When Nintendo released its financial results recently, we highlighted the worryingly low projection for Wii U sales. While the 3DS is expected to sell around 12 million units over this fiscal year, Nintendo's estimate for its home console is just 3.6 million units — should that be accurate, the Wii U will have failed to reach ten million sales in around two and a half years at market.
With major releases such as Mario Kart 8 and Super Smash Bros. on the way, and with the Nintendo Figurine Platform set to make its début in late 2014, it's a number that doesn't inspire confidence. After multiple years of bold projections that weren't met, it was striking that Nintendo had swung towards safe numbers so drastically.
Naturally, shareholders at the investor Q & A queried this and, to a lesser extent, the 3DS figure that would result in its sales of the portable dropping a little from the previous year. Satoru Iwata highlighted that, after multiple years of missed targets, the company had laid out the minimum expected results for the home console.
We set the sales unit forecast of 3.60 million units of Wii U hardware as the target that we should at least reach by making the releases of two key titles for this fiscal year from the very popular, evergreen franchises that have been under development since before the launch of Wii U hardware, “Mario Kart 8” and “Super Smash Bros. for Wii U,” the pillars of our entire marketing strategy for this year. These two titles can be enjoyed alone or with others, and we believe they will encourage those who do not own Wii U hardware to purchase it.
...In setting our financial targets for this fiscal year, we have taken into account the fact that in the last fiscal year, we established a target of 100.0 billion yen in operating profit and set sales forecasts to achieve Nintendo-like profits, but we failed to show the results despite having worked hard to meet these goals, and Nintendo has now failed to meet its own financial forecasts for a few terms in a row, and in this sense, by trying to set rather conservative goals we are perhaps using conservative estimates about our unit sales. This does not mean that Nintendo 3DS sales will definitely fall this fiscal year when compared with the previous fiscal year. We have set our estimates for this fiscal year by considering the amount that we are confident we can reach, so it is my hope that we will also do our best with regard to Nintendo 3DS, too, and exceed its sales estimate. In order to show that Nintendo 3DS sales have not yet peaked out and are not to simply decline in the future, we want to exceed last fiscal year’s figures.
As for Wii U, we estimated 9.00 million units of hardware in sales in the last fiscal year, but many of you must be aware of the actual results, and the Wii U market has experienced a sharp downturn. In order to recreate momentum and sell 5.00 million or 10.00 million units of hardware annually, there are indeed challenges that we must overcome. And in the face of these challenges, announcing more optimistic figures before we actually release the Mario Kart and Super Smash Bros. titles to consumers, would not be compatible with our original stance to provide rather conservative figures, so once again we set our estimates by considering how much we could realistically hope to achieve with our software lineup. The fate of a video game system is often influenced greatly by the introduction of a single title. As many of you probably remember, before the release of the Pokémon game, Game Boy had been showing slow growth, and many people wondered whether it was the end of Game Boy. But the Pokémon game singlehandedly changed the landscape of the system, which then started to show the strongest sales in the lifecycle of the system. As I explained back in January, it is true that we cannot draw up a good business plan for Wii U by assuming that Wii U will sell more than Wii did. Therefore, we will need to think very carefully about the balance of revenue and expenses and try to operate by controlling overall costs. On the other hand, we do not believe that this year’s estimate of 3.60 million units of Wii U hardware will be the peak of its lifecycle, and we would like to work hard to make sure that we give sufficient momentum to the system so that we can expect good results in and after the next fiscal year, too. However, as for this fiscal year, as I explained before, the figures you see have been determined by rather conservative estimates.
Perhaps it's understandable that Nintendo is managing expectations, even if the degree of the "conservative" approach can be argued as too severe. Despite the narrow focus on these two titles Iwata-san has re-iterated that the company will "talk about other Wii U titles at E3", while "internal software development teams directed by Shigeru Miyamoto are committed to developing several titles that focus on offering unique experiences only made possible with the Wii U GamePad".
Are you pleased that Nintendo is keeping its goals for Wii U low in the hope of exceeding expectations, or are you concerned that it reflects a lack of confidence in the system's prospects this year? Let us know.