Nintendo CEO: 'We Are to Blame' for Poor Wii U Sales
While the Wii U hasn't lived up to sales expectations and some important video game publishers have severely pulled back their support of the company, Nintendo's global CEO isn't looking to shift blame.
Unlike many executives who might obfuscate the issue with corporate doublespeak or finger-pointing, Satoru Iwata is blunt in his assessment of the company's recent troubles.
"We are to blame," he said. "We relaxed our [marketing] efforts, so the consumers today still cannot understand what's so good and unique about the Wii U. Because we're always trying to be unique, it takes some energies on our side to [make] people understand the real attractions about whatever we are doing."
Nintendo has faced this sort of hurdle before. While the Wii is part of the gaming vocabulary today, it was a concept so revolutionary when it was unveiled eight years ago that the company had to teach players how to use it.
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That campaign, obviously, worked—with the Wii going on to sell roughly 100 million units worldwide. A big part of that early success came courtesy of "Wii Sports," an included game that showcased the platform.
To date, the Wii U doesn't have that sort of flagship title. And, as a result, said Iwata, it's harder to get people to even try the system.
"We have been unsuccessful in coming up with one single software with which people can understand, 'OK, this is really different,'" he said.
"As long as people have hands-on [experience], they can appreciate the value of the Wii U, but because there's not software that's simple and obvious for people as 'Wii Sports' for the Wii, potential consumers do not feel like trying the Wii U. Our challenge today is with the software lineup we are introducing now, we have to encourage [people] to experience the Wii U in the first place."
In its first five months, the Wii U sold 1.1 million units— compared with 2.1 million Wiis when that system came out. To put those numbers in perspective, in the first three months of 2013—without holiday sales to boost it—the eight-year old Xbox 360 sold 844,000 hardware units—75 percent of the Wii U's life-to-date numbers.
The months following the Wii U launch saw a dearth of games, which is another big reason the system has undersold so dramatically. Nintendo, when it introduced the system, had vowed to keep a steady flow of first-party titles, but found itself unable to do so.
The problem, said Iwata, was the production crunch that came toward the end of the Wii U's development. In order to get the console out in time for the 2012 holiday season, the company was forced to reallocate internal resources. The shuffling resulted in significant game delays.
That started the daisy chain that led to Nintendo's current position. Those game delays impacted hardware sales—and poor hardware sales resulted in some third-party partners pulling back their support of the Wii U.
Electronic Arts ignored the platform entirely at its E3 press conference this year—and will not be making Wii U versions of its annualized franchises, such as "Madden" this year. And Ubisoft has elected to delay a game that was scheduled as a Wii U exclusive so that it can appear on Microsoft's Xbox 360 and Sony's PlayStation 3 as well.
Luring those companies back is critical to the long-term success of the Wii U. Iwata said it will happen in one of two ways.
Should one publisher have a breakaway hit, others will begin to rethink their position on the platform. Alternatively, Nintendo will have to use its first-party games, featuring stalwart characters like "Mario," "Zelda," "Donkey Kong" and more to increase the system's installed base.
A rebound may follow with "Super Mario 3D World" and "Pikmin 3"—and a new "Wii Fit" and "Super Smash Brothers" in development.
"I do not think we should become too pessimistic about the current situation with the Wii U," he said. "I think we should pour that time and energy into our [development] efforts, so eventually we can encourage third-party [publishers] to want to support Nintendo."
The company is also beginning to talk to (and interact with) consumers in a much more direct manner. At this year's E3, for example, Nintendo bypassed its usual press conference, opting instead to broadcast a video directly to consumers.
And rather than confining demos of upcoming games to the Los Angeles Convention Center and making potential buyers just watch footage of the titles, the company let people play them in more than 100 Best Buy stores around the country.
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"To me a game is not something to look at, it's primarily something to play," said Iwata.
One tool you likely won't see Nintendo employ to boost sales, though, is the one many partners and consumers would most like: A price cut.
While reducing the retail cost of the 3DS helped that hardware system regain momentum, Iwata is more hesitant to repeat that with the Wii U.
"Because from the very beginning we came up with a very aggressive price point. We do not think [a price cut] is a very easy option to take," he said.
—By Chris Morris, Special to CNBC.com.