In Japan, console gaming is dead. The latest weekly sales tracking from Media Create is the latest worrying data to come out of the country. While numbers are disappointing across the board, the week's big loser was Sony's (NYSE:SNE) PlayStation 4. The device slipped below 10,000 weekly sales, selling a meager 8,480 units, according to Media Create's numbers. For comparison, the tracker's numbers show Nintendo's (NASDAQOTH:NTDOY) disastrous Wii U console moving approximately 7,600 units in the week.
The PlayStation 4 was once touted as a potential savior for the traditional Japanese games industry. Now, it seems unlikely that Sony's newest console will be able to outperform the PlayStation 3's somewhat disappointing showing in the country. What does the future hold for gaming in the Land of the Rising Sun?
What's happening with the Japanese game industry?
Recent fiscal reports from major Japanese games publishers like Square Enix, Konami, and Capcom bear a common strategy for the future. Each of these companies will move forward with an increasing focus on mobile development, while producing occasional triple-A titles aimed primarily at Western markets.
Series like Resident Evil from Capcom (NASDAQOTH:CCOEF) or Metal Gear Solid from Konami still have global blockbuster potential. But, Japanese publishers are not making the types of console games that have the potential to stimulate the Japanese console industry. For the most part, what sells in the region is drastically different from what's popular in the West, making it difficult to justify substantial production budgets. Naturally, this has a negative effect on Japanese console sales, and it looks like the situation has reached critical mass with the PlayStation 4.
Comparing PS4 and Wii U
Post-launch, the PS4's sales in Japan have been horrific. Courtesy of Japanese gaming outlet Famitsu, Sony's latest console is actually among the fastest to drop below 10,000 weekly sales, having dipped to approximately 8,500 units sold just 11 weeks after its release. It took the Wii U 12 weeks to achieve that dubious milestone, the Dreamcast 16 weeks, and Sony's PS Vita 17 weeks to dip below 10,000 sales per week. Those are not the platforms that a company would want its new console compared to. Being outperformed by them paints a worrying picture for both Sony and the Japanese gaming industry at large.
At this point, there actually seems to be a decent chance that the PlayStation 4 will be outsold by Nintendo's Wii U in Japan. Lifetime sales of Nintendo's struggling platform are approximately 1.73 million in the country, while sales of PlayStation 4 are at approximately 567,000. The Wii U hit Japanese store shelves more than a year before Sony's latest console, so the lead is easily explainable, but it's uncertain whether or not PS4 will be able to build the momentum needed to close the gap. Based on PlayStation 4's known upcoming lineup, there is a clear shortage of titles with the potential to turn things around. Nintendo can at least rely on Mario Kart 8 and Smash Bros. to drive some interest in their ill-fated platform.
Which games could have an impact on PS4?
For the time being, the only PlayStation 4 game slated for this year with the potential to spur substantial Japanese interest is Deep Down. The game was originally said to be a launch title in the territory, but the fact that the title does not currently have a firm release date makes it likely that this was never going to be the case. That said, PlayStation 4's prospects should see a bit of improvement within the next month.
While sales of the platform will continue to disappoint, June's E3 gaming show should see the unveiling of at least a few big games with Japanese appeal. Already-announced big hitters like Final Fantasy XV and Kingdom Hearts III from Square Enix will arrive after this year and prove somewhat helpful in courting gamers to Sony's platform. The console will have suffered from the effects of game drought long before these titles debut, however. A lack of games that appeal to Japanese tastes is already doing serious damage to the console.
What does PS4's disastrous Japanese year mean for Sony?
2014 is going to be a rough year for the PlayStation 4 in Japan. Without meaningful software releases, weekly sales of the system could soon drop below those of the Wii U. This performance highlights Sony's need to prepare for a future in gaming that isn't dependent on hardware. At the very least, it throws a kink into plans for future hardware releases.
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Keith Noonan has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.