Talking Point: The Wii U's 'Relevance' Is About Sales, Nintendo's Strategy Has Remained Consistent

It's tried to stick to a winning Wii formula

Last week was a bit grim for Nintendo and its followers, as it changed from an official stance of predicting a positive year to the polar opposite. Gone were optimistic projections aligned with profits, and in their place were lower numbers — distressingly so with Wii U — and predicted losses. Positive spin wasn't possible and Nintendo didn't even try it, with Satoru Iwata stating that there would be changes of strategy, that he planned to oversee them as President, and while admitting the company would continue to explore avenues such as smart devices — the company's been saying this for a while — it won't necessarily be a case of enabling Mario to move on smartphones.

Like any company that's had a major disappointment, changes will be afoot and we can expect an interesting few months — and beyond — as we see what Nintendo does next. We've seen the company take bold moves in the past, most recently when it drastically chopped the 3DS price in 2011 and, with that act, took plenty of heat but facilitated a recovery. Nintendo dropped its principle of hardware breaking even to bring the system down to a sustainable market value; its new price combined with major releases to increase its desirability. Calls for a similar-sized drop for Wii U — or another smaller one to add to that of Autumn / Fall 2013 — are not unreasonable in that sense, as Nintendo could aim to hit the sweet spot to increase interest. This would have to combine with games, but there is a 3DS template, nevertheless.

Sometimes bold decisions backfire, with one example being the call to stick to cartridges on the Nintendo 64 — less loading times than discs, but very expensive. Nintendo has misjudged marketplaces before, taken some serious licks, and then gone again. Case in point is the transition from GameCube to Wii, which brought Nintendo roaring back into the home console market.

Now let's think about the Wii in some broad terms. It was underpowered — in raw CPU / GPU / general graphics terms — compared to its rivals, it was sold at a price profitable to Nintendo and it created its own trends of third-party support. With some exceptions the system missed out on the majority of triple-A multi-platform titles over a number of years, simply due to the discrepancy in capabilities compared to Xbox 360 and PS3. It's easy to forget just how different the system was compared to its rivals: before Kinect and Move arrived its controls were unique, and it was definitively SD in a world that was moving onto HD.

Detractors used to carp about the Wii being GameCube 1.5, but from Nintendo's perspective that generation showed it that raw power wasn't necessarily the key to success — it was all about the concept. We would bet that you wouldn't have to go far in 2005 to find someone saying that Nintendo was doomed to fail with a motion-controlled, relatively modest piece of kit — their arguments wouldn't have been unreasonable, either. Yet it stuck, with products such as Wii Sports and Wii Fit capturing imaginations; it was also a cheaper, more family-friendly option.

The Wii U is now over a year old and, as all logical evidence makes clear, it's suffering through an entirely different and difficult lifespan. Aspects of its specifications were always inevitable, such as the step-up to HD, and Nintendo's hook this time around was to tap into a craze for tablet devices — here's the GamePad, a controller and touch screen, perfectly integrated with the system for dual screen gaming. The thinking behind it is clear, as any market research you'd care to read observes that families and individuals spend a lot of time staring at smart devices — the GamePad tries to tap into that modern trend through a central living room device. Again, though, like Wii, its capabilities in the raw matter of producing polygons and visual effects is — by relatively established consensus — somewhere between the last-gen systems and the latest offerings from Sony and Microsoft.

So the Wii and Wii U have obvious similarities.

  • Wii is weaker, in terms of graphical tech, than Xbox 360 and PS3. Wii U, likewise, with PS4 and One.
  • Both have unique control setups, compared to the standard controllers of their rivals.
  • Both are missing many of the biggest multi-platform games.

There are differences that have been major negatives for the Wii U, naturally. A few — though not all — include the price, as Nintendo's business model of seeking profits per unit meant that the Wii U was not as affordable in early days as Wii. Its original price reflected poorly against cheap PS3 and 360 models on the market, and the worst issue was that lightening didn't strike. The Wii concept sold a lot of pricey Balance Boards and plenty of the inexpensive actual systems, but the Wii U didn't have that immediate impact.

What's surprising is much of what's been said about Nintendo's 'strategy' is that it's changed since the glory days of Wii. Well, not really. Nintendo's been prioritising its own hardware designs and ideas over third-parties since the Nintendo 64 days, and it gave up on producing the most powerful machines with the Wii, at the latest. That's not to say that's a good thing, but Nintendo often makes adjustments to its strategy while sticking to core principles, even in 'dark days'. As we've highlighted in our article last week, too, the figures show that Nintendo's handheld market is the consistent area — now smaller with evolution in technology — as the console business is rather more boom and bust.

We'd highlight that the home console market is a cyclical business, too, with companies making mistakes, learning from them and improving second time around. Early in the PS3 / Xbox 360 battle Sony's system struggled due to its high price and Cell technology giving developers headaches — the 360 was cheaper and various games ran that bit better on its hardware. In latter years the PS3 has caught up, courtesy of some excellent exclusive software, rapid drops in price and various factors. Yet with PS4, Sony came in at the cheaper price and with hardware that bit more powerful and easy for developers. Microsoft has gone the other way, with a higher price — Kinect says hi — and examples where its games are at a lower resolution or not quite as fancy as on PS4. Sony made errors and has switched it up, and Microsoft switched its approach and is in a more equal fight with Sony's system from the get-go, with PS4 leading the sales race so far.

With each generation hardware companies, including Nintendo, look at their results and various trends and they make a pitch at glory. Nintendo nailed it with Wii, but a combination of factors have meant that the same success hasn't followed with Wii U. We can point to plenty of reasons for this, but that's the way it is. But this isn't new or shockingly different from past occasions where Nintendo has needed to reassess, it's just that the opinion around it is more abundant and louder — that's the internet.

It's interesting that some refer to the Wii U's discrepancies in raw power and third-party content as some kind of strategic failure — that overlooks years of the company's history. If the Wii U sells more — through potential price cuts, new SKU structures, more games, and/or a combination of all three — then we'll likely see some additional third-party efforts. It's very simple, when Nintendo consoles sell (Wii) some interesting third-party exclusives arrive, but not all of the big multi-platform games. When sales are disappointing, these third-party games are far less frequent.

Nintendo will assess and make moves to improve its Wii U prospects and, yes, will consider important lessons when moving forward with the home console, 3DS, external devices and its next hardware projects. Yet let's remember that the sticks that beat the Wii U are the same sticks that could apply to Wii and GameCube. The key differentiator is that Wii sold well, so the well-worn attacks existed but had less bite.

Nintendo's made mistakes recently and before, it will make them again. Yet it's not suddenly ignored third-party concerns or gone with a concept that has failed to capture the market — it's just done it again. Its actions to rectify and improve matters for months and years to come will define it, but the consumer market is complicated, and Nintendo unsurprisingly tried to replicate the Wii trick with the Wii U. It's a funny old world that's constantly evolving, however, and to date lightning just hasn't struck twice.