Talking Point: The Next-Gen Console War is Wii U's to Lose
Posted by Thomas Whitehead
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.
Wii tellingly saw sales overtaken by its HD rivals — year by year, not overall sales — when they released streamlined, more affordable consoles
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.
Nintendo has an opportunity to differentiate its new system in a big way.
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.