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Nintendo Hits a Few Hurdles in Wii U Launch

Source: Nintendo

System launches from Nintendo tend to be smooth running affairs, but the ambitious nature of the Wii U has presented a few stumbling blocks for the company.

Within hours of the next generation console's debut, new owners were grumbling about a system update that kept them from playing for an hour or more, sporadic system outages and anticipated features that were delayed at the last minute.

It's a notable blunder for Nintendo, whose corporate philosophy has historically been in line with that of Apple : A system should be easy to set up and work straight out of the box.

Technically, the Wii U does work. Anyone who buys one can play a single player game as soon as they get it home and set up, but Nintendo has touted the system's multiplayer and social aspects as a big part of its marketing. And to access those, owners were forced to download and install a sizable patch (which some reports say was as big as 5 GB).

Installing that patch took most users an hour or more — and some reported it took up to four hours. During that time, the system was unusable.

"The company was too proud to say 'our online isn't ready and let's delay the launch to April' – which in retrospect maybe they should have," says Michael Pachter of Wedbush Securities. "It's a delicate balancing act. You can't keep everybody happy. What Nintendo decided to do when they decided to join this generation is do a whole lot of things at once… This is an ambitious undertaking for them. And I think the gaming community doesn't understand how hard it is to pull off."

A handful of owners found downloading that system update to be especially frustrating, after the Wii U refused to connect to their home WiFi systems. A workaround was quickly discovered by one user and placed on the Nintendo message board, but it's a complicated process that's likely to intimidate any mass-market consumers who braved the lines to buy the device.

The complaints didn't end with the system update, though. The Wii U's online user hub, called the 'Miiverse,' quickly buckled under user demand.

"Oops. So many Miis have jumped on Miiverse that some may be having problems connecting to the service. We are in the engine room getting it fixed!," the company wrote on Facebook . (The problems were resolved by the end of the day.)

Some users were also upset by the last-minute delays to non-gaming functionality, including Hulu, Amazon on Demand and Nintendo's own Nintendo TVii, which is aimed at improving discoverability for both over the air and online programming. (Users will be able to search programming from Netflix, Hulu, Amazon and live TV – as well as content on their Tivo DVR. Unlike the Xbox, though, families can set individual profiles for each member, allowing each to pick favorites – and allowing their friends to make recommendations.)

Analysts say that while the problems were disappointing, they're not likely to affect demand for the system. Instead, they say, it underscores the big leap Nintendo was trying to make with the new system. Users, they say, might complain in online forums, but they'll be largely forgiving — for a while. (Read More: 'Game Over' for Videogame Makers This Holiday? )

"They really need to get this fixed quickly," says Billy Pidgeon, senior analyst at Inside Network. "They don't get a free pass on this until the other consoles (from Microsoft andSony) come out." (Read More: 10 Must-Have Videogames This Holiday Season, 2012 )

Overall demand for the Wii U seemed to be strong, but not overwhelming (as it was for the Wii six years ago). There were reports of stores in both Boston and Los Angeles still having stock at the end of the day.

"Our field checks suggest solid early demand for Wii-U, with roughly half of the stores in our survey sold out of initial shipments (mostly GameStop), and most of the other half (largely 'big box' retailers) reporting low inventory levels," says Colin Sebastian of R.W. Baird. "While the launch overall appears to be tracking to expectations, we are not seeing a buying frenzy similar to the original Wii launch."

On eBay, a fairly reliable way to gauge supply and demand of new electronics, re-sellers have already managed to unload some 2,000 Wii U consoles. The average eBay sales price for the Wii U Deluxe, says Sebastian, is $488 (a 40 percent markup), while the $300 basic version of the system is selling for $389 online — 30 percent higher than its retail price.

That's well below the rates the Wii was commanding in its heyday as well. But analysts say that's less an issue of the system's launch stumbles and more tied to the current state of the traditional video game industry.

"The only thing that they've really done wrong is they tried too hard to be first," says Pachter. "I think they committed to a fall 2012 launch and there was a lot of blocking and tackling that they weren't ready for. It just shows how difficult it is to compete in this sector."

email: tech@cnbc.com

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