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Retail

Pachter: Price drop won't help Wii U

Pachter: Price drop won't help Wii U

Mon 15 Apr 2013 2:25pm GMT / 10:25am EDT / 7:25am PDT
RetailHardware

Analyst forecasts yet another bad month of sales in the US for Nintendo's console and says even a price cut wouldn't be enough to help

The NPD Group will report its US video game retail data this Thursday, and in a preview note Wedbush Securities analyst Michael Pachter commented that he's expecting Nintendo to post yet another weak month of Wii U sales. For the Wii U's fifth month on the market, he's forecasting that Nintendo sold just 55,000 units, which would represent a 17 percent decline month-over-month. Moreover, Pachter's expecting this slide to continue for Wii U, even if Nintendo chooses to implement a price cut.

"The only key hardware device to underperform our expectations was the Wii U," Pachter said of last month's numbers, "and its fortunes appear unlikely to improve for several months, even if Nintendo decides to drop price, as there are an insufficient number of core titles that are generating interest in the console. We think that core gamers are far more likely to turn their attention to the PS4 (due in the holiday season) and the next Xbox, which we believe will be unveiled before E3 and have a launch alongside that of the PS4, and believe that the long-term appeal of the Wii U will be severely limited by the perception that the PS4 and next Xbox will be much more powerful with greater online integration and multimedia functionality."

And if the pricing on the PS4 and next Xbox is reasonable, it could really put Wii U in a bind, Pachter added: "Should the new consoles from Sony and Microsoft be price competitive, we think that Wii U sales may continue to stagnate." In fact, Pachter believes that next-gen consoles are likely to be subsidized and will therefore look even more affordable to consumers.

"We think that the next-generation consoles will perform a wide range of multimedia functions. We should learn more in the coming months, but we expect the next Xbox to have an IPTV tuner that will allow an MSO to deliver services over the Internet outside of the MSO's regulated geographic boundaries. If we are right, any of Microsoft's MSO partners will have an incentive to subsidize the purchase of the next Xbox in exchange for a long-term service commitment (similar to the cell phone model). If the subsidies are steep, it is likely that the next Xbox will appear more affordable to many consumers than currently anticipated, and it may capture market share faster than many expect. We don't expect Sony to sit idly by watching, and believe that the PS4 will follow Microsoft's lead in short order, suggesting to us that next-generation consoles could have lower starting prices than any in history," he said.

As for March retail game sales overall, Pachter expects the numbers to be up slightly (just one percent) thanks to big AAA releases like Gears of War: Judgment, Tomb Raider and BioShock Infinite.

20 Comments

Morville O'Driscoll Blogger & Critic

1,576 1,419 0.9
Not wishing to dance on the grave of Nintendo (because I would be genuinely sad if they left the hardware business, even if I think they would prosper as software only), but...

Hopefully this means there's an increased chance of Deus Ex: Human Revolution Director's Cut coming to PC. :D

Posted:A year ago

#1

Private Industry

1,176 182 0.2
They must have made a huge amount of money with the Wii and the 3DS is selling. They wont be leaving even if the Wii U fails. They had 2 generations that didnt go for them as planed with N64 and GameCube and they came back from it. I'd say those failures where the reasons for them going the low spec route that gave them the success of the Wii. The questions would be if the Wii U failes would they go back to delivering consoles with high specs or not? I would like them make consoles that are not on equal grounds with 7 year old hardware.

Posted:A year ago

#2

Morville O'Driscoll Blogger & Critic

1,576 1,419 0.9
Mmmm... It would be really nice to see something along the lines of the SNES - something that beats the console hardware of the time, and delivers a broad range of top-notch games. Sadly, I can't see them making a lot of money from such a thing in the future; I think they're being bulled out of the market, and going for the high-spec home console market is now really risky. The new XBox and the PS4 are essentially PCs, and with the Steambox too, either a new high-spec Nintendo machine will be much the same, or it'll be really expensive to manufacture with custom hardware.

That said, I can see - just about - them continuing with portable hardware. There's still a demand for dedicated portable games machines, and they continue to innovate with controllers and UI. But even that would be a shame - I want to see a Metroid game with the flawless gloss of Tomb Raider or Bioshock: Infinite, not something on a teeny 3D screen. :(

Posted:A year ago

#3

Jim Webb Executive Editor/Community Director, E-mpire Ltd. Co.

2,270 2,439 1.1
Popular Comment
So Pachter expects sales to drop in March despite having 2 of the bigger game releases since the console launched? Not to forget that the Wii U saw a sales increase from Jan to Feb with no new games at all.

I really don't get this guy some times.

Posted:A year ago

#4

Art C. Jones Writer / Blogger

60 91 1.5
The sales drop in March is curious, I'd expect it sells more, but what is the period?
Does it include Easter?
(If so doesn't that guarantee more sales?)

I do agree that a price drop is a waste of time.
Nintendo needs more of their console sellers. Insert a Mario Kart + Smash Bros. and sales will improve.
Outside of downloadable titles, which honestly have been AWESOME, the WiiU software has been soft so far.
1-2 titles a month, few titles on the horizon (to the point that Nintendo did a PR to mention Disney Planes is coming to WiiU...seriously, a movie game gets a Press Release...from Nintendo!? That's a bad sign!)

It will be interesting to see how the other consoles do when released, I think PS4 does worse than WiiU and X720 does better b/c of the subsidized w/4 year live account sign-up. (I only assume MS will do something like this)

Too bad though, WiiU is the only console that is trying to do something different and long-term, more of the same with better graphics on the other consoles for me is a huge lose for the industry. WiiU offers more opportunities for interesting game play, but it's clear that the public has not yet embraced it. :(

Edited 1 times. Last edit by Art C. Jones on 15th April 2013 10:29pm

Posted:A year ago

#5

Paul Jace Merchandiser

935 1,410 1.5
I'm gonna guess that Pachter isn't too fond of Nintendo's latest console. But he's right, sales are pretty terrible at this point in time. They need to bring out the big guns. Until then we will keep hearing about how much worst sales get month to month.

Posted:A year ago

#6

Nicholas Pantazis Senior Editor, VGChartz Ltd

1,020 1,467 1.4
He's right about the price drop. It won't matter, software will. But predicting the future success and pricing of the PS4 and Xbox 720 vs the Wii U in the holiday is a bit silly. It's especially silly to predict deep subsidies, when we all know Sony can't afford that.

Posted:A year ago

#7

Paul Johnson Managing Director / Lead code monkey, Rubicon Development

880 1,291 1.5
Well, I have one going cheap if anyone wants to make an offer.

Posted:A year ago

#8

Stephan Schwabe Multichannelmanagement, Telefonica

74 34 0.5
Do we need a multimedia device that dose all the feat's with 100 watt?

Posted:A year ago

#9

Bruce Everiss Marketing Consultant

1,692 594 0.4
Dreamcast #2.
Could have the same effect on the business model of the manufacturer.
Having said that Sega haven't exactly set the world alight as a publisher despite amazing heritage IP.

Wii U is approaching 3 million sales. Dreamcast reached over 8 million.
This year smartphones will probably reach over 2,000 million.
If you want to reach people with a game then the world has changed.

Posted:A year ago

#10

Daniel Hughes Studying PhD Literary Modernism, Bangor University

436 496 1.1
Pachter speaking 8 days ago:
"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."
8 days ago Pachter suggested that the price cut WAS an important factor in how Wii U would sell. Now while I'm agreed software will be the real driver of any turn around Nintendo want to enact, a lower price point will help as well.

Oh, and Bruce, Dreamcast sold 10.6 million units and came from a company with one failed home console, two failed handhelds, and four failed hardware extensions in the preceeding five years. Comparisons between it and Wii U are absolute crap, and you are an intelligent enough man to know that. You'll also note that 3DS has managed to find an audience of 30 million and climbing, despite that huge mobile audience that exists.

Posted:A year ago

#11

Bruce Everiss Marketing Consultant

1,692 594 0.4
@Daniel Hughes

The problem is just how much are Nintendo losing on every Wii U that they sell?
They are subsidising for the first time in their history, throwing money at trying to get to critical mass. Something that might be impossible given the myriad better alternatives for a potential customer's entertainment spend.

Posted:A year ago

#12

Stephan Schwabe Multichannelmanagement, Telefonica

74 34 0.5
Nintendo sayd if thy sell one game the console breaks even.. I dont know anybody that did not buy at least one game for Wii U.

Edited 1 times. Last edit by Stephan Schwabe on 16th April 2013 11:08am

Posted:A year ago

#13
Expect a Wii-U II with all the features we wanted at the beginning added - and the inclusion of some interesting online elements.

Nintendo has form for this kind of approach (GameCube=Wii) - best to clean the mess up with some player bribery.

Now lets see the fan-boys paint a happy ending out of this train wreck!

Posted:A year ago

#14

Adam Campbell Associate Producer, Miniclip Ltd

1,178 967 0.8
A price drop would help but its probably not the focus area and the one that will see the biggest gains.

I still don't see the Wii-U as being the next Dreamcast and there is just so much that can go 'right' or be done to improve the success of the console between now and any time that would be a remote possibility.

Edited 1 times. Last edit by Adam Campbell on 16th April 2013 11:17am

Posted:A year ago

#15

Daniel Hughes Studying PhD Literary Modernism, Bangor University

436 496 1.1
@ Bruce

Well, neither of us can provide an answer to that--but with 3DS turning a profit per unit and selling increasing amounts of software at retail and crucially through digital, I doubt the amounts lost on Wii U are currently so huge as to make the device non-viable. Combined with the weakening yen and strengthening dollar, Nintendo's financials this year could actually post a small net profit, even if they are yet to return to operational profit. Though the weakened yen will also increase profits from the overseas sales of 3DS hardware and software, which could possibly even see a small operational profit.

The important point is that for the near future, Nintendo do have the financial resources to burn to turn Wii U around, or even go back to the drawing board and launch a new system.

Posted:A year ago

#16

Andrew Ihegbu Studying Bsc Commercial Music, University of Westminster

455 164 0.4
I think a major factor in Sega's dire straits was poor DRM depriving them of royalties, something you're all to familiar with. It's best selling game only sold 2.5m units compared to 10 million consoles. and it didn't even last a whole generation.

Funnily enough I think it's the polar opposite of the WiiU in a lot of ways. Incredible hardware (for the time) great games, but the standout problem with the both of them is the same. Poor launch. (Dreamcast was rushed out.)

Posted:A year ago

#17

Caleb Hale Journalist

155 231 1.5
Nintendo botched its head start with the Wii U. No price drop is going to help that, and after the 3DS, lowering the price of Wii U, would definitely give potential customers reason to hold off on buying Nintendo hardware products at launch. Even if it can produce a steady stream of the first-party titles everyone wants to play, at this point it's doing so simply to keep the installed consoles in use. With the buzz picking up for PS4 and the next Xbox, the Wii U is simply going to look like last year's model to the average consumer.

Posted:A year ago

#18

Jim Webb Executive Editor/Community Director, E-mpire Ltd. Co.

2,270 2,439 1.1
As expected, Pachter was wrong.

Posted:A year ago

#19

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