Graphical differences and consumer budgets continue to shrink
If you'll forgive us, let's delve of into a faint whiff of politics in this introduction. In most major industrialised countries — whether in the West or Japan — national economies aren't exactly in rude health. After spells of prosperity and golden toilet seats for all in the mid-'90s and early noughties (OK, that's a slight exaggeration), the general environment is that there's less ready employment, less easy money and less financial largesse around. It's an age of austerity, when politicians in most countries argue about money, the lack of it, and who's to blame for the whole thing.
At this point you may wonder what on Earth we're talking about, and what's this got to do with Nintendo? We're really talking about the basics of the marketplace that console manufacturers are scrapping over, and it's continually evolving and switching up. In recent times we've seen a lot of gamers walk away from consoles to smartphones and tablets — just look at shrinking game sales in recent times — because a multi-purpose tablet or phone can be cheaper, or more economical in terms of their use against cost, and has a load of games that are free or very cheap. In some senses, those gamers may have bolted the barn permanently, as the conventional gaming market can't and won't compete on those terms. It shouldn't be the death of the home console or handheld, but it will mean a smaller group of consumers to fight over.
Even stepping away from concerns over the new 99 cent kids on the gaming block, let's look very simply at the last generation. The Wii offered something distinct from its competitors and, for a good number of years, was a far less expensive option than its HD rivals. To be blunt, value and innovation romped away with the mainstream market for quite a few years, and Wii tellingly saw sales overtaken by its HD rivals — year by year, not overall sales — when they released streamlined, more affordable consoles, with Kinect and Move also bolted on; Sony's PS3 in particular toiled until its exorbitant price dropped. When that happened, Wii didn't represent exceptional value to the same degree, the worm turned and momentum somewhat fell off a cliff.
And let's be clear, we're writing against the context of mainstream, everyday consumers here, so a lot of this reasoning doesn't necessarily apply to us here at Nintendo Life. But let's look at Wii U and, by extension, 3DS. Both shifted a few million units at launch — 3DS nearly hit four million — but then faded badly. And while we hate bringing it up, the portable system's revival isn't solely down to games, but that meaty price cut it received; its price became comparable with the DSi, amazingly, and demand increased exponentially. $250 for a gaming handheld on its own? Ouch. $199 for an XL as a Christmas present with a new Mario Kart game? Much more palatable.
Like the 3DS, Wii U has been greedily snapped up by a few million enthusiasts, with sales dropping drastically until some increases — in Europe at least — as a result of recent releases. Even with the spike in sales the system is still not flying off shelves, and as expected eyes will turn towards franchises such as 3D Mario and Mario Kart to see whether they lead to a significant bump in sales; if the latter isn't lined up for a Holiday release, then Nintendo's missing the boat. What's clear though, and is borne out with early sales on the full-price PS3 and Xbox 360 systems when they launched, is that the group of initial committed buy-at-all-cost consumers for each product is likely to be around that figure — a few million.
With Wii U's initial price-point, it stands out as the most expensive console on the high street. Inevitable, clearly, but for a shopper looking for a fun console the eye may be drawn towards the established, cheaper alternatives; the slow games catalogue on Wii U has also been detrimental. Sales in the UK jumped 125% recently, and that was partly attributed to embattled retailer HMV slashing the console to £199 in some stores; to the man or woman on the street, it was a new Nintendo console that wasn't too much more expensive than picking up a 360 or PS3, especially if those old Wii Remotes are still lying around. Oh, and there were a couple of new games, so it became worth a punt to a few thousand more shoppers.
At its full price, right now, Wii U is an expensive proposition. We can argue, as enthusiastic gamers, the system's merits and that the price is reasonable value for what it delivers, but that doesn't change the fact that a big chunk of change is needed for the system. If it was $50-$80 cheaper, would sales increase noticeably? We'd be surprised if they didn't.
We've been commenting on stretched budgets and Wii U's challenge selling units, but what of its upcoming rivals? Sony's PS4 is packed with so much horsepower — and cutting-edge expensive RAM — that the company's going to have a hard time offering it at a compelling price point. And then we have the latest Xbox; rumours swirl of a potentially disastrous "always online" component, while there's talk of a $500 price point with a $300 SKU on a subscription model. The prospect of a subscription's success depends on the terms, but if both of these systems land in the $500 range (compared to the current $350 of the Wii U Deluxe), how many on-the-fence consumers will walk into a store and put down the cash for them? Early adopters will flock, initial stock will sell out and there'll be headlines accordingly, but what about once that initial base of enthusiasts has shuffled away?
It's here that Wii U has an opportunity this Holiday season. There'll be a broader library, there should be a blockbuster game or two, and with a well-timed price cut the system could, potentially, be on store shelves at a little over half the prospective cost of PS4 and the new Xbox. There are a number of "ifs" and "maybes" in that, of course, but price could be King. Other factors to consider, in terms of the mainstream audience, is how Wii U at least looks distinctive from its predecessor, with that hefty GamePad included. The PS4 is arguably focused on power and — admittedly impressive — social infrastructure, but to outsider's eyes looks awfully similar in terms of the controller, while the new Xbox will apparently have an upgraded Kinect in the box.
Beyond features and millions of extra polygons to catch the eyes of gamers, is there a broad new concept there? Will consumers even see or care about the shinier graphics? It's all 1080p HD in the coming generation, after all, so differences will come down to advances in graphics engines, primarily; there's a school of thought that graphical fidelity is becoming a less distinct issue away from those that have an eye for the details. On the subject of systems offering something new, meanwhile, here's what Former BioWare boss Dr. Greg Zeschuk has been quoted as saying recently.
"I worry a lot that unless Microsoft or Sony pull something magically out of a hat, it's pretty much the same old, same old repackaged and I don't think they're going to change the dynamic of the retail market."
We also had Michael Pachter — whose day job is to advise investors and has backed the new Xbox to win the next generation, we should say — tell us in our recent interview about how he sees Wii U's prospects in relation to prices.
"The Wii U is closer to the GameCube (23 million) than to the Wii (99 million). At its current price point, I think it will sell as well as the GameCube. If Nintendo cuts price to $199, it will probably sell better than the GameCube. If they cut price to a point below $199, it should sell much better than the GameCube. All of this is dependent upon Microsoft and Sony pricing their new consoles above the Wii U price; if they price below, I think the Wii U is in trouble of underperforming even the GameCube."
It was said in that interview, and elsewhere in many examples, that developer support on the biggest blockbuster titles could be a problem for Wii U; there's no getting around the fact that could happen. Yet if Sony and Microsoft come in at high prices, as is anticipated in many quarters, and momentum tanks after the initial launch frenzy, will developers suddenly need Wii U more? If Nintendo's system's struggles in the last few months have been a turn-off for developers, would similar struggles on rival systems prompt the same results? If Nintendo does seize the day this Holiday, perhaps its status with some third-parties would naturally take a turn for the better.
Back to a possible change in price, we doubt Nintendo will go as far as $199 in the near future, but it has an opportunity to differentiate its new system in a big way and seize the biggest piece of the remaining market; it could make swallowing a financial hit worthwhile, as it did with 3DS. If you're a parent or a casual consumer and you see a new Nintendo system that's much cheaper from the flashy alternatives this Holiday, the possibility that you'll lean to Wii U is very real. While hardware specs and higher-resolution graphics matter a great deal to millions of gamers, it's debatable whether the enthusiast groups for each manufacturer are anything other than a vocal and visible minority. That applies to all of us in this community too, of course, here on Nintendo Life.
Wii U cannot and will not win over the 360 and PS3 crowd that eagerly upgrade, but it can offer better value and a greater sense of innovation to many that simply go with the most fun product they can afford. In the past couple of years that's been a 360 with Kinect or a PS3 with Move and Wonderbook; in the next couple of years that could be a Wii U.
Lots of "ifs", "buts" and "maybes" in these ideas, yes, but no more than those assuming Wii U doom and triumph for Sony and Microsoft.
Article brings up some decent points. Like what will happen once the early adopters stop buying the next MS and Sony system and have to try and sell their consoles to consumers with a ~$500 price tag. Will the sales come to a crawl or even worse than the recent Wii U sales?
Nintendo could have a pretty good sales recovery if they pretty much do what they did with the 3DS. Drop the price during the summer (250 basic, 300 deluxe) and release Mario Kart and 3D Mario by the holiday season. While sales might not skyrocket into Wii sales levels it should provide a much needed healthy boost.
We going to see a shift soon.
Nintendopie Was obviously right and I was obviously wrong. I will forever be a lesser being than them. (6/16/13)
If Wii U is the cheapest and if it has exciting software, there is a very good chance of it being a market leader.
Well, let's see how it goes. I'm unsure if the effect will be duplicated if they slashed the price of the Wii U akin to the 3DS. I see different variables involved when you look at the console market. I can't speak for other people, but I'm not seeing any games from the Wii U that would get me to purchase one over the holidays. Either way, I hope they do well. While I do not like every aspect of the system, there are features I do like, and I enjoy their games.
Yep, it might not have the same effect that it had on the 3DS but it definitely wouldn't hurt. A little obvious that I feel the turn around could be a lot greater considering I am the one that made this thread. Mario Kart has a huge potential and if it is anything like the Wii version (but with more tracks, better online, etc) then it will help a lot.
Yep, it might not have the same effect that it had on the 3DS but it definitely wouldn't hurt. A little obvious that I feel the turn around could be a lot greater considering I am the one that made this thread.
Agreed … it would definitely help. For me, software is key. Bayonetta 2, Pikmin 3 and Zelda WW HD are great games, but they’re not enough to get me to buy the system. A brand new Zelda and Smash Bros. are all I need to purchase a Wii U – the aforementioned titles and price drop would be icing on the cake. With that said, I’ll probably get it closer to the release of either of the two games I mentioned.
As for the holidays, a lot depends on what Sony and MSFT offer during that window. If Sony comes out with Killzone, inFAMOUS, Knack and DriveClub, along with superior multiplats like AC IV and Battlefield 4, it would make the system look very attractive. Microsoft has not shown its hand yet, so it is hard to say anything about them, but the same applies to them if they provide compelling software. And then there’s the price point for both systems. If they are within reach and perceived as reasonable by most people, it would make things more difficult for the Wii U.
I’m curious to see how frequent Sony and Microsoft will release titles for their respective systems. Nintendo pointed out that they had issues transitioning into the HD realm, so it seems that had a hand in the delays they’ve been experiencing. If Sony and MSFT can deliver games consistently after the launch of their respective systems and avoid a drought like situation Nintendo experienced with the Wii U, that might be another factor to consider (but I’m sure by then Nintendo will get things together). I expect Sony and MSFT (and by extension third parties) to deliver games consistently since both systems are touted to be relatively easy to develop for.
I think WiiU doesnt have the chance of recovery at this point, and by recovery i mean being the dominace force like Wiis been since 2006.
I really think Nintendo shouldve had WiiU rolling with a Mario3D and Mario kart already in the market for christmas 2012 and the promise of Bayo2, ZeldaWwHD, X etc. in the near future. A spring 2012 launch and a strong holiday shouldve put WiiU WAY stablished for a new console to break in and start doing good numbers, let alone two...
Well, maybe they thought 3rd parties would help a lot more given the cash they made them earn with Wii being a shovelware paradise, or they underestimated the jump to much more powerful hardware...
About Sony and Msoft, i find really hard to believe that they will perform any better than WiiU, sincerely, i expect a decent start with a big fall coming on last quarter fiscal year 2013, just like WiiU now, plus we will see many cross platform games that will even decelerate more the transition to next gen.
All in all, the industry is going to contract a lot, half because Wii craze is gone, half because of the lack of the groudbreaking 'thing' (motion controls, HD, DVD, 3D grafix etc..) needed to catch peoples attention.
I see what Nintendo is trying to do with WiiU, thay want it to be a home family computer, like if it was a domotics device, the center of the home which every member of the family can interact with in various ways...which is actually what they have been trying to achieve since...ever.
From a gamers perspective, this can easily be the greatest generation ever, whith grafix already hitting photorealism and complex online communities being the common denominator.
Only the jump in graphics already makes WiiU worth it imho. Just imagine the next Zelda and 3D Mario!!!!.....oh god i cant wait!!!!!!
When Nintendo launches their new X console, PS4 will be half of its estimated life, what will happen ther? Imagine a Nintendo hand/home hybrid as powerful as a PS4?