Wii U launch disappoints, says analyst

Sterne Agee industry watcher says Nintendo's latest hasn't lived up to already-low expectations

The Wii U's first holiday season has been a disappointment, according to Sterne Agee's Arvind Bhatia. In a note to GameStop investors previewing the company's holiday sales report next week, Bhatia said Nintendo's new console hasn't been living up to expectations.

Bhatia said Sterne Agee checks suggested the Wii U has been easily available at retailers, with the $349 Deluxe bundle proving more popular than the $299 Basic configuration. He added that the Wii U's software attach rate has been poor as well.

"Our conclusion is the Nintendo Wii U launch has been slightly disappointing," Bhatia said. "Keep in mind investor expectations with respect to Wii U were already fairly low going into the launch."

As for GameStop's holiday haul, Bhatia expects it to be in line with the company's same-store sales guidance between -7 percent and +1 percent. He said that Call of Duty: Black Ops II has been tracking below last year's Call of Duty: Modern Warfare 3, but added that Assassin's Creed III and Halo 4 have performed well for the retailer. Looking ahead, Bhatia expects GameStop to benefit from an industry-wide rebound driven by easy comparisons, more high quality games, and new consoles. Bhatia said there was a high probability Microsoft and Sony will launch their new systems in 2013, with October and November given as a likely launch window.

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Latest comments (6)

Chris Madsen5 years ago
I didn't buy mine in GameStop... cheaper elsewhere.
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Richard Gardner Artist, Crytek5 years ago
I'm really interesting to see where the Wii U goes from here, I have a sneaky suspicion Nintendo are holding a lot of there cards back to compete with 2013 E3 announcements. If Nintendo had already confirmed Zelda, Mario, Metroid etc... What would they have to compete with Microsoft and Sony this year?

When Sony and Microsoft launch there consoles they will be low on software, but at the same time Nintendo will be getting all the major hits into stores. Its going to be an interesting few years. I don't think Nintendo are going to come out on top, but I feel they are playing there cards as best they can right now.
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Daniel Hughes Studying PhD Literary Modernism, Bangor University5 years ago
I can understand investor expectations around Wii U being low, as Wii U is never going to be able to beat the initial two year sales curve of the Wii, which was and remains unprecedented for a gaming device, but are these "slightly" disappointing sales still disappointing versus Nintendo's own expectations? That's the key question. It'll do far more PR damage to Nintendo if they have to revise their own estimations down again because they can't hit their targets. A key problem with 3DS has been that Nintendo have consistently set the bar too high. Expecting 3DS to significantly outpace its enormously successful predecessor at a time of global recession, against incredibly tough and incredibly varied competition, has been sheer madness, and it's taken some of the shine off 3DS's relative success.

As it is, Wii U's initial shipments to retailers are forecast to be below (slightly, I think) the Wii's shipments over the comparative time period. Are sales to customers so low as to call into question Nintendo's ability to hit their sales to retail target? It's very difficult to ascertain what's actually happening here. It's good to see, however, this is simply reported for what it is--launch data--and not being reported as indicative of the system's long-term health. And as Richard says, there's the feeling Nintendo are holding back the big guns for when their rivals come to market. Nintendo's attention grabbing blockbusters simply haven't materialised yet, and that's not because they don't exist, it's most likely because late 2013 and 2014 are the target windows for those releases.
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The only thing that matters in the short term is whether they hit the 5.5m sales by the end of the FY.
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Nick Parker Consultant 5 years ago
Very astute Michael. The 5.5 target to be achieved by the end of March '13 was at first thought to be production driven and would lead to significant out of stocks. With less than 300k sold through in Europe by end 2012, less than 700k in Japan and an early estimate of less than one million in USA, that 5.5m is looking optimistic at this stage. This may have been in the business plan but I have another concern and that is of an imbalance of marketing/stock on a regional basis, leaving Europe with lower opportunity in this launch period.
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David Radd Senior Editor, IndustryGamers5 years ago
I think it's clear that the roadmap is different than with the Wii. Not to say the primary audience is different, but clearly the curve for the Wii U will be different than its predecessor. They certainly need some more quality first party launches to drum up some interest because many prominent third-party releases this year (BioShock Infinite, Tomb Raider, GTA V) are not coming to Wii U as of yet.
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