All Your History: Nintendo Part 7 – WiiUnited…

The Wii was a return to form for Nintendo, rocketing the company straight to the top of the video game market. It easily outpaced the competition in sales, racking up nearly 100 million in console sales over the course of six years. It also featured some of the company’s most exciting and innovative first-party games yet. But for every great Nintendo-made Wii game, there were at least three forgettable third-party titles. The system was plagued with inferior ports, low-selling exclusives, or straight-up shovelware. Nintendo had captured the hearts and living rooms of families around the globe, while the Wii left a bad taste in the mouths of so-called “real” video gamers. So how could Nintendo keep the casual audience it had won with the Wii, but recapture the hardcore gamers who felt “buyer’s Wiimorse”? Could the two factions come together once more?

WiiUnited…

Even before Nintendo’s success with the Wii console, the company had dominated the handheld market for two decades. The Game Boy was the champion of mobile gaming for over ten years, while the Game Boy Advance and DS systems kept Nintendo’s hot streak alive. So when its next handheld gaming system was unveiled at E3 in 2010, it seemed like a surefire winner.

The 3DS was exactly what it sounded like: a more powerful version of the DS console with 3D visuals—without the use of annoying glasses. A year before in 2009, James Cameron’s big budget spectacle, Avatar, had ushered in a frenzy of interest in 3D movies and television. Electronics manufacturers cranked out 3D-capable TVs, while blockbuster movies were converted for 3D screenings. The 3DS’s promise of glasses-free 3D-visuals seemed like the perfect gadget at the perfect time.

When the system launched in the spring of 2011, it seemed as though Nintendo had done it again. The 3DS sold out of its initial shipment of 400,000 during its release in Japan, with similar sell-outs in other territories. Nintendo of America announced that the 3DS’s US launch had set a record for the highest first-day sales of any of the company’s previous devices. But soon after, interest in the 3DS slowed to a crawl. Nintendo had hoped to ship at least 4 million consoles by the end of March, but fell short with only 3.61 million. By June, sales in Japan finally crossed the 1 million mark, a shocking reversal of fortune considering the DS had managed the feat in a mere four weeks. Only a few months after its launch, developers were announcing delays for their 3DS games, citing slow system sales.

What had gone wrong? To start, Nintendo over-estimated the public’s hunger for a 3D-enabled gaming system. By 2011, 3D movies and TV was largely considered nothing more than a fad. The 3DS’s high launch-price of $250 didn’t help, either. And despite promises of three-dimensional romps through familiar Nintendo titles, there were only three first-party launch games: Pilotwings Resort, Steel Diver, and Nintendogs + Cats. But above all, there was one unforeseen factor that stalled the 3DS’s sales: the iPhone.

Apple’s take on smartphones revolutionized the mobile technology industry. Sure, in the mid-2000s everyone had a cell phone, but they also had separate MP3 players, GPS navigators, cameras, and gaming machines. When the iPhone hit in 2007, it sent shockwaves through the tech world, condensing all of those devices—and more—into one sleek and fashionable gadget. Smartphones weren’t for businessmen anymore; they were for everyone. And Apple’s secret weapon? The App Store, full of colorful, addictive games ranging in price from three dollars, to one dollar, to flat-out free. Who needed Mario when you could play Angry Birds or Peggle on the bus? While the 3DS was a huge leap forward for Nintendo’s handhelds, its $40 games and inability to make phone calls made it seem like a throwback. Once again, it looked like consumers’ tastes had moved forward…and nobody bothered to tell Nintendo.

With the 3DS stalling out only months after its launch, suddenly Nintendo’s success with the Wii appeared less like a return to form and more like a temporary fluke. Now this was the Nintendo hardcore gamers remembered: out of touch and behind the times. Nintendo hadn’t anticipated the rise of the smartphone—besides Steve Jobs, who could have? Once again, critics, analysts, and even Nintendo’s investors pressured Nintendo to leave the hardware game and bring Mario and Pokémon to mobile phones. And once again, Nintendo went its own way. But not before taking some drastic steps.

In July 2011, Nintendo announced a dramatic 3DS price cut, dropping over 30 percent from $250 to $170 after only five months on the market. Even worse, the slow sales forced Nintendo to cut that year’s profit projections by over 80 percent. The announcement caused Nintendo’s stock price to tumble12 percent on July 29. Former Nintendo president Hiroshi Yamauchi—the company’s largest stockholder—lost over $300 million in one day. Nothing like this had ever happened during his half-century as president. His successor, Satoru Iwata, took full responsibility for the dire turn of events, giving himself a 50 percent pay cut. To many, this looked like the end.

Amazingly, though, it wasn’t. When it was first announced, the price cut looked like a desperate move to temporarily delay Nintendo’s imminent collapse. But sales of the 3DS actually did begin to climb. Soon first-party games like Mario Kart 7, Super Mario 3D Land, and Kid Icarus: Uprising started to appear. Delayed third-party games made their way to stores as 3DS ownership grew across the world. By September 2012, the 3DS’s sales had reached 22.19 million, keeping close pace with the sales of its predecessor for the same period of time. It turned out that people were perfectly happy with Mario staying off the iPhone—as long as the price was right.

Meanwhile, Sony followed up its PSP in early 2012 with the PlayStation Vita. Like the 3DS, its first few months on the market were rough—but unlike the 3DS, its $250-plus price-tag remained the same, spending the majority of its first year struggling to find its audience.

Even still, the damage to Nintendo was done. It ended the fiscal year 2011 with its first ever full-year loss, coming up $533 million short. While it would be easy to blame the 3DS’s slow start and the money lost in its price cut, the reality wasn’t so simple. External factors like Japan’s back-to-back natural disasters and an unusually strong yen-to-dollar amplified Nintendo’s financial woes. But the point had been made: Nintendo could still sell a handheld system, even in the face of Apple’s unstoppable iPhone. So could it sell a home console to casual fans and hardcore gamers at the same time?

To find out, Nintendo devised a follow-up to its mega-popular Wii console, called the Wii U. First unveiled during E3 2011, the Wii U finally brought high-definition visuals to Nintendo’s games. And it utilized one of the company’s more successful innovations: the dual-screen and touch-control dynamics from the DS handheld. The Wii U’s big selling point Wii U was the touchscreen-enabled GamePad. The Wii U also took advantage of its predecessor’s huge install-base, including backwards-compatibility with not only Wii games, but also Wii remotes.

But that wasn’t all: the GamePad featured traditional button-layouts, two analog sticks, built-in accelerometers, a microphone, speakers, a front-facing camera…it seemed like the new device promised to do everything but your taxes. Though the Wii U’s web browser could probably help you do that, too.

The HD visuals represented Nintendo embracing the future. The Wii-compatibility represented Nintendo’s commitment to casual gamers and families. But the GamePad? That was a mystery.

The Wii U’s announcement wasn’t embraced with the enthusiasm that Nintendo needed. Journalists were mystified by what they saw, a result of the console’s physical similarities to the original Wii. The new name didn’t help—was the Wii U just an add-on for the Wii? Did the GamePad connect with the old system? What kind of leap forward was a touchscreen controller, anyway? Wasn’t the Wii’s success based on stripped-down simplicity? The GamePad looked anything but simple.

Investors were similarly nonplused. Nintendo’s stock dipped nearly 10 percent two days after the Wii U’s E3 debut. While the company’s fortunes improved over the next few months with the 3DS price cut, the Wii U remained a question mark in the year leading up to the console’s late-2012 release. But as journalists had a chance to try out the new system, many started singing its praises. The Wii U’s potential to transform video games—new dynamics between players, immersive interactive mechanics—started to seem less like promises and more like reality.

The opinion among developers remained divided, however. Some derided the new system and its current-gen visual and processing specs. Other developers, though, were fully on-board: Ubisoft was releasing Wii U exclusive titles like ZombiU and Rayman Legends that seemed to take full advantage of the GamePad. And Gearbox Software’s Randy Pitchford said, “This is the best controller Nintendo’s ever made for making an FPS. This is the best controller Nintendo has ever given us for playing hardcore games.”

The Wii U was released in North America on November 18, 2012, selling out of its initial shipment of 400,000 units in its first week on the shelves. And in the weeks leading up to its launch, news outlets in the United States claimed the Wii U was that year’s hot holiday buy, joining the ranks of Furby, Tickle-Me Elmo, and the original Wii before it. By all accounts, the Wii U would be another hit.

But then, the original Wii and the 3DS both enjoyed red-hot launches, with deeply divergent results. It’s not yet clear what the future holds for the Wii U. With its price starting at $300, Nintendo was selling the console at a loss, another first for the company. Though Nintendo of America president Reggie Fils-Aime claimed that the sale of a console and one game made the device profitable, the Wii U’s aggressive pricing was a necessary gamble, the result of harsh lessons learned from the 3DS’s overpriced launch.

By the end of 2012, Nintendo’s future seemed unclear. The 3DS was at the top of the handheld market, and for the first time since the launch of the original Nintendo Entertainment System, the company was first to market with a next-generation console. But the company was still reeling from posting its first-ever fiscal loss, and its strong Wii U launch was no guarantee of long-term success. Will the Wii U be another Dreamcast, destined to enjoy a brief victory before getting crushed under the competition? Or has Nintendo once again changed the games industry into something new and unpredictable?

Looking at Nintendo’s competition did offer some clues about its impact on the industry, however. In 2012, Microsoft introduced SmartGlass, an app designed to integrate gamers’ smartphones and tablets with the aging Xbox 360 hardware. Similarly, Sony began talking up the cross-platform functionality between the Vita and the PlayStation 3. Like the Wii having inspired the Kinect and PS Move, it seemed as though Nintendo’s Wii U encouraged its rivals to imitate its innovations once again.

No matter what happens with the Wii U, Nintendo has had a greater influence on video games industry than any other company before or since it entered the industry. In terms of business, Nintendo’s first home console created a business model the industry has embraced and internalized. And though it didn’t invent the video game medium, Nintendo perfected it. Its characters are known the world over, and the games it creates blaze trails of innovation and creativity that have never been matched. The proof is in the record books: Super Mario Bros. held the record for highest selling video game of all time for a staggering 18 years. And when the record did finally fall, it was due to—what else?—another Nintendo game, Wii Sports.

From its humble beginnings as a playing card manufacturer in Kyoto over a hundred years ago to its status today as a worldwide symbol of games and fun, Nintendo will undoubtedly find a way to live on for generations to come. Super Mario, Link, Pokémon, and the rest aren’t merely mascots for a video game company—they’re modern icons that represent new realms of excitement to explore.. Simply put, Nintendo’s legacy will surely live on longer than anyone can predict. For over thirty years in the video game market, Nintendo has left luck to heaven…and will likely never stop making plenty of luck of its own.

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