Roundtable: Is Nintendo sounding a retreat?
With a Wii U price cut and a DS which drops 3D, is Iwata backing down?
Nintendo dropped two pieces of news this week with the unveiling of the 2DS and a $50 price cut for the Wii U Deluxe Edition bundle, bringing it down to $300. The new handheld abandons the glasses-free 3D feature and clamshell case design of the 3DS, but brings the price down to $130 in the process. Meanwhile, the Wii U's price cut will be accompanied by a new bundle featuring a Legend of Zelda-themed GamePad and a digital version of the WindWaker HD remake included right out of the box.
Both made for big headlines, but will they lead to big sales? Will the price cut work considering the Wii U Basic Edition was already available for $300? Is customer confusion going to be an issue with the 2DS? Do you believe Nintendo's insistence that they aren't backpedalling on 3D? Which announcement will wind up being more significant for the company? The GamesIndustry International team weighed in on the news for this week's staff roundtable.
It would be redundant for me to say that the Wii U desperately needed a price cut. Now that it's finally got one, I do like its chances slightly better this holiday, especially when combined with Super Mario 3D World, Donkey Kong Tropical Freeze and Wii Fit U. It's too bad Mario Kart 8 isn't coming this holiday season, because to me, it's poised to move more Wii U hardware than any other game. Even in the demo I played at E3, it looked incredibly polished and fun with new gameplay mechanics. Unfortunately, Nintendo is not selling Wii U in a vacuum and consumers are going to be looking at Xbox One, PS4, tablets and other game-playing devices this Christmas. If the hype and purchase intent around next-gen consoles is as high as GameStop claims it is, Wii U is going to have a tough time, regardless of its slightly lower $299 price point.
Besides, price conscious parents are more likely to skip right past Wii U in favor of one of Nintendo's own handhelds. The new 2DS is likely to do gangbusters alongside Pokemon X and Y this holiday season. For $129, consumers can get a system that already has a wealth of great content - albeit now played without the 3D function. I have to agree with Brendan on that point, however; customer confusion is something that Nintendo is going to have to put considerable time into avoiding. Marketing will be key for solving this problem, but Nintendo's track record of late with marketing is pretty darn poor. The Wii U was terribly marketed, and even now with better software on the horizon I've yet to see Nintendo truly convey the value and appeal of the Wii U. Maybe they can do better with promoting 2DS.
At the end of the day, we all have to remember that Nintendo is Nintendo. The company isn't in any console or handheld race. It's racing against itself, and as long as it can boost its bottom line and post a healthy profit at the end of the year, shareholders will be happy, Iwata's job will be safe, and it ultimately won't matter one bit that Wii U sales are quickly lapped by the competition.
The Wii U will certainly do better at $299 than at $349, especially against a $399 PlayStation 4. Still, the main driver will be software, and Nintendo's got some strong offerings late this year and early next year. I don't expect a dramatic sales increase for the Wii U, though; the price cut still leaves it more expensive than an Xbox 360 or PS3. Looking ahead there's no reason to expect new must-have software every month or two. Nintendo alone can't produce Wii U titles at that pace, and third-party support is not strong and likely never will be.
"Looking ahead there's no reason to expect new must-have software every month or two"
The Wii U will sell better with this price cut and the more compelling software coming out, but it will never lead the monthly sales reports for consoles. The Wii U will probably establish a position as a strong alternative console for those gamers looking for family fun who aren't interested in shooters, RPGs, sims and sports.
The 2DS is an interesting strategy. The $129 price point will certainly be attractive and keep the overall 3DS momentum going. Marketing-wise, the naming is confusing and difficult to figure out, but that follows right in the footsteps of the Wii U. I don't think Nintendo will be able to turn the 2DS/3DS/3DS XL line into a juggernaut like previous handhelds. Continued pressure from smartphones and tablets will keep this line from becoming a superstar, but it should do quite well. If Nintendo can hit $99 with the 2DS for Christmas 2014, that would keep the line going strongly into the future.
I'm going to give Nintendo a small clap for the price cut and phasing out of the Basic Wii U unit. The cut puts the Deluxe on better footing against Sony's PlayStation 4, but still leaves the system almost $100 more than the new 12GB PlayStation 3. The price cut and Super Mario 3D World will move some systems this holiday, but not as much as if Mario Kart 8 had joined the party. Together it would've been a repeat of the price cut/Mario Kart 7/Super Mario 3D Land combo that pulled the 3DS out of its slump. As it stands, Mario 3D World is all that's stopping parents from looking at the wide variety of PS3 titles, that $200 price tag, and calling it a day.
The 2DS is the real announcement that happened yesterday. The portable is an ugly little thing, but at $129 and next to Pokemon X/Y, it won't matter. It's not as portable as the 3DS, but at that size it'll certainly fit into kids' backpacks just fine.
Consumer confusion could be an issue, but I think removing the old 3DS and leaving just the 2DS and 3DS XL would help. The 2DS instantly looks like the system you buy for your kids, while the 3DS XL competes directly with the PlayStation Vita. The $30 difference between the 3DS and 3DS XL just looks odd, while the $70 between the 2DS and XL just feels right.
I'm torn on these announcements. The Wii U price drop is undeniably a step in the right direction for the system, but it's a very, very small step. The Wii U Basic set was already available for $300, and savvy shoppers have been able to find even the Deluxe system for that price as retailers have looked to move the product from shelves. The addition of a few more GB of internal memory and an HD remake of a game with an art style that still looks perfectly good in standard-definition is not exactly going to get ambivalent consumers to finally pull the trigger on a purchase. The Wii U would likely be struggling no matter the asking price, as Nintendo has done a dreadful job giving people compelling software reasons to pick it up. This month's release of Pikmin 3 was the first time I purchased a Wii U game since launch. It's a good start, but Nintendo still has a long way to go on the software front.
"As for the 2DS, that system is a very tangible backpedalling on the value of glasses-free 3D."
As for the 2DS, despite Nintendo's protestations to the contrary, that system is a very tangible backpedalling on the value of glasses-free 3D. Much like the never-released Wii Vitality Sensor, Nintendo promised creative developers would find excellent new ways to use it, but those innovations never materialized. (Sadly, the GamePad may belong in that last sentence as well. We'll likely find out for certain once Nintendo releases a few more games for it.) It was essentially a vestigial organ that was hindering efforts to lower the hardware cost, so Nintendo removed it, no matter how much pride they had to swallow in the process. The result is that they now have an affordable option for parents who don't feel comfortable giving their kids access to expensive tablets with app stores that double as free-to-play minefields.
I'm generally in favor of the move, although I am slightly concerned about customer confusion. Will parents buying 2DS systems in an aisle choked with 3DS games fully understand that one works on the other? Will 3DS packaging be changed to include the 2DS logo somewhere? The company seemed to deal with these issues effectively enough in selling the DS Lite, DSi, Game Boy Pocket, and so on, but this time the name of the system is directly contradicting a primary feature of the software platform. I can't help but think it will be an issue.
Satoru Iwata's mantra-like statements in the last months were absolutely appropriate: The reason for the slow sales of Nintendo Wii U is not pricing, it is the lack of software which shows off the unique nature of the system. So far, people don't see enough reason for buying a Wii U and even in a price-aggressive and competitive retail landscape like some of the European markets, a lower price point wonīt save a system without compelling games.
"people don't see enough reason for buying a Wii U - even in a price-aggressive and competitive retail landscape like some of the European markets"
The timing of the price-cut is hard to understand: for the first time in almost a year Nintendo has a very strong lineup with eight big titles for the holiday season - including some long awaited system-sellers like The Legend of Zelda: The Wind Waker HD. However, retail canīt be happy with the inventory turnover of the system. During Gamescom, for example, German retail chain Saturn sold the 32GB Wii U with Nintendo Land and New Super Luigi U in the stores in Cologne for only 299 Euro - almost 100 Euro below the usual pricing. This educates potential customers that a price drop is actually possible and may prevent many from buying the system now. It is obvious that retailers are giving Nintendo a hard time and the company probably decided to concede before predatory pricing on a local basis turns into a wildfire.
However, the downgrade of the Nintendo 3DS seems to be an even stranger decision. With a global install base of more than 32 million units, a cosmetic redesign of the hardware could have been a good idea - actually extending the lifecycle. We have seen this with several Game Boys, the DS, and also the Xbox and the PlayStation. But Nintendo decided against the fashion path. Nintendo decided to kill the 3D-functionality and by association the unique sales point of the hardware. This turns the handheld effectively into an almost 10 year old gaming system anybody can buy much cheaper on ebay.