Wii Sales: Less Than Meets the Eye

[Asher]

Bundles don't count toward Attach Rate.

The last time I checked, they did count.

 

[StefanS]

Good things come to those who wait

This one has been in the works for a while and we've now finally put the last finishing touches to it

The Beyond3d closer look at the Nintendo's fiscal results

Check the article for lots of nice diagrams, tie ratios etc.

Last Tuesday Nintendo announced its earnings for fiscal year 2007 (Videostream of the Financial Results Briefing), which ended on March 31st. As previous revised bullish projections indicated might be the case, Nintendo’s consolidated revenue rose to all time high of 966.634 billion yen, up from 509.249 billion yen last year. Operational income and net income rose from 90.349 and 98.378 billion Yen to 226.024 and 174.290 billion yen, respectively, during the past year, thus signifying an increase by over 150% and 77%.

Nintendo’s forecast for FY 2008 remains good: Revenue is expected to grow to 1,140 billion yen. Additionally, operating income is expected to rise by 26.7% to 290.000 billion yen, while net income remains relatively stagnant (175.000 billion yen), mainly due to foreign exchange losses of 20 billion yen, compared to gains of 23.131 billion yen in FY 2007.
....

All in all, Nintendo’s projected targets seem very ambitious. While analysts see further “unhindered†growth and a realistic long term stock value of over 44,000 yen per share (currently: 37,800 yen), it remains to be seen if indeed 14 million Wiis can be sold in FY 2008, especially since a significant price drop of the competing consoles from Microsoft and Sony is expected later this year, thus decreasing Nintendo’s price advantage. Moreover, the lower tie-ratio in Japan points to a lack of diversity in the line-up. However, an increased marketing budget could widen Nintendo’s target audience and thus compensate for some of these aforementioned effects. The Nintendo DS has also reached a critical stage: As life-to-date sales in Japan have reached GBA levels, market saturation could take place. Nevertheless, if the DS truly achieves mainstream penetration, its sales could reach PS2 levels (Japan: 24.76 million units sold) during the current fiscal year. Interestingly, Nintendo’s R&D budget is also rising from 37.725 billion yen in FY 2007 (30.596 billion yen in FY 2006) to 45 billion Yen this fiscal year. This could indicate that a successor for the DS is getting prepared for a release in FY 2009.

 

[Natoma]

But they do. There're counted in the software sales category. Unless you do the whole silly monthly attachrate stuff.

Well that's just dumb. Not everyone who has Wii Sports would've bought it had it not been bundled.

Bleh, whatever.

Numbers reworked, that brings us to an attach rate of 3.4 when taking out Red Steel, Zelda, Rayman, Wii Sports, and Wii Play. Still pretty high.

 

[fearsomepirate]

Are VC games included in the attach rate?

 

[Rangers]

The console itself has been selling like hotcakes. In Japan, it's clobbering the PS2, which in turn is outselling the PS3 and X360. In the US, it's more of a neck-and-neck type race. And as new shipments of the thing sell out almost instantaneously at a price that B3Ders think is crazy high, it's obviously a very high-demand item. But the games arne't selling. Oh sure, if you look at VGcharts, 3rd party games have mostly bombed. Godfather tanked, Sonic was ignored in Japan but did OK in the US, Elebits was a colossal failure, and so on. This is what a lot of people expected, but the real news is 1st-party software. In Japan, Twilight Princess is the worst-selling Zelda of all time, selling under a half-million units on the Wii (Windwaker sold 2.6m). Warioware sold less than 1/3 the Gamecube version, which was merely a port of the GBA game. Fire Emblem bombed as well. The new Pokemon battle game sold around a quarter million units...down from 2 million on the Gamecube. Almost the same thing has happened in the USA, with the exception that Twilight Princess outsold Wind Waker (GC and Wii combined) and did fairly well in Europe, too. But almost nothing is hitting the top ten charts in any country, except...

Wii Sports and Wii Play. That's about it.

This is not just a case of "Nintendo gamers don't buy 3rd-party games," because they're not lining up to buy Nintendo games, either. My theory: the problem with all these non-gamers is, well, they're not really interested in video games in general. They're interested in Wii Sports. Wii Play is artificially high because of the controller. I think that "hardcore" gamers aren't picking up the Wii as fast, and when they do, they might mess around with a few games, but their money is more likely to go to the Virtual Console and whatever platforms they own (PS2 or 360) because the big-production games are there...or released there first, often without broken controls.

So will it turn around? Or is Wii in everyone's mind just a platform for playing legacy games legally and the occasional quirky minigame collection?

Yes I agree very much with this. I have been thinking about this topic and considering posting about it at various forums for a couple days.

Wii doesn't seem to have the software sales to match it's high hardware sales. Also, it doesn't seem to have many killer titles on the horizon.

I think it's because it attracts so many casual gamers and females who wont buy a lot of titles.

Further, I think Wii will have a hard time creating hyped titles going forward because most of the time hype is generated by graphics, which it lags in.

 

[Natoma]

Are VC games included in the attach rate?

I would certainly hope not. But there were 3.3 million VC games downloaded according to Nintendo. So if they were counted, that'd drop the physical attach rate from 3.4 to 2.9.

I couldn't see how that would be defensible in any way shape or form though. Then again, I don't think including bundled games is really defensible either. You're artificially increasing your attach rate that way. Bleh.

The only way we'll know for sure is to take the LTD sales for every Wii game through March 31st and add them up.

 

[Natoma]

Yes I agree very much with this. I have been thinking about this topic and considering posting about it at various forums for a couple days.

Wii doesn't seem to have the software sales to match it's high hardware sales. Also, it doesn't seem to have many killer titles on the horizon.

I think it's because it attracts so many casual gamers and females who wont buy a lot of titles.

Further, I think Wii will have a hard time creating hyped titles going forward because most of the time hype is generated by graphics, which it lags in.

You should read the thread. The software sales are certainly there.

 

[patsu]

But the games arne't selling. Oh sure, if you look at VGcharts, 3rd party games have mostly bombed. Godfather tanked, Sonic was ignored in Japan but did OK in the US, Elebits was a colossal failure, and so on. This is what a lot of people expected, but the real news is 1st-party software. In Japan, Twilight Princess is the worst-selling Zelda of all time, selling under a half-million units on the Wii (Windwaker sold 2.6m). Warioware sold less than 1/3 the Gamecube version, which was merely a port of the GBA game. Fire Emblem bombed as well. The new Pokemon battle game sold around a quarter million units...down from 2 million on the Gamecube. Almost the same thing has happened in the USA, with the exception that Twilight Princess outsold Wind Waker (GC and Wii combined) and did fairly well in Europe, too. But almost nothing is hitting the top ten charts in any country, except...

Wii Sports and Wii Play. That's about it.

It could also mean that current Wii owners are looking for a different kind of video games. I don't think the buyers care whether the games are third party or first party. Give Nintendo and the developers some more time to figure things out.

I also don't think all the Wii cards have been played. Some of their early online channels (Everyone votes ?) are really interactive marketing in disguise. It will help to tune in to the consumers' taste. In the mean time, the console is sold for a profit, which keeps distributors happy too.

Plus... my friends and I have not even bought one yet (Can't find damn console). Attach ratio also doesn't tell the full story... even if I buy like a hardcore gamers, the more substantial number of non-gamers is going to pull down the average.

 

[crystalcube]

what makes a casual or non gamer tick ? I mean what makes them buy a game ...

In context of Wii I always hear..

Oh man my friends came to my place and I we had so much fun and we played like 100 hr straight
or I went to my friend's place and we had tons of fun
or I enjoyed whole weekend with my kids ...and so on

What I found interesting is all these point to how easy its to get in the game specially when you have company. Now to have all that fun do I really need to buy another game ? The fun part is because everyone is playing together. Wii is just a tool so , will the experience be very different if I have 100 games ? I mean when my friends come they wont even care if we are playing Wii Sports or Wii Golf

So why would casual/non gamer buy many games ?

Just an example one of my friend who got a Wii for his kids is so happy that when he goes back from work how they all enjoy it together. And I wonder will he ever buy a second game ? His kids can definitely enjoy Wii sports for the life of Wii and never need to have another game.

Well what I am trying to point out is that these people are not really playing games , they are just having fun. To them it doesn't matter if its Wii Sports or Wii Olympics ...

I expect that such people when they go to store and find some Wii games on shelf they will indeed buy some but they will soon reaize that they always go back to Wii sports and will say bah ..that game is enough for whole family.

On other hand you look at "gamer" category targetted by Xboxes and PS3s , etc. That person plays games for sake of playing , so he would buy more games. He may or may not finish the game but will go to another.

So the new demographic targetted by the new Wii which is buying Wii in truck loads ...will they really buy games in same quantity ?

I personally doubt it but I am with Natoma on this one, we will have to wait to see.

 

[patsu]

Will a Wii Sports buff buy Wii Sports II ? If the initial experience is positive, the chance is higher.

Do most Wii buyers have normal needs ? If so, it's possible that they will like Party Brain Training, Family Nintendogs, ... or even titles for pre-schoolers and foreign language training. As long as the process is fun, it is a game.

Yes we should all wait to see, but I'm rather optimistic about Nintendo's outlook even though I don't talk much about it.

 

[crystalcube]

Will a Wii Sports buff buy Wii Sports II ? If the initial experience is positive, the chance is higher.

Agreed. But what we are also talking about is 3rd party games, so if Wii Sports II and EA Sports Ultimate are both on the shelf which one is that person most likely to buy?

Nintendogs

did anyone felt that after a while the game felt like a chore ?

 

[patsu]

Agreed. But what we are also talking about is 3rd party games, so if Wii Sports II and EA Sports Ultimate are both on the shelf which one is that person most likely to buy?

Depends on how well EA produce and market it, plus whether they come up with a good title before Wii Sports II. No one will know for sure.

 

[fearsomepirate]

Tiger Woods sold fairly well. But off the top of my head, assuming VC games are being counted as game sales, VC downloads, Wii Sports, Wario Ware, Zelda and Wii play have accounted for around 17 million of the 29 million Wii games sold, more than half.

What else are people buying? Two launch titles, Red Steel and Rayman, were pretty successful, accounting for another 2 million units. Madden, Monkeyball, and COD3 all sold over 200K, but they were all launch-window titles. Seems like a lot of the game sales were at launch, but since then, they've dropped off pretty sharply.

 

[Natoma]

Tiger Woods sold fairly well. But off the top of my head, assuming VC games are being counted as game sales, VC downloads, Wii Sports, Wario Ware, Zelda and Wii play have accounted for around 17 million of the 29 million Wii games sold, more than half.

What else are people buying? Two launch titles, Red Steel and Rayman, were pretty successful, accounting for another 2 million units. Madden, Monkeyball, and COD3 all sold over 200K, but they were all launch-window titles. Seems like a lot of the game sales were at launch, but since then, they've dropped off pretty sharply.

You're making a lot of unprovable assertions you know.

 

[tongue_of_colicab]

Tiger Woods sold fairly well. But off the top of my head, assuming VC games are being counted as game sales, VC downloads, Wii Sports, Wario Ware, Zelda and Wii play have accounted for around 17 million of the 29 million Wii games sold, more than half.

What else are people buying? Two launch titles, Red Steel and Rayman, were pretty successful, accounting for another 2 million units. Madden, Monkeyball, and COD3 all sold over 200K, but they were all launch-window titles. Seems like a lot of the game sales were at launch, but since then, they've dropped off pretty sharply.

Than you still got something like 9,5million games sold on other than those you mentioned. Thats still almost 2 for each Wii. Doesnt seem that bad to me if you concider the quality of the games that came out since launch. The only decent games that came out after the launch are godfather, SSX and DBZ.

 

[PatrickL]

A lot of Wii games were announced for Japan that year. We will see if they come to our areas and if they are good.

The full list of Wii games due for a 2007 release is as follows:

1. Donkey Kong Taru Jet Race
2. Wii Health Pack
3. Disaster: Day of Crisis
4. Mario Party 8
5. Project H.A.M.M.E.R.
6. Wii Music
7. Super Mario Galaxy
8. Super Smash Bros. Brawl
9. Battalion Wars II
10. Forever Blue
11. Mario Strikers: Charged
12. Metroid Prime 3: Corruption
13. Mario and Sonic at the Olympics

The financial documents listed Animal Crossing Wii and Hoshi no Kirby as still "to be announced".

 

[Squeak]

Yes I agree very much with this. I have been thinking about this topic and considering posting about it at various forums for a couple days.

Wii doesn't seem to have the software sales to match it's high hardware sales. Also, it doesn't seem to have many killer titles on the horizon.

I think it's because it attracts so many casual gamers and females who wont buy a lot of titles.

Further, I think Wii will have a hard time creating hyped titles going forward because most of the time hype is generated by graphics, which it lags in.

Nowadays 90% of the appeal of graphics from a given game is down to the art direction.
It was another story back in the 8 and 16 bit days, because the tools had such a relatively limited visual vocabulary. But even back then, art direction was king, and as today, working with the limitations, instead of against them will get you potentially incredible results.

If the casuals were persuaded to put down $200 for a system I'm going to bet they'll be willing to but down $45 for games that has some of the same appeal (Health Pack, Animal Crossing, Nintenddogs etc.)

With regards to sales of 3rd party titles, Raving Rapids and Red Steel respectively has sold almost a million each.
That Elebits didn't sell well can't come a surprise to anyone, since the public shoos unrecognized quality like the plague.

 

[Fox5]

So will it turn around? Or is Wii in everyone's mind just a platform for playing legacy games legally and the occasional quirky minigame collection?

That's all it's been for me so far.
Last gen I didn't regret my decision to get a high end PC and a Gamecube.
This gen, I wish I had gone for an ultra light laptop (technically, I had an ultralight convertible tablet but it self destructed, not at all impressed with lenovo's build quality) and a 360.

Wii does have a lot more 3rd party support than GC did though, sales could just be divided among many many games.

Or maybe nintendo's just turning the razor and blade model on its head. More like the electric razor model, sell an expensive unit with little in additional sales....except for the new model a year or two down the road.

 

[Corwin_B]

Or maybe nintendo's just turning the razor and blade model on its head. More like the electric razor model, sell an expensive unit with little in additional sales....except for the new model a year or two down the road.

I think that's exactly the point. The usual model for consoles is that hardcore users are the early adopters, they buy a more expensive unit, (often with losses on HW). Those losses are compensated by the large amount of games the hardcore crowd buys (see 360 as the most obvious example). Later in the generation, the price drops, and casual gamers enter the user base. They buy less titles than the hardcore gamers, but there are less losses (or profitability) on the HW front. It seems that Nintendo decided to jump right to the price point where the casual gamers start buying the console.

 

[Rainbow Man]

It's too early to discount the Wii already. Damn peiople did pretty much the same thing about the DS many months after that one launched.

I'd wait until after titles suchas Battalion Wars 2 and Metroid whatever-it's-called and others come out before even trying to pass jusdgement on this thing.

It's only been a few months guys. Console gen's going to last upwards of 5 years.
Peace.