Has Nintendo Done the Seemingly Impossible and Saved the Wii U?

The Wii U has been getting a healthy dose of positive buzz. Is the system on the comeback trail?

Jun 21, 2014 at 2:02PM

Screen Shot

Source: Nintendo.com

There's recently been a lot of talk suggesting that Nintendo's (NASDAQOTH:NTDOY) Wii U is making a comeback. After two dismal E3 showings, the most recent expo show saw Nintendo make big strides in its presentation format. The company's E3 Digital Event showed off a selection of new and upcoming games that might help to give the Wii U some spark. Additionally, Nintendo's Mario Kart 8 has landed to great reviews and strong commercial reception. Were criticisms of the Wii U premature? Is the system now on track for a healthy performance?

Big increases on small numbers
The release of Mario Kart 8 has provided Nintendo's home console with a bit of much needed momentum. News articles from around the time of the game's release touted sales increases of 666% percent for the system in the UK and drove home the fact that the racing title sold approximately 1.2 million copies in its first weekend. More recently Nintendo indicated May that sales of the Wii U were up 90% compared to the previous year. All of these numbers sound very good, but they have led to an overly rosy portrayal of the Wii U's future.

Is this the tipping point?
Nintendo of America's VP of sales and marketing Scott Moffitt recently indicated that the Wii U is about to reach its tipping point, suggesting that the console had beaten its hardships and was headed for bigger success. Moffitt pointed to this holiday's Super Smash Bros. as a game that would finally help the struggling console breakthrough to the mainstream audience. While the upcoming mascot brawler should move good software numbers, its effect on hardware is likely being overstated. This type of positive spin from Nintendo on the Wii U situation is not unfamiliar.

Looking back to the release window for Wii U's Super Mario 3D World, there was a lot of similar comeback chatter. Nintendo's President emphasized that one game could change the fate of the platform, much as he did prior to the release of Mario Kart 8.

Strong reviews for 3D World, and a number of press articles suggested that Wii U was the best choice for a console that season. These elements prompted a selectively held belief that Wii U had hit its stride and was on its way to a healthy lifecycle. Positive perceptions helped drive the company's share price to a two-year high. The only problem was that media and fan buzz suggested sales numbers much higher than what were actually delivered. When the figures rolled in, Nintendo's valuation reacted accordingly.

Wii U still has a software problem
Nintendo deserves credit for improving its E3 presence and delivering with Mario Kart 8, but the broader problems facing the Wii U remain unchanged. The new games that it unveiled at E3 did not have the appearance of high-budget megahits. Instead, the new titles looked like mid-budget games with charming art styles -- titles that would appeal to the core Nintendo audience, but fail to ignite broader interest. Captain Toad: Treasure Tracker is built from Super Mario 3D World assets. Splatoon looks like fun, however the title could pass for a browser game. Yoshi's Wooly World and Kirby and the Rainbow Curse have appealingly clean aesthetics, but the Wii U really isn't in need of more 2D platformers.

Ubisoft (NASDAQOTH:UBSFF) CEO Yves Guillemot recently indicated the belief that Wii U has a future if Nintendo can get it to the right price point. The French publisher is sitting on a finished, unannounced game for the platform, just waiting until Nintendo's latest console establishes a viable user base. That's a pretty tepid endorsement from one of the platform's biggest supporters, and it's obvious that the GamePad is a hindrance to reaching a more attractive price point.

Amiibo toys won't move many consoles
Nintendo's Amiibo figurine platform is a smart move for the company, but its success faces a major obstacle. As great as Nintendo's characters are, there's no overcoming the fact that the Wii U has not built a healthy install base. The Amiibo figurines should sell well enough to Nintendo's core audience, but expecting the toys to drive sales of the Wii U doesn't make a whole lot of sense.

The GamePad continues to be dead weightScreen Shot

Source: Nintendo.com

The expensive GamePad controller remains a substantial barrier to entry for consumers who might otherwise be interested in a Wii U. This year's E3 highlighted the fact that Nintendo has yet to justify the lumbering device, as legendary designer Shigeru Miyamoto could only introduce small prototypes as evidence of the controller's worth. For the system's third E3 showing, trotting out demos like Project Giant Robot and Project Giant Shield as proof-of-concept for the GamePad is unacceptable.

Nintendo dismisses VR while praising the GamePad...
Nintendo's decision to ride out the Wii U hardware situation is understandable, though the lack of reactive strategy does not deserve commendation. The company's decision to stick with its GamePad-centric messaging while failing to deliver the content to back it up suggests Wii U's problems will be ongoing. Additionally, recent comments from Nintendo executives on the potential of a VR revolution have been dismissive and evoke the company's trademark stubbornness and conservatism. Nintendo can still change its fortunes, but such a reversal won't come courtesy of Wii U.

Leaked: Apple's next smart device (warning, it may shock you)
Apple recently recruited a secret-development "dream team" to guarantee its newest smart device was kept hidden from the public for as long as possible. But the secret is out, and some early viewers are claiming its everyday impact could trump the iPod, iPhone, and the iPad. In fact, ABI Research predicts 485 million of this type of device will be sold per year. But one small company makes Apple's gadget possible. And its stock price has nearly unlimited room to run for early in-the-know investors. To be one of them, and see Apple's newest smart gizmo, just click here!

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.

Money to your ears - A great FREE investing resource for you

The best way to get your regular dose of market and money insights is our suite of free podcasts ... what we like to think of as “binge-worthy finance.”

Feb 1, 2016 at 5:03PM

Whether we're in the midst of earnings season or riding out the market's lulls, you want to know the best strategies for your money.

And you'll want to go beyond the hype of screaming TV personalities, fear-mongering ads, and "analysis" from people who might have your email address ... but no track record of success.

In short, you want a voice of reason you can count on.

A 2015 Business Insider article titled, "11 websites to bookmark if you want to get rich," rated The Motley Fool as the #1 place online to get smarter about investing.

And one of the easiest, most enjoyable, most valuable ways to get your regular dose of market and money insights is our suite of free podcasts ... what we like to think of as "binge-worthy finance."

Whether you make it part of your daily commute or you save up and listen to a handful of episodes for your 50-mile bike rides or long soaks in a bubble bath (or both!), the podcasts make sense of your money.

And unlike so many who want to make the subjects of personal finance and investing complicated and scary, our podcasts are clear, insightful, and (yes, it's true) fun.

Our free suite of podcasts

Motley Fool Money features a team of our analysts discussing the week's top business and investing stories, interviews, and an inside look at the stocks on our radar. The show is also heard weekly on dozens of radio stations across the country.

The hosts of Motley Fool Answers challenge the conventional wisdom on life's biggest financial issues to reveal what you really need to know to make smart money moves.

David Gardner, co-founder of The Motley Fool, is among the most respected and trusted sources on investing. And he's the host of Rule Breaker Investing, in which he shares his insights into today's most innovative and disruptive companies ... and how to profit from them.

Market Foolery is our daily look at stocks in the news, as well as the top business and investing stories.

And Industry Focus offers a deeper dive into a specific industry and the stories making headlines. Healthcare, technology, energy, consumer goods, and other industries take turns in the spotlight.

They're all informative, entertaining, and eminently listenable. Rule Breaker Investing and Answers are timeless, so it's worth going back to and listening from the very start; the other three are focused more on today's events, so listen to the most recent first.

All are available for free at www.fool.com/podcasts.

If you're looking for a friendly voice ... with great advice on how to make the most of your money ... from a business with a lengthy track record of success ... in clear, compelling language ... I encourage you to give a listen to our free podcasts.

Head to www.fool.com/podcasts, give them a spin, and you can subscribe there (at iTunes, Stitcher, or our other partners) if you want to receive them regularly.

It's money to your ears.


Compare Brokers