At the recent Electronic Entertainment Expo in Los Angeles, Sony and Microsoft made headlines when they unveiled new generation consoles to reach stores by Christmas. Nintendo’s news at the world’s biggest gaming show? Its fifth software delay since October.
That’s a problem because games sell consoles, and Nintendo’s new $300-$350 Wii U hasn’t exactly been flying off shelves. Between its November introduction and the end of March, Nintendo sold 3.45 million Wii U’s. That’s far below the company’s initial estimate of 5.5 million and about 40 percent behind the original Wii in the same time after its 2006 release, according to Citigroup Inc.
The slow sales can be blamed in part on smartphones and tablet computers, which many casual players now use instead of consoles. But it’s also due to a lack of must-play titles from the company that created blockbusters like Super Mario, Zelda and Donkey Kong. While Nintendo’s website lists 108 games as available for the Wii U in the U.S., there are 1,023 for the Wii. Through March, Nintendo had sold 13.4 million Wii U games, less than half the number for the Wii at the same point after its release, Citigroup says.
With just a few months until it’s no longer the newest console on the market, Nintendo is turning to a network of 1.8 million programmers, including part-time hobbyists, to try and revive its game pipeline. The company has formed an alliance with Unity Technologies, a San Francisco-based maker of software that lets game creators adapt titles to different machines.
“As digital business expands, there will be even more opportunities to do business with small, independent software developers,” Nintendo President Satoru Iwata said in a presentation at the E3 show.
While Nintendo has more than tripled research and development spending over the past decade, that hasn’t spawned a new powerhouse title. Iwata has long pledged to maintain exclusivity for Nintendo consoles by never licensing flagship games to smartphones, but the Unity deal will likely make many phone-based games available for the Wii U.
“The change in stance creates the possibility of a blockbuster title,” said Tomoaki Kawasaki, an analyst at Iwai Cosmo Holdings Inc. in Tokyo.
Nintendo and its software makers haven’t had any titles that sold more than 10 million units annually since the year ended in March 2011, according to Tokai Tokyo Financial Holdings Inc.
When Iwata announced the Wii U last year, he said strong software development would be critical to making the console a success and avoid the mistake it made with the 3DS handheld player in 2011.
Within six months of that device’s release, Nintendo cut its price after lackluster sales due to a lack of titles.
In the first full financial year after the Wii U introduction, Citigroup expects Nintendo to sell 6 million of the consoles and 31.3 million games for it.
That compares with 18.6 million Wii consoles and 120 million games for it in its first year, the bank said.
Though almost all Wii titles run on the Wii U, few customers will buy the new console just to play games that work just fine on its predecessor.
“We think Nintendo will find it hard to truly escape from weak demand without a big price cut,” Citigroup analyst Soichiro Fukuda said in a report this month.
Working with Unity will help widen options for customers of the Wii U, and the company has no plans to cut prices, said Yasuhiro Minagawa, a spokesman for Nintendo in Kyoto.
A predicted surge in titles for the Wii U and 3DS handheld player underpinned the company’s bullish profit forecast for this year.
Net income will rise to 55 billion yen in the 12 months ending March from 7.1 billion yen last financial year and a loss of 43 billion yen a year earlier, it said in April.
Nintendo stock has gained about 18 percent this year.
That compares to a more than doubling of Sony shares and a 26 percent increase for Microsoft.
“Wii Fit U” and “Wii Party U” will both be released by the end of the year instead of the summer, Nintendo said this month. The announcement marks the fifth U.S. software delay since October.