Nintendo Is Going to Miss its Wii U Target By at Least 6 Million Units

The Wii U was introduced by Nintendo alongside a stunning array of promises. The "U" in the system's poorly chosen name was intended to signify that it would be a device that offered something for everyone. Its GamePad controller would usher in new styles of play and shift the very the foundations of game design. Third parties would be there in abundance, supporting the device with their biggest franchises now that Nintendo's console had the horsepower to output HD graphics. The importance of a thriving online ecosystem had been recognized and was a major focus for the company. If you've been following the Wii U with any regularity, you've surely noticed a trend with regard to the outcome of these promises--they were all broken. 

Without a doubt, the most egregious of Nintendo's broken Wii U promises will also be its most objectively quantifiable. CEO Satoru Iwata made a commitment to selling 9 million Wii Us and achieving approximately $1 billion in operating profit for the fiscal year ending March 2014. Despite every indication that these projections are phenomenally off-base, Nintendo has opted against revising them. Has the company completely lost it, or is there a deeper strategy at play?

New years resolution: stop being so negative
Let's get something out of the way--the Wii U is not going to approach the ballpark of Nintendo's stated targets. The only question is how catastrophic the miss will be when it's finally recorded in the company's year-end report. All signs point to "very."


Doing a bit of simple math should help nix the notion that Nintendo believes it will come anywhere close to its targets. Even if Iwata is right and one game can change everything, the writing is on the wall and no amount of insistent denial can change what's coming. Nintendo's figures show that only 160,000 Wii Us were sold in its first fiscal quarter. Its next quarterly report tallied 300,000 Wii Us sold worldwide, with many of these sales coming after a price drop and the release of a bundle featuring the company's The Legend of Zelda: The Wind Waker HD. In this same quarter, the device posted negative 20,000 sales across Europe, with at least that many units being sent back to Nintendo by retailers.

An optimistic take on numbers and timeframes
With Europe soundly out of the picture, Nintendo would have to sell about 8.5 million Wii Us across North America and Japan in the span of six months to meet its target. Is there a prophetic visionary among us bold enough to hazard a guess as to how that will turn out? If you're still not a disbeliever, let's throw some more numbers together.

Based on reliable leaks of NPD Group's sales tracking, the Wii U's October sales were under 60,000. November's figure looks to be around 220,000 units. December is a five-week tracking month compared to November's four and Nintendo at least has the potential to outdo that month's meager figures. A generous 60% growth multiplier would make for a hypothetical 352,000 units sold in December.

With one week of Famitsu reporting left to go, Japanese Wii U sales for the quarter stand at approximately 380,000 units. Let's once again be generous and say that it sells another 140,000 units in the final week of the Japanese holiday period, bringing Japan's quarterly total to 520,000 units. Because I'm feeling festive now that the holidays are finally over, let's also assume Wii U can sell 200,000 units in Europe over the third and fourth quarters just for kicks. Adding these optimistic figures up brings the system just north of 1.35 million units for the quarter and 1.81 million units YTD.

Is this the best U can do in the face of competition?
To say that the Wii U's final quarter at bat will post numbers substantially lower than the last would be a sizable understatement. The console gaming market frequently experiences the post-holiday blues, with spend burnout and a lack of quality titles typically contributing to low January-March sales. What's more, the Wii U has been overshadowed by the launches of the Sony PlayStation 4 and the Microsoft Xbox One. Because the paint-by-numbers picture we're wrapping up is supposed to illustrate a best-case scenario, let's put fourth quarter sales from all major territories at a cool million. All said and done, you're looking at under 3 million Wii U consoles sold in fiscal year 2014.

Microsoft's new system sold approximately 910,000 units in the North American November tracking period, with the PS4 beating it out by a currently unknown margin. Both systems eclipsed the Wii U's LTD sales in the UK mere days after their respective releases. Early reporting has the PS4 outperforming the Xbox One in most territories, but Microsoft's system is practically guaranteed to outsell the Wii U at least twice over. 

What will the new fiscal year bring?
Nintendo isn't stupid, or at least not stupid in the sense that it lacks the resources to perform basic addition. Its decision to maintain its Wii U forecasts in previous quarterly reports is at least partially about controlling media narrative. The fact is that using less generous numbers finds the Wii U's YTD sales coming in at closer to 2 million units. Nintendo will have almost no choice but to revise its projections downwards in its next report. If revisions aren't posted, expect President Iwata's resignation with the new fiscal year. Whether he sticks around or not, Nintendo is about to catch some serious heat. 

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The article Nintendo Is Going to Miss its Wii U Target By at Least 6 Million Units originally appeared on Fool.com.

Keith Noonan has no position in any stocks mentioned. The Motley Fool owns shares of Microsoft. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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7 Comments

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Imperial

The writer of this article should be investigated by the SEC. This article is so biased and inflammatory that it appears to be an attempt to drive down nintendo stock prices by casting a huge shadow of doubt in investers minds. Go back to evaluating pharmaceutical companies and leave the games to gamers. I don't need to correct your numbers as others already have but you should stock totickers because writing is not your forte.

January 09 2014 at 8:36 AM Report abuse rate up rate down Reply
Eric Gipson

The Chinese just lifted their ban on console gaming and the Nintendo Brand (the Mario and Pokemon franchises in particular) is already a very well established name over there ... Just food for thought.

January 07 2014 at 11:24 PM Report abuse rate up rate down Reply
sethro73

Thank you everyone for telling it like it is, I wanted to respond to this earlier but couldn't from work. The 9million is lifetime sales and though they may not hit their goal they won't be 6million off the pace. Should be somewhere between 1-2million I am guessing. The Wii U is just now hitting a stride, sales have picked up. Hell I can't even find one in the local stores in my area, but there are plenty of Xbones to be had.

January 07 2014 at 9:43 PM Report abuse rate up rate down Reply
Damorea Clay

Yes please remove this article it's embarassing

January 07 2014 at 11:51 AM Report abuse rate up rate down Reply
Anyely De Mercado

There is some confusion in this issue. Some are saying that the 9 million number comes from the fiscal year alone and not total all time sells. I am confused in this one myself as I have not found the exact information regarding this. And if it is true for the fiscal year that would be the numbers this guy is talking about. The problem is the way you look at it. The numbers will be lower than projected, but Nintendo will still have a profit. Let's not forget Nintendo has the 3DS the number 1 selling system in the world right now.

January 07 2014 at 9:17 AM Report abuse rate up rate down Reply
coolz1337

I'm sorry but whoever pulled these number out of there ass should get fired. They have already sold about 5.3 million according to the vg charts and that doesnt even include the next 3 months. I agree odds are that they wont hit their goal, but not but 6 millon units. If you actually did research and gave a **** about what you wrote you'd see that your dead wrong already and its not even March yet. This is some bias **** right here. Also they way nintendo has it set up their sales can only go up with the line up they have coming. smash bros, "X", hyrule warriors, bayonetta 2 donkey kong? they are set for growth. Your certainly right when you say nintendo isn't stupid. they have been around the longest and they sure as hell know what they are doing

January 06 2014 at 7:25 PM Report abuse +1 rate up rate down Reply
Tara Sorensen

Nintendo expected to sell 9 million Wii U's by March 2014, they have already sold about 5.2 million (not including online sales) so where do you get this ridiculous idea that they are short 6 million units? Did Rob Ford write this piece?

January 06 2014 at 7:16 PM Report abuse +1 rate up rate down Reply