Locked: Why the Wii Won't sell 80m+

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Wii is going to have a tough time of things in, 'Others'. It is also going to start falling back in Japan. I think it will be stron in the US for longer than the other territories though. That is all.

PSN - hanafuda

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hanafuda said: Wii is going to have a tough time of things in, 'Others'. It is also going to start falling back in Japan. I think it will be stron in the US for longer than the other territories though. That is all.
Europe is definitely the biggest challenge for Wii, and Nintendo of Europe's performance for the most part isn't exactly awe-inspiring, to say the least. :-/ Japan, not a chance, their market has changed a lot in the last few years, the PS2 started dying there WAY before it did in other regions. Why do you think they've started calling it Nintendoland? ;) Technically, there's more evidence of PS3 slowing down in Japan more than there is the Wii, and this doesn't look like it will change much before Q4 '07 at least. Considering North America, I think it will be the first region that Wii sales slow down, mainly because of the 360's "hardcore" strength currently, but the Wii's sales won't slow down much before June at earliest now, given the looks of the market.

Nobody is crazy enough to accuse me of being sane.

mrstickball said: If Nintendo is making $100 per system and sells 40-50m of those systems, thats $40 BILLION dollars in hardware PROFIT. Thats an ungodly amount of money. Nintendo, like Sony wants MONEY. PROFIT.
Thats $4-5 billion, still a good amount. And ur reasoning about the companies wanting money is correct, but the hardware sales do matter more then just the profit or loss of each sale, it matters to the gamers as higher hardware sales usualy gives more games and it matters to the company as high hardware sales gives good rep which gives good developper support and loyalty. Most gamers couldnt care less wether their consoles company is earning or lossing as long as they can pump out their favourite consoles and games each gen.

Very nice article. But, there may be a few things not taken ibnto account. 1)If what Gamestop asays is true, then Nintendo has more systems in storage. This is probobly to stock up and save systems for big selling points. It's likely that Nintendo is producing more then we know of. And if there is enough demand, Nintendo will continue to up factorie production throught the systems lifespan.

Hus said: "at the end of 2005 there were already 2m 'HD ready' TV households in Europe and by 2010 there will be more than 50m 'HD ready' TV sets"
I think Screen Digest is way of on the numbers of HD-ready TV sets soled by 2010. They are expecting a HDTV penetration across Europe at about 12m households by 2010. Compared to the anticipated total number of 252m TV households (today: 238,5m) in Europe HDTV will account for meagre 4,7% by 2010. I doubt that those 12m households will own 4 HD-ready TV sets each or that there will be a need to replace them in large numbers. Preview of Screen Digest Report "By 2010, 12 million European TV households will receive HDTV programmes and watch them on an HD-ready television set. This will include 9 million pay TV subscribers and 3 million free-to-air households." While HDTV spreads very well amongst pay TV channels a lot of european free-to-air broadcasters are reporting that they won't be able to produce more than 30-50% of their programm in HD before 2012. You should note that a huge portion of the HD-ready 720p TV sets sold so far don't come with a HDMI port which also limits their use for watching HD DVD or Bluray movies. So there is no real big selling point for HD in Europe yet besides HD events like the Soccer Worldcup 2006 or the Olympic Games 2008 (especially in traditionally huge free-to-air broadcast regions like Germany). This limits the sales potential the Xbox 360 or PS3 could have in Europe if they would be able to exploit their HD features in more households. While the HD capabilities of a console might be a big selling point in the US in the next years it won't really matter in Europe until the next generation of consoles arrive in 2011-2013.

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In Japan, HD penetration is already huge (over 60%), and Wii is outselling the others combined 3 times over each week.

"[Our former customers] are unable to find software which they WANT to play."
"The way to solve this problem lies in how to communicate what kind of games [they CAN play]."

Satoru Iwata, Nintendo President. Only slightly paraphrased.

mrstickball said: I understand that Nintendo and other sources claim the NDS is at 2.5m units a month for shipping, but I believe that information is VERY false. Consider this: The NDS sold 500,000 units (estimated) in the US, and around 550,000 in NA/America. The NDS sold around a similar number (125k/week) in Japan Also, the NDS is selling most likely around 400k a month in Europe/other. That puts actual sellthrough @ 1.4m units a month. The NDS is near (or actually) sold-out everywhere or almost everywhere in Japan, and I feel that most likely the NDS is near that level elsewhere. By those sales numbers which are actual (atleast for NA and Japan), Nintendo is shipping 600k to 1m units that aren't selling.
you forgot holidays. DS is selling 500.000 per month in japan february. It sells much more in November and December. According to this site (so basically Mediacreate) in the last 52 weeks (a year) the DS has sold 9305250 units in Japan only. That's 775000 per month, much more than your estimate. Also, the DS sales in Europe are better than American sales (just look at the annual totals - yes, USA is the worse of the 3 big market for DS - but GB is still very strong) so your 400.000 is underestimate 2 times: because you don't consider the holidays and because the monthly sales are bigger than northamerican ones.

@mrstickball: I think it may well become true that the Wii will have a shorter life than PS and PS2, though you don't give a cause for your proclaimed Nintendo Law of falling console sales, so the Wii may also turn out to have Sony-like legs after all. I think Sony-like longevity is based on the ability to a) tap different demographics and b) different international markets (from US and Japan to Western Europe and Australia to Eastern Europe and Latin America...) over a system's life, and c) manage rich 3rd party support. What I do think is flawed is your assumption that Wii sales within a given year are mostly determined by supply issues. This is just not the reality of our markets and the computer industry. Sales potential is mostly determined by how much you can attract costumer interest. With some 6 months to prepare a big company like Nintendo could order from the factories any amount of systems for the Holiday season they think they can sell, be it 100k, 1 million, or 10 million. Just look at the iPod. Apple changed their whole lineup for Holidays '06, with 1 upgrade and 2 completely new designs, while old designs were discontinued. Yet they managed to produce and sell 21 million units within the Holiday quarter, a 50% increase over 1 year ago. If demand is there, Nintendo could not only ramp up to 1,1 million units/month in April, but further to 1,5 million in July and 1,9 million in October - and be at 20 million units sold by the end of the year. The real issues about planning production are not how much you can produce but how much you actually need and how fast you can bring the price down.

Hardcore gaming is a bubble economy blown up by Microsoft's $7 $6 billion losses.

I think the Wii will continue to sell large *and* Nintendo "rushes" the Wii2 somewhat (if you consider ~5 years rushing). They can keep the Wii1 kicking as a 3rd (or likely 4th) leg, like they've done with their handhelds successfully (the GBC held on for a while after the GBA, just as the GBA is still kicking alongside the DS). An "early" launch would allow them to be a *bit* more aggressive with the specs (e.g. a $300 system that doesn't have to totally replace the last one right away), and would put the squeeze on MS and Sony which need a *LONG* cycle to have any hope of turning a profit.

re: Nintendo's ability to ramp up production, I think there's a crucial difference between Nintendo's manufacturing model and that of, say, Apple with the iPod. While Apple's products are assembled entirely from commodity parts purchased from outside suppliers (plus some simple/cheap bespoke bits like cases), Nintendo actually owns (if they've stuck their their traditional model anyhow) much of their fab' in order to keep down costs (the alternative is to end up in the Xbox1-Nvidia squeeze). While there are lots of commodity parts in the Wii, a lot of it is actually very bespoke. E.g. the Wii CPU and GPU have effectively zero value to anyone who's not Nintendo. While they can certainly contract outside chipmakers to make more, they will pay for that, and they won't have much if any wiggle room in terms of their order.