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[Sectorseven]

Iwata thought the Wii U was going to sell 5.5 million units in it's launch year. It only sold 3.45 million.

Then Iwata said that Wii U's second year was going to be the one where the booster rockets were really going to kick in, and predicted that it would sell 9 million in it's second year, for 12.45 million total. Sales were low all year, but right before Nov/Dec (Nintendo's best selling period), Iwata reiterated that everything was going smoothly. The Wii U stalled out over the holiday and ended up selling 2.72 million in it's second year (6.17 total), which was worse than even it's underperforming launch year.

Iwata shut down production and put out the fire, but production doesn't start and stop on a dime, these things take time to get up to speed and you've made all sorts of contracts with suppliers. Since Wii U crashed into Holiday 2013 anticipating 12.45 million in sales, it stands to reason that Nintendo bought 12 million units or more worth of various parts before it had to shut down. That's why people think Nintendo is sitting on enough parts to make 12-15 million Wii U's.

Nintendo took a big loss in 2013 because they had to pay for those unused parts, but since then they've been able to go back to assembling Wii U units and calling that profitable.

The Wii U was unprofitable before it crashed. It started out as Nintendo's least profitable system by far, and it's bad first year forced Nintendo to make a price drop they didn't want. The Wii U apparently blows a lot of money on the GamePad and overall the system wasn't designed to quickly drop in price like the GameCube was. It was designed to... I dunno. Even Nintendo's first party studios never asked for the GamePad. Such a senseless design.

Anyways, Nintendo toughed it out, and kept throwing great games at the system, one after another, even announcing more games than they originally signed up for (when they could've been spending that effort on the 3DS), and now they seem to have one or two years of life left in the Wii U, and they seem to be one or two years away from selling 12-15 million consoles at near-full price.

If Nintendo drops the price of the Wii U to try and sell more units faster, they're going to lose their profit margin, and once they run out of spare parts, they're going to have to find new suppliers who can make compatible parts, which probably means a "slim" redesign, but they're going to have to put money on the table again, probably push Wii U back into a money-losing position, and bet that the Wii U has more life left in it. Which is crazy, because Nintendo has almost gotten most of their money back from the last time they bet money on Wii U, and if the price cut and slim redesign don't work, Zelda won't be able to pull Nintendo's butt out of the fire. Zelda has it's work cut out for it as-is. And if Zelda fails, that's when they fall back on the price drop.

The new narrative for Wii U's success is how much fun it is and how many great games it had on it. It's never going to reach GameCube's numbers, so it's pointless to get worked up about how close it can get to them.

Are the PS4 and Xbone prices irrelevant to them at this point? It's entirely possible the next holiday season could have $299 bundles or even cheaper.

 

[Jigorath]

I think one should expect a 3DS & Wii U successor to be announced at E3 2016, launched in early November.

FY16 will be about QOL and improving margins. Wii U is dead after Zelda.

Nintendo has never released a new handheld and console at the same time.

 

[vinnygambini]

Nintendo has never released a new handheld and console at the same time.

There's a first for everything!

 

[nckillthegrimace]

Nintendo has never released a new handheld and console at the same time.

GameCube and GBA were the same year. That's pretty close.

 

[hatchx]

The new narrative for Wii U's success is how much fun it is and how many great games it had on it. It's never going to reach GameCube's numbers, so it's pointless to get worked up about how close it can get to them.

This is a good post and I definitely agree, though I do think a redesign SKU might be in the cards to potentially boost it a bit for Zelda.

But at the end of the day you are right. Nintendo doesn't want to go down in history looking at the WiiU like a dismal failure that they gave up on (like virtual Boy, which is barely mentioned by Nintendo), they want to look back at the WiiU for it's collection of great games.

I wouldn't be surprised if in the future, when Nintendo talks about their 'Wii' sales, they lump Wii's hardware and WiiU's hardware number's together, and act like the WiiU was simply a less-than-successful expansion to the Wii, rather than the massive disaster of a console it has been.

 

[CosmicQueso]

Nintendo has never released a new handheld and console at the same time.

Doing what they've always done will only hasten their decline.

They have to do something different. I still think it's one device but hey, guess we'll find out.

 

[Refreshment.01]

Why are you so sure they're separate systems? Rumors have been going on for some time that it might be one device that acts as both.

Already answered by various posters, but no, Iwata's statements point to the opposite actually. Two systems sharing an OS and similar dev environment.

Iwata is aiming for "Nintendo-like" profits in 2016 and everything he has said points to that being a big year for Nintendo so I would expect we get at least one platform next year.

Isn't that what my post sugested in the first place? But having both sytems close to each other? i think it is out of the question.

There's a first for everything!

If it makes sense? yes, however in this case it doesn't.

Doing what they've always done will only hasten their decline.

They have to do something different. I still think it's one device but hey, guess we'll find out.

Would one device be cool? yes, kind of maybe. Does it make sense to them? No. i would love to hear you explain how it would be a good decision from their point of view.

Also they have been playing the "different card" as you suggest in many occasions. It's safest console ever was probably the GC, and they weren't happy with the results.

 

[Sandfox]

Already answered by various posters, but no, Iwata's statements point to the opposite actually. Two systems sharing an OS and similar dev environment.

Isn't that what my post sugested in the first place? But having both sytems close to each other? i think it is out of the question.

If it makes sense? yes, however in this case it doesn't.

Would one device be cool? yes, kind of maybe. Does it make sense to them? No. i would love to hear you explain how it would be a good decision from their point of view.

I wasn't disagreeing with you. How close their platforms launch close to each other is up in the air IMO.

 

[CosmicQueso]

Well it's speculation all around at this point.

The Revolution wasn't expected by anyone before it's debut. I expect them to have something of similar impact ready, or it just won't matter what they do.

 

[ZSaberLink]

Going with that, well then if the new platform is to run on a family of systems, wouldn't they all be released at the same time?

iPhones & iPads were rarely released at the same time (they were 6 months off for the longest time), so I'm not sure why folks just expect Nintendo to release things at the same time.

Well it's speculation all around at this point.

The Revolution wasn't expected by anyone before its debut. I expect them to have something of similar impact ready, or it just won't matter what they do.

That's the main thing thankfully. Nintendo can surprise everyone at times, and hopefully their current situation will force them to put out their best. Wii U / 3DS were definitely not their best in many ways (hardware, software release schedule, etc.).

 

[shinra-bansho]

Expected releases in CY2016 is borne out of necessity of release, not out of mimicking Apple.

They have a waning 3DS, and a zombie Wii U.
Pushing either of those beyond FYE3/17 and into FYE3/18 simply doesn't seem tenable.

The question should be more whether they can practically do so.

 

[Vena]

The question should be more whether they can practically do so.

Handheld should certainly be reasonable, particularly if they follow the ARMv8a approach with AMD where they'll get cheap production since AMD will do just about anything for revenue at this point.

Not producing PPC and paying IBM through the nose for it on expensive, limited die sizes will likely save them a good bit of money too.

 

[Chmpocalypse]

What's good is that it shows Nintendo have its own market. They can be autonomous forever (If they play their cards right). They don't need the rest of the industry.

Hey, there's nothing wrong with a lucrative niche market!

 

[AniHawk]

Expected releases in CY2016 is borne out of necessity of release, not out of mimicking Apple.

They have a waning 3DS, and a zombie Wii U.
Pushing either of those beyond FYE3/17 and into FYE3/18 simply doesn't seem tenable.

The question should be more whether they can practically do so.

i think the best thing to do is to keep an eye on their development teams. monster has been relegated to making ports of things. next-level hasn't done anything recent and they seem the best kind of people to make a smaller-budget console game while nintendo's internal development studios work on the next big thing.

2016 should be their next handheld. 2016 is also the 20th year of pokemon. do they use a modified gen vi engine and do a re-remake of pokemon red/green for a handheld launch? other companies who have been relatively silent are retro and ead tokyo. tokyo will be three years without a game in 2016, and retro had essentially finished their game in 2013, so they're in the same boat. the 3ds right now seems to be third-party games, remakes, and intelligent systems, which was a very gba way of things.

and then 2017 is probably mario kart 9, whatever that will be. if the splatoon guys won't be doing animal crossing for the wii u, they will probably be doing animal crossing for the next handheld too.

none of this accounts for the space to do a wii u successor. i don't think there will be a traditional one though. it does seem pretty unlikely that nintendo would have a new home box come out the same time as a new handheld (and those platforms play pretty much the same games), but it also seems unlikely they'll keep the wii u around for a lot longer to give its successor its own library.

i'm in the 'nintendo os' camp though, with the belief that dedicated hardware is increasingly unimportant, especially for how they need to operate going forward, and what they can get out of having a unified library. it's the only way i can make sense of them making so many wii u games (even if they're low budget), still announcing 3ds stuff, and be making games for next-gen. if they try to spin all four plates again like last gen, each system will be having a dry spell. again.

 

[vinnygambini]

i think the best thing to do is to keep an eye on their development teams. monster has been relegated to making ports of things. next-level hasn't done anything recent and they seem the best kind of people to make a smaller-budget console game while nintendo's internal development studios work on the next big thing.

2016 should be their next handheld. 2016 is also the 20th year of pokemon. do they use a modified gen vi engine and do a re-remake of pokemon red/green for a handheld launch? other companies who have been relatively silent are retro and ead tokyo. tokyo will be three years without a game in 2016, and retro had essentially finished their game in 2013, so they're in the same boat. the 3ds right now seems to be third-party games, remakes, and intelligent systems, which was a very gba way of things.

and then 2017 is probably mario kart 9, whatever that will be. if the splatoon guys won't be doing animal crossing for the wii u, they will probably be doing animal crossing for the next handheld too.

none of this accounts for the space to do a wii u successor. i don't think there will be a traditional one though. it does seem pretty unlikely that nintendo would have a new home box come out the same time as a new handheld (and those platforms play pretty much the same games), but it also seems unlikely they'll keep the wii u around for a lot longer to give its successor its own library.

i'm in the 'nintendo os' camp though, with the belief that dedicated hardware is increasingly unimportant, especially for how they need to operate going forward, and what they can get out of having a unified library. it's the only way i can make sense of them making so many wii u games (even if they're low budget), still announcing 3ds stuff, and be making games for next-gen. if they try to spin all four plates again like last gen, each system will be having a dry spell. again.

That's what I am thinking as well. 3DS' successor should be out in Q3 FY17.

For first-party content, I think one might be looking at a new 3D Mario & Pokemon Red/Blue cross-gen (3DS/4DS) with enhanced visuals + features.

To bring in the core as well, we might be looking at another situation a la Zelda: Twilight Princess with the launch of the Wii: Metroid (WiI U/4DS) or FE X SMT (Wii U/4DS).

 

[CosmicQueso]

Nintendo can surprise everyone at times, and hopefully their current situation will force them to put out their best. Wii U / 3DS were definitely not their best in many ways (hardware, software release schedule, etc.).

Agreed. That's why I've been of the opinion that these prognostications of split releases on certain established timelines may be broken. They are very smart at Nintendo, even if they sometimes disappoint. They must realize doing more of the same is a losing proposition.

 

[Turrican3]

I'm honestly curious about why people think a simultanous launch of nextgen handheld and home would be a bad idea.

If we assume the systems are going to share a huge chunk of the library (bar some exclusives that might make sense leaving home or portable-only maybe?) and - on the other hand - that is quite reasonable to believe there isn't going to be a 100% overlap between home and portable users... what would Nintendo gain from having the two - or more... - systems have a, let's say, 6+ month gap between each release?

I mean, if the vast majority of the nextgen software ecosystem is going to be shared, one might argue that, in a way, a simultaneous launch would be somewhat akin to having two SKUs.

 

[idwl]

I'm honestly curious about why people think a simultanous launch of nextgen handheld and home would be a bad idea.

If we assume the systems are going to share a huge chunk of the library (bar some exclusives that might make sense leaving home or portable-only maybe?) and - on the other hand - that is quite reasonable to believe there isn't going to be a 100% overlap between home and portable users... what would Nintendo gain from having the two - or more... - systems have a, let's say, 6+ month gap between each release?

I mean, if the vast majority of the nextgen software ecosystem is going to be shared, one might argue that, in a way, a simultaneous launch would be somewhat akin to having two SKUs.

Launching a console Is a huge cost, releasing both at the same time would be very risky for Nintendo. Plus it would decrease sales of each one , I'm a Nintendo fan but I wouldn't be able to buy both at once if they launched simultaneously. Look at apple even they don't announce and release their iPhone and ipads at the same time .

 

[Turrican3]

Plus it would decrease sales of each one

But would they?
Average user overlap is a major factor here I think...

I'm a Nintendo fan but I wouldn't be able to buy both at once if they launched simultaneously.

Neither would I, probably.

But I'm already anticipating the possibility of going home-only for nextgen if they really can get controls right and have something like 90% of the software shared with the portable(s) platform(s).

You might argue that this way Nintendo sells less hardware (I usually buy both home and portables), but I think this would be likely offset by better software sales... this is their ultimate goal I believe: improve tie ratio (and also lessen droughts)

Needless to say, I expect this working both ways for people who might choose to stay portable-only.

 

[FZZ]

Iwata thought the Wii U was going to sell 5.5 million units in it's launch year. It only sold 3.45 million.

Then Iwata said that Wii U's second year was going to be the one where the booster rockets were really going to kick in, and predicted that it would sell 9 million in it's second year, for 12.45 million total. Sales were low all year, but right before Nov/Dec (Nintendo's best selling period), Iwata reiterated that everything was going smoothly. The Wii U stalled out over the holiday and ended up selling 2.72 million in it's second year (6.17 total), which was worse than even it's underperforming launch year.

Iwata shut down production and put out the fire, but production doesn't start and stop on a dime, these things take time to get up to speed and you've made all sorts of contracts with suppliers. Since Wii U crashed into Holiday 2013 anticipating 12.45 million in sales, it stands to reason that Nintendo bought 12 million units or more worth of various parts before it had to shut down. That's why people think Nintendo is sitting on enough parts to make 12-15 million Wii U's.

Nintendo took a big loss in 2013 because they had to pay for those unused parts, but since then they've been able to go back to assembling Wii U units and calling that profitable.

The Wii U was unprofitable before it crashed. It started out as Nintendo's least profitable system by far, and it's bad first year forced Nintendo to make a price drop they didn't want. The Wii U apparently blows a lot of money on the GamePad and overall the system wasn't designed to quickly drop in price like the GameCube was. It was designed to... I dunno. Even Nintendo's first party studios never asked for the GamePad. Such a senseless design.

Anyways, Nintendo toughed it out, and kept throwing great games at the system, one after another, even announcing more games than they originally signed up for (when they could've been spending that effort on the 3DS), and now they seem to have one or two years of life left in the Wii U, and they seem to be one or two years away from selling 12-15 million consoles at near-full price.

If Nintendo drops the price of the Wii U to try and sell more units faster, they're going to lose their profit margin, and once they run out of spare parts, they're going to have to find new suppliers who can make compatible parts, which probably means a "slim" redesign, but they're going to have to put money on the table again, probably push Wii U back into a money-losing position, and bet that the Wii U has more life left in it. Which is crazy, because Nintendo has almost gotten most of their money back from the last time they bet money on Wii U, and if the price cut and slim redesign don't work, Zelda won't be able to pull Nintendo's butt out of the fire. Zelda has it's work cut out for it as-is. And if Zelda fails, that's when they fall back on the price drop.

The new narrative for Wii U's success is how much fun it is and how many great games it had on it. It's never going to reach GameCube's numbers, so it's pointless to get worked up about how close it can get to them.

You've made similar posts like this in the past but where's your proof, you say these things as if they are leaked information but it just seems like you're talking out of your ass and making assumptions based off of target goals and Nintendo missing profit margins. In reality the resurrection of 3DS and the loss they took from that along with the huge R&D costs that increased every year makes much more sense than the stuff you've been posting.

 

[Cheerilee]

You've made similar posts like this in the past but where's your proof, you say these things as if they are leaked information but it just seems like you're talking out of your ass and making assumptions based off of target goals and Nintendo missing profit margins. In reality the resurrection of 3DS and the loss they took from that along with the huge R&D costs that increased every year makes much more sense than the stuff you've been posting.

How does saying things like "it stands to reason that people think" when explaining why people (like me) seem to think that Nintendo's sitting on a hardware stockpile, equate to "talking out of my ass"?

And what does a loss due to the resurrection of 3DS (?) or R&D costs increasing every year, have to do with anything I said?

Anyways, because I was bored.

January 2014
http://www.vg247.com/2014/01/28/sony-to-buy-nintendo-dram-manufacturing-plant-for-¥7-billion-rumour/

Sony is reportedly in the final stages of acquiring the semiconductor plant that currently produces Nintendo’s DRAM chip, currently found within Wii U consoles.

At present, the plant manufacturers several components, including the Wii U’s DRAM chip, but reports suggest that Sony will us the site to boost its CMOS smartphone sensor output by 30%.

Nintendo is yet to comment on the reported acquisition, and hasn’t confirmed a new manufacturing partner as yet, but alleged stockpiles of the DRAM chip are said to act as a buffer against any shortage.

April 2014
http://www.nintendo.co.jp/ir/en/library/events/140508qa/index.html

With respect to the impact of Wii U hardware sales on profit and loss, in order to sell 3.60 million units, we have to produce some more hardware units on top of our current hardware inventory. However, since the loss arising due to the hardware production costs being higher than our trade price was taken into account in the previous fiscal year, you could assume that there will be almost no loss this fiscal year for the sales of the 3.60 million hardware units.

Production was shut down and restarted, and 2014 losses were already accounted for on 2013's balance sheet.

I did make a mistake in saying that Nintendo paid for the parts, and now they're paying for assembly, because Nintendo is apparently counting parts and unsold inventory as "assets", and only counting them as a loss whenever they mark down the price or give up on trying to sell them.

 

[maxcriden]

Not sure if this was posted yet:

Gamasutra Feature: Nintendo Climbs the Digital Hill

--

CNBC: Weak Yen to buy Nintendo time, for now

Coming from CLSA analyst Atul Goyal...

- Nintendo's "core business is in bad shape and worsening"
- biggest worry is the decline in sales of 3DS
- 3DS has traditionally "kept Nintendo from large losses"
- Wii U is the "weakest console in the history of Nintendo, and it is getting worse"

Coming from Barclays analyst Yuki Okishio...

- "[Right now] there's nothing to be done – we just have to wait and hope the next generation consoles will be blockbuster hits."

More at the links above. Found both on GoNintendo.com, so they get a shout-out, too.

 

[jvm]

Not sure if this was posted yet:



Gamasutra Feature: Nintendo Climbs the Digital Hill

Thanks for this. I'm here if people have questions.

 

[gamergirly]

I think one should expect a 3DS & Wii U successor to be announced at E3 2016, launched in early November.

FY16 will be about QOL and improving margins. Wii U is dead after Zelda.

Um......no

 

[ZSaberLink]

Not sure if this was posted yet:



Gamasutra Feature: Nintendo Climbs the Digital Hill

Thanks for this. I'm here if people have questions.

@JVM, do you have a graph without the 12 month TTM? Also, is this just digital in general? Or is it only digital sales of retail games? I'm assuming the former right?

 

[jvm]

@JVM, do you have a graph without the 12 month TTM? Also, is this just digital in general? Or is it only digital sales of retail games? I'm assuming the former right?

To my knowledge, Nintendo does not split out the digital of retail games from digital overall.

Yes, I can make the graph you requested. I will try tonight.

 

[shinra-bansho]

Interesting article as always jvm; although wondering if you considered at all the changes in total software revenue (which could make proportional changes in digital more pronounced) and exporter-favorable exchange rates that have been discussed in the thread, and the impact on those curves?

 

[jvm]

Interesting article as always jvm; although wondering if you considered at all the changes in total software revenue (which could make proportional changes in digital more pronounced) and exporter-favorable exchange rates that have been discussed in the thread, and the impact on those curves?

No. I literally have time for quick rundowns and that's it nowadays. Sorry. Happy to provide my data to anyone who wants to chip in.

 

[Vena]

Interesting article as always jvm; although wondering if you considered at all the changes in total software revenue (which could make proportional changes in digital more pronounced) and exporter-favorable exchange rates that have been discussed in the thread, and the impact on those curves?

I wish we could see it split between 3DS and WiiU as I suspect that most of the growth would actually be on the 3DS with the various new programs that Nintendo has launched + I believe a mobile platform would be more conducive to such content consumption as well as the wealth of indies that are entirely digital but still fight over the same pocket of money as retail games. (Also the WiiU's paltry size limitation.)

 

[1st Course]

Not long ago Iwata talked about plans for console specifically designed for emergent markets. Said they are also studying Chinese market and trying to figure out how to break through the market barriers.

http://www.reuters.com/article/2014/05/08/us-nintendo-emergingmarkets-idUSBREA4703U20140508

Wonder whatever happened to that.

 

[SuperLeviathan]

For stuff like Mario Kart and Smash, they could make the exclusive content of each version unlockable by owning them both.

Sort of a modified version of what they're doing with Mewtwo. They'd be selling two versions of the same game, but would give an incentive for buying both versions.

 

[Here For The Free Feed]

I wouldn't be surprised if in the future, when Nintendo talks about their 'Wii' sales, they lump Wii's hardware and WiiU's hardware number's together, and act like the WiiU was simply a less-than-successful expansion to the Wii, rather than the massive disaster of a console it has been.

found this interesting, one of the problems they faced was people not knowing the difference between wii & wiiu or thinking the wiiu was an extension of wii.

i can totally see them saying this in the future 'the wii series of consoles sold over 100m'

 

[jvm]

@JVM, do you have a graph without the 12 month TTM? Also, is this just digital in general? Or is it only digital sales of retail games? I'm assuming the former right?

Sorry, can't make a graph this moment, so here is raw data.

Period End	Digital
03/31/07	￥2.36B
09/30/07	￥3.50B
03/31/08	￥4.31B
09/30/08	￥4.49B
03/31/09	￥5.10B
09/30/09	￥5.68B
03/31/10	￥6.24B
09/30/10	￥3.68B
03/31/11	￥4.31B
09/30/11	￥3.38B
03/31/12	￥4.42B
06/30/12	￥2.30B
09/30/12	￥2.80B
12/31/12	￥6.03B
03/31/13	￥5.30B
06/30/13	￥5.70B
09/30/13	￥5.70B
12/31/13	￥6.60B
03/31/14	￥6.00B
06/30/14	￥5.00B
09/30/14	￥5.70B
12/31/14	￥10.40B

NOTE: Before 06/30/2012 the results were every 6 months, not every quarter. I used ImageJ to extract my estimates for those six-month periods from Iwata's investor presentation graphs.

 

[Turrican3]

i can totally see them saying this in the future 'the wii series of consoles sold over 100m'

Wii alone has already passed 100M sales though... they might want to group sales like that to somewhat hide WiiU's awful numbers.