zelda, Mario Kart, Smash Bros., etc.

    Of course I have my eye on the PS4 but at the moment I am really just happy with the PS3 and the Wii U.

    If MS wouldn't have been so rude and obnoxious at E3 and beyond I would also like to have picked up an XBOXone, but only time will tell wether I would buy this system. It's really rubbed me the wrong way and the PR kind of regurgitates the whole graphics over content argument, the Wii U can stand on it's own.

  • Report this Comment On January 05, 2014, at 2:48 AM, TubeBar wrote:

    Why is everyone so obsessed with Nintendo? As I said they lost their markets share of casual gamers to the tablets, they foolishly misread the market years ago and gave it to Sony, so now all they have are the kids. Considering the kids buy their 3DS/2DS handhelds why do they need a Wii-U? The market share simply isn't there get over it.

  • Report this Comment On January 05, 2014, at 2:49 AM, TubeBar wrote:

    @2pang you are wasting your time. They don't need you or want your help. Corps don't e-mail people on message forums.

  • Report this Comment On January 05, 2014, at 11:11 PM, typicalguy wrote:

    Bunnyking77 - Same here. I prefer Xbox 360 to PS3 and Wii but do not plan on picking up an Xbox One due to Microsoft's behavior. It was nothing but "Don't have Internet? Well just go buy an Xbox 360 then!", "Deal with it.", etc.

    It's almost like the folks at Microsoft somehow lost perspective that their video game console is toy - a luxury item. It's not a necessity.

  • Report this Comment On January 05, 2014, at 11:11 PM, typicalguy wrote:

    Bunnyking77 - Same here. I prefer Xbox 360 to PS3 and Wii but do not plan on picking up an Xbox One due to Microsoft's behavior. It was nothing but "Don't have Internet? Well just go buy an Xbox 360 then!", "Deal with it.", etc.

    It's almost like the folks at Microsoft somehow lost perspective that their video game console is toy - a luxury item. It's not a necessity.

Add your comment.

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 2783197, ~/Articles/ArticleHandler.aspx, 11/26/2014 10:13:45 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...


Advertisement