Another week of Japanese sales tracking, another horror story for Sony's (NYSE:SNE) PlayStation 4. The latest data from Media Create has the console selling just 6,508 units for the week ending June 1. Nintendo's (NASDAQOTH:NTDOY) Wii U almost tripled PS4's weekly sales, coming in at 19,312 units sold for the week. What do these numbers mean? Is this a big win for Nintendo?
Mario Kart provides a small boost
The Wii U recently saw the release of Mario Kart 8, a game that has been hailed as the system's best chance for a comeback. According to Media Create, the game sold approximately 351,000 Japanese units in its first weekly tracking period, enough to make it the third-best debut in the series history. Given Wii U's relatively small installed base, the game is performing well. It sold to approximately 20% of Japanese Wii U owners in less than a full week on the market, an impressive feat. That said, the game does not look like it will have a substantial impact on hardware sales.
The Japanese release of Mario Kart 8 pushed Wii U weekly sales up approximately 10,000 units from the preceding week. The system was the second-best selling hardware for the period, behind the 3DS, with approximately 23,700 units sold, and ahead of the PS Vita at approximately 14,000 units sold. These results provide a valuable window into the state of the Japanese console industry.
The Wii U failed to outsell the 3DS in a week that has the former playing host to the top-selling game, while the latter does not have a notable new software release. At this point, it's safe to say that Nintendo's latest console is beyond saving. Mario Kart 8 looks to do good worldwide numbers, but the Wii U's broader future remains unchanged. That said, Mario Kart 8's inability to spur a substantial uptick in console sales is also bad news for Sony.
Why Sony should be worried about this week's Wii U sales
Hopes that the PlayStation 4 can achieve a reasonable degree of Japanese success hinge on the introduction of big titles that appeal to the nation's tastes. The current lack of such titles has been well documented, and the deficiency looks to be an ongoing problem for the console throughout the year. The upcoming E3 conference will likely see the unveiling of a few titles that should raise hopes, but the fundamental problem will remain.
The Wii U's performance this week suggests that Japanese gamers may simply be done with consoles. Mario Kart 8 stands as an undeniably high-profile release. It has a good chance of being the best-selling console game in Japan for the year, but the title clearly lacked the pull needed to give the Wii U a solid bump. Far-off releases like Final Fantasy XV and Kingdom Hearts 3 will give the PlayStation 4 some jolt, but there's little reason to believe that they will be enough to drive the system to a healthy performance.
Is Japan a bigger problem for Sony or Nintendo?
The new Japanese gaming landscape is more problematic for Nintendo than it is for Sony. The PlayStation 4's delayed Japanese release made it clear that North American and European territories were the essential battlegrounds for console success. While the PS4 can safely be characterized as a flop in Japan, the console has been putting up great numbers in other parts of the world.
Alternatively, success for Nintendo is largely dependent on the handheld market. Handhelds are still the healthiest dedicated gaming devices in Japan (3DS has sold a respectable 15.6 million units in the territory), but mobile is rapidly reshaping the industry. Elsewhere, interest in dedicated handheld gaming is dropping at an even faster rate, and Nintendo has an even weaker position in the console space. For a company that is so dependent on hardware sales, the coming decade is rife with obstacles.
Can the Japan problem be fixed with future hardware releases?
Both Sony and Nintendo are in the unenviable position of having to plan next-generation hardware for a future that looks increasingly uncertain. Talk that the most recent batch of consoles will be the last is likely premature, but it's undeniable that the gaming industry is in the midst of rapid change. The situation in Japan presents a troubling variable that looks to have two primary solutions: continue to de-emphasize the territory in favor of the West, or build a gaming platform tailored to the region's tastes. Sony is in a better position to pursue the first option, while Nintendo will likely take the bolder route and attempt to reenergize its gaming presence in Japan.
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.