Gamasutra: The Art & Business of Making Gamesspacer
View All     RSS
October 22, 2014
arrowPress Releases
October 22, 2014
PR Newswire
View All





If you enjoy reading this site, you might also want to check out these UBM Tech sites:


In-Depth: Where Do Wii Sales Go From Here?
In-Depth: Where Do Wii Sales Go From Here?
November 22, 2010 | By Matt Matthews

November 22, 2010 | By Matt Matthews
Comments
    27 comments
More: Console/PC



[Examining U.S. sales of Nintendo's Wii as part of his October 2010 sales analysis, Gamasutra's Matt Matthews showcases the significant slowdown in Wii's momentum and asks -- what should the company do to stimulate sales?]

In relation to U.S. retail console sales for the past few months, let's look at Nintendo's Wii. With the hardware's $194 average price at retail clearly below the $200 MSRP, retailers are already promoting it with special deals.

If the retailer offers become more aggressive through December, that average price should drop further, and sales should increase but to what levels? This is the key question for Nintendo through the end of 2010, and one we will explore further below.

Unfortunately for Nintendo, the Wii's days of consistently dominating the console segment appear to be over. It has not been the best-selling console since May of this year, just prior to the launch of the Xbox 360 S model.

In fact, Nintendo's console has seen its year-to-date sales decline by 24%, a change which has allowed the Xbox 360 to take the crown of best-selling console so far this year.

The current malaise in Wii hardware sales is a troubling sign, and it makes estimating sales through the end of the year difficult.

As the figure below shows, Wii hardware sales have been on the decline since peaking in 2008, but the contraction has accelerated in the past couple of months:



What is particularly interesting about Wii hardware sales for November and December of this year is that we still don't know which way the trend will break. Last year's numbers looked particularly weak until November and December more than doubled the year-to-date Wii system sales. In 2008, those two months had only accounted for 41% of Nintendo's annual console sales and in the year before that, the two holiday months were only 37% of annual Wii sales.

So which will it be this year? A more modest contribution as was experienced in 2007 and 2008? Or a near doubling of annual sales like 2009?

To at least beat the annual total for 2007, Nintendo will have to sell 2.85 million systems in the last two months of 2010 in which case November and December would account for 45% of the system's 2010 sales. Given the stronger competition from Sony and particularly Microsoft this year, that seems unlikely to us.

Which leaves us wondering why Nintendo has maintained its $200 MSRP for the Wii. Perhaps they are waiting until 2011 and allowing the desperate retailers to cut their own margins over the holiday, reducing the effective price as happened in 2009. Perhaps they are still uncomfortable with trimming their own margins because of the unfavorable yen-to-dollar conversion rate.

Regardless, there is the issue of software sales, which in the case of the Wii appear to closely correlate with hardware sales. It is our theory that the Wii's strong software sales in past years were driven primarily by new Wii owners (those within the first six months of ownership). As the hardware sales have fallen this year, so have the software sales rates.

According to tie ratios provided to us by the NPD Group, and comparing with data released by Nintendo during its recent investor briefing, Wii software sales rates have dropped by over 50%. In particular, during the January May period of this year, we estimate that approximately 1 million Wii software units were being sold each week, on average.

During the June October period, that rate fell to below 500,000 Wii software units per week. Not only was that a drop compared to the rate in the first part of the year, but it does not look healthy compared to the 890,000 software units per week that the Wii averaged in the same June October period in 2009.

We are left wondering whether Nintendo should consider a reduced-price line of software akin to the Player's Choice line used during the GameCube's lifetime. If the Wii installed base is price-sensitive enough, then those users may choose to buy very few software titles or to buy used software as often as possible.

Used software revenue is not reflected in the NPD Group's monthly figures. If the introduction of re-issued Wii software at $20 $30 could pull in more Wii consumers and simultaneously stem the flow of some consumer dollars into the used software market, then that could at least boost the fortunes of Nintendo's platform generally and third parties specifically.

This isn't to say that third parties couldn't lower prices on their own in fact Wii software prices are significantly below prices on the other current-generation consoles but rather that it would mean more if Nintendo put its weight behind such a program.

When the company has had to defend its success with third parties several times during the lifetime of the Wii, it would seem a rather natural step to put some of its own marketing muscle behind a repackaging effort that could visibly aid those third parties.


Related Jobs

Nexon America, Inc.
Nexon America, Inc. — El Segundo, California, United States
[10.22.14]

Localization Coordinator
Petroglyph Games
Petroglyph Games — Las Vegas, Nevada, United States
[10.22.14]

Producer
University of Texas at Dallas
University of Texas at Dallas — Richardson, Texas, United States
[10.22.14]

Assistant/Associate Prof of Game Studies
Wargaming.net
Wargaming.net — Hunt Valley, Maryland, United States
[10.22.14]

Lead UI Engineer










Comments


gus one
profile image
Down. The only reason people would by a Nintendo now is because their room is too small for Kinect. Kinect is the future.

Ben Hopper
profile image
The Kinect is garbage IMHO.

Merc Hoffner
profile image
...Or you know, the good old reasons, like they like Nintendo classics, or say they have $200 but not $300.

Daniel Martinez
profile image
On pure gut instinct, I'd say they'll go 7 million, no more. Can't wait to see the follow-up article. I still don't own one, and I love Nintendo. Might get the black one this holliday season.

Joe McGinn
profile image
Would have enjoyed a more robust analysis of the software side. He says "...software sales, which in the case of the Wii appear to closely correlate with hardware sales." Certainly not what my buddies on the publishing side of things say - not for 3rd parties anyway. A far more interesting article would be "can non-Nintendo publishers make money on Wii games"?



P.S. Kinect is Eye Toy 2. Cute be severely limited in application, and certainly not "the future".

Damian Connolly
profile image
Iwata addressed this specific complaint that 3rd parties couldn't sell on the Wii last year: http://www.nintendo.co.jp/ir/en/library/events/100129qa/02.html (scroll to the bottom or look at the slide in question: http://www.nintendo.co.jp/ir/en/library/events/100129qa/img/slide
10.jpg)



The question is not that 3rd party games can't sell on the Wii, it's that *bad* 3rd party games can't sell. There's a huge gap in quality between 3rd party titles and 1st party titles on the Wii.



But that's besides the point. There's no killer software for the Wii at the minute, so there's no reason to buy one. Software always drives hardware.

Joe McGinn
profile image
No offense to Iwata but I'd like independent verification of his claim, from someone who *doesn't* have a vested interest in the answer tot he question. For a long time I thought the same thing Damian, and there is indeed a huge quality gap ... but then how do you explain games like Dead Space Extraction on the Wii? Top notch, AAA quality game. And sold something really dismal, like 50,000.



And then some of the 3rd-party games that have sold have not been quality at all, like Wii Play.



That kind of uncertainty makes it hard to get things green-lit.

Damian Connolly
profile image
Well Iwata's getting his results from the NPD and the TRSTS, so they're about as independant as they come.



As for why some games sell and others don't, that's a whole different, and much more difficult, ballgame. My own perspective is that what most 3rd parties think the Wii audience is and what it actually is are two different things. When you said Dead Space is a AAA game, is it really? Sure, it's probably technically quite proficient, but that means nothing when I have a bad experience playing it. A 5hr long game where I can't see anything or move unless the developer lets me? I might as well watch a movie.



If we look at some of the 3rd party games that have really sold, we start to see different reasons. Just Dance is a really focused, fantastic game. You might not play it on your own, but you can't deny that it nails it's audience. Monster Hunter Tri (which is the most played Wii game going by the link that Ephram posted below) is all about playing with your friends; sharing experiences.



I do agree with you when you say it's hard to get things green-lit. This risk only hurts 3rd parties though. Because they don't know how it will sell (they don't know the audience), the result is a tight budget, a reduced development time, and ultimately a mediocre game that doesn't sell. Which hurts the next cycle.

Prash Nelson-Smythe
profile image
You can't make this analysis without looking at demand for the software.



"It is our theory that the Wii's strong software sales in past years were driven primarily by new Wii owners (those within the first six months of ownership). As the hardware sales have fallen this year, so have the software sales rates."



I think this is somewhat backwards causation. People don't want hardware. They want software. Software is the "driver" and the hardware is just an obstacle to getting it. Nintendo's software line-up this year has been poor and therefore hardware sales have been poor.



That means only software can turn things around for the Wii this year. Wii Party is already out and is doing OK, I believe. FlingSmash seems to be going nowhere. We will see if Donkey Kong can pull off a "New Super Mario Bros" for Nintendo.

Eric Geer
profile image
"It is our theory that the Wii's strong software sales in past years were driven primarily by new Wii owners (those within the first six months of ownership). As the hardware sales have fallen this year, so have the software sales rates."



I'm not sure this a backward causation at all--If you look at the crowd that they are selling to--were selling to--Its a casual group. Casual consumers buy because its the hot thing--then they have it for a while--and their interest falls. Meaning--they buy the console--maybe a few titles---then they realize "Hey, now I remember why I haven't bought a gaming system in "X" number of years--its because I like it but not enough to continually buy for it" So once that shine from the new toy as been covered with dust--they either trash it or sell it all---leaving other gamers to pick up a used one for half the price---I think the casual group is the group really pushing the new hardware sales--while the hardcore group is pushing the new software sales. I have two used Wiis and a TON of games--that at the time were bought new.

Prash Nelson-Smythe
profile image
You make a lot of assumptions about "casuals" that are common fallacies. I will tackle one of them:



Hardcore gamers are actually more likely to buy a game because it's the "hot thing". Look at the sales spikes for hardcore games in their first few weeks of release. Most of them sell for a month and drop off into obscurity since sales are driven by hype/reviews etc. "Casual" games tend to sell more steadily for longer.



And here's a counterpoint that you might agree with:



"Hardcore" gamers are more likely to buy games for their platforms automatically because spare cash tends to go to gaming. Non-hardcore gamers will only buy games if they are compelled to do so by a good game. Otherwise, they will spend their money elsewhere and let their console sit on the shelf. So the point about software driving hardware is probably even more applicable to the Wii than other consoles.

Jamie Mann
profile image
It depends on how you define hardware. If you define hardware as "something bundled with the game to make it easier to play", then hardware is driving the sales. Look at the top-ten list on Wikipedia:



*Wii Sports (67.71 million)

*Mario Kart Wii (24.01 million)

*Wii Fit (22.61 million)

*Wii Sports Resort (20.94 million)

New Super Mario Bros. Wii (16.73 million)

*Wii Fit Plus (15.22 million)

Super Smash Bros. Brawl (9.48 million)

Super Mario Galaxy (8.84 million)

Mario Party 8 (7.6 million)

Mario & Sonic at the Olympic Games (7.09 million)



Five of these games came with hardware - the Wii effectively "enabled" Wii Sports and while Mario Kart doesn't come with an electronic gadget, it does come with a plastic steering wheel!



It's also worth noting that Nintendo's traditional flagship game (New Super Mario Bros) only comes in at #5: it's practically equalled by Wii Fit Plus.



Unfortunately, once people get bored of the hardware gimmick, sales do tend to drop off: for instance, Wii Fit Plus sold significantly less than the original Wii Fit, despite the fact that the original install base already has the Balance board hardware (and therefore needs to spend less)! This is also in stark contrast to "traditional" games, which tend to grow their fanbase with each sequel.



For better or worse, Nintendo do seem to have bet the farm on hardware-based gaming: the Wii, the DS and the 3DS have all been driven by this philosophy. It remains to be seen whether they can continue to find ways to keep player interest up...

Prash Nelson-Smythe
profile image
Jamie,



If a game is bundled with some hardware, then it's hard to say if the hardware sold the software or the software sold the hardware, or both. But anyway, I wasn't considering peripherals at all and was referring to the console platform when I said hardware.



It's true that Wii Sports and Wii Fit sequels have sold a lot less. I think that's partly because they did something new. When you do that thing *again* it won't have the same impact. So this could be seen as purely a failure of the software rather than the lack of new peripheral.



I'm not sure that traditional games necessarily to grow their fanbase with each sequel. That only really applies to a few successful franchises. There are plenty of examples of series which got less popular and died out. This means you don't hear much about them and then forget about them: survivorship bias.

Jamie Mann
profile image
Prash,



You've raised some fair points there!



For me, the success of the Wii is entirely down to the tight integration of the controller and game, starting with the Wii itself (for Wii Sports) and moving through the various add-ons: Wii Fit and the motion board, Wii Sports Resort and Motion Plus, etc. In other words, the peripherals have sold the game, by reducing the learning curve.



Equally, I believe that has resulted in a heavily gimmick-based market, in much the same way as happened with previous peripheral-based games - Eyetoy, Guitar Hero, DDR, Light-gun games, etc. However, the trend with gimmicks is generally a bubble: it blows up quickly and then pops.



The huge size of the market Nintendo tapped into has kept the bubble inflated for longer than normal, and (unlike the music-game genre) they have other strings to their bow in the shape of classical IP - Mario, Zelda, Metroid, etc - but the market is now getting saturated and their IP doesn't seem to appeal that strongly to the "casual" demographic: there's a significant drop in numbers between the top half of the table (4/5 involving hardware) and the bottom half (4/5 involving Nintendo IP)...

Jonathan Gilmore
profile image
@Prash responding to Eric

Actually, those sales spikes are usually for sequels and known quantities, those have marketing support, but the sales are based on familiarity as much as anything, not being shiny, new, and full of hype.

Ian Uniacke
profile image
Actually you're comparisons of wii fit and wii sports are incorrect. Launch aligned the sequels are doing as good as if not better then the originals. You are forgetting that wii games sell for years, not for days. In fact on an analysis of 10 week sales, both wii fit plus AND wii sports resort trounced the originals. To further clarify, Wii fit sold approximately 40% of it's sales after the first year, since wii fit plus is just over a year on the market and still selling it looks like it could go on to sell about the same as wii fit (possibly more if they don't release another sequel).

Prash Nelson-Smythe
profile image
Thanks for the perspective, Ian.

Eric Geer
profile image
Nintendos installed base is so large right now there is really only one place to go...Down. And another factor to drive this is that the 3rd party devs have basically dropped the Wii off the production line. Most of the worthwhile incoming titles are either Ninty Develped or Ninty Published--It's a shame really because I really enjoy the Wii and some of the titles for the system are incredible--Another factor driving this is the sheer number of Used Wii consoles that are hanging around---I just orded another one for $100--Why would I pay twice as much for a console when there are better options?



"We are left wondering whether Nintendo should consider a reduced-price line of software akin to the Player's Choice line used during the GameCube's lifetime."

This would make me very happy--I can't believe that old or used 1st party Nintendo titles are still marked at $50+. Ridiculous.

Gary Beason
profile image
"the 3rd party devs have basically dropped the Wii off the production line. "



What do you mean? I see Activision, EA, Ubisoft, and Sega still active with Wii titles. They might have scaled back on some efforts and targeted specific demographics, but they've not abandoned the Wii by any means.



One problem is that while HD costs might be high, they can hit 2-3 platforms (360, PS3, and PC) while the Wii is its own development effort. What we've seen is that 3rd party games succeed if they are well designed, developed, and marketed. But some gamers have abandoned the Wii so the sales for some types of games aren't there. Unfortunately, third parties were stuck on selling mini game collections and then made more of an effort with "hard core" games. But the effort was in fits and not consistent.



It's parallel to the idea that you need a threshold of similar stores or restaurants near each other.

Joe McGinn
profile image
>>What do you mean? I see Activision, EA, Ubisoft, and Sega still active with Wii titles.<<

In my experience it has been abandoned, and that will become clearer over the next 12-18 months. Right now no one seems to be green-lighting much of anything on the Wii. The supply might not be dry yet but the pipe is. (Mind you to be fair, I think you are going to see less games released every year on consoles generally.)

Daniel Kinkaid
profile image
Lets keep it simple: What third party games for the Wii are actually good? Point being, its become repetitive, so theres no new killer software out there to entice new buyers to want the system. Throw in the fact that everyone who wanted a Wii already has one, and that means quickly shrinking sales.



Just like the N64 and Gamecube, the Wii had a strong first impression, driven by a strong Nintendo launch lineup the first two years or so. And just like both consoles, after that, killer software was a dime a dozen, and overall sales suffered for it.

Prash Nelson-Smythe
profile image
Exactly, there's no need to overcomplicate it.



FYI, "a dime a dozen" means "common" :)

E Zachary Knight
profile image
Well, if you want good 3rd party games, perhaps you need to open your eyes. There are hundreds of great titles available for the Wii for those willing to take a chance.



Every month Kotaku compiles a list of the 20 most played games per owner on the Wii. Here are the results for October:



http://kotaku.com/5690654/the-20-most+loved-wii-games-breaking-th
e-80+hour-barrier



If you look at that list you will see that only 5 of the 20 are 1st party games. That means that the owners of the other 15 are pretty happy with their 3rd party choices.

Jerome Russ
profile image
Hi Ephriam,

Thanks for that link! That list will definitely be used whenever I am looking for Wii games in the future.

Gary Beason
profile image
That's a good list, but there are so many other excellent Wii games that aren't getting bought and played for various reasons:



Muramasa

Little King's Story

Sin & Punishment

Metroid Prime/Trilogy

Red Steel 2

Silent Hill: Shattered Memories



And I'm enjoying GoldenEye.

Leon T
profile image
No matter how the sales for the Wii break in November and December it will be interesting. I think it will sell about 4 million over the holidays.

Sean Kiley
profile image
The milk is finally starting to run dry from this cash cow. Nintendo got more than they expected out of the Wii and I'm sure a lot of those resources went into R and D for the next console, which will launch whenever the big N starts loosing substantial market.


none
 
Comment: