Nintendo's (NTDOY 0.28%) Wii U had a 12-month head start on Microsoft's (MSFT +0.04%) Xbox One and Sony's (SNE 0.69%) PlayStation 4 -- time completely wasted, in light of new sales data that should be seen as troubling for Nintendo.
As of December 28, Sony has sold 4.2 million PlayStation 4 consoles, while Microsoft had sold 3.1 million Xbox Ones as of the end of 2013. In comparison, Nintendo's Wii U -- despite debuting in November 2012 -- has sold just 5.2 million (based on recent sales estimates). Unless something completely changes in the first quarter of 2014, Nintendo should miss its Wii U targets, as both the Xbox One and PlayStation 4 easily surpass it in popularity.
Nintendo's 9 million target
Nintendo President Satoru Iwata has held steady in forecasting 9 million Wii U sales by the end of March. That's certainly possible, but seems highly unlikely. When Nintendo last reported earnings, it said that it had sold 3.9 million Wii Us as of the end of September.
Recent estimates from third-party sources (via VGChartz.com) put current sales higher -- near 5.2 million. But with the holiday shopping season over, Nintendo would more or less need a miracle to move another 3.8 million units by the end of March.
Nintendo's management had been hopeful that the fourth quarter would turn out well for the Wii U -- the company pushed a bundle that included two free Super Mario games alongside the console, while at the same time releasing Super Mario 3D World in November. That game garnered nearly universal praise, making it onto many video game publications' best-of-2013 lists and being dubbed a "creative masterpiece" by The Guardian.
Nintendo's Wii U is holding back its game sales
But because so few gamers actually own a Wii U, very few bought the title. In the U.K., rival platforming title Knack actually outsold Super Mario 3D World in November, despite receiving lukewarm-to-poor reviews.
In contrast to Nintendo's title, Knack's numbers may have been boosted by demand for Sony's console -- with only a handful of available games, some gamers may have purchased Knack simply to give themselves something to play on their brand new PlayStation 4.
Microsoft's Xbox One hasn't sold as well as Sony's PlayStation 4, but given that it's $100 more expensive and launched a week later, differences in sales data should be expected. Compared to Nintendo's Wii U, however, the Xbox One is an overwhelming success -- Microsoft's $500 console is more than 60% more expensive than the Wii U, but in two months Microsoft sold almost as many consoles as Nintendo did in 11.
Nintendo's living room strategy is hurting its shareholders
Despite the failure of the Wii U, it isn't all doom and gloom for Nintendo's business. Its 3DS continues to sell quite well, with more than 40 million consoles now sold worldwide. Nintendo-made 3DS titles like Pokemon X/Y and The Legend of Zelda: A Link Between Worlds dominate video game sales charts. But as Nintendo is selling its Wii U at a loss, most -- or all -- of the money generated by its handheld business could be subsidizing its ailing living room console. In October, Nintendo reported an operating loss of more than $200 million, blaming the Wii U for a disappointing quarter.
While I had previously believed Nintendo's strong slate of games would help it deliver a solid quarter when it next reports earnings, it's hard to like Nintendo when Sony and Microsoft are absolutely dominating the living room.
