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Nintendo Co., Ltd: Can software save the Wii U?

  • September 2014
  • -
  • MarketLine
  • -
  • 31 pages

Introduction

The Wii U, Nintendo's latest home console, has failed to live up to the success of its predecessor, the Wii, and the company's financial performance has been poor since its release in 2012. This case study analyzes Nintendo's recent financial woes, and assesses the company's efforts to get its latest home console back on track through the utilization of its strong character and software IP.

Features and benefits

* Analyzes Nintendo's recent financial and sales performance.
* Assesses Nintendo's efforts to reverse the fortunes of the Wii U.
* Explores Nintendo's utilization of strong character and software IP in its efforts to save the Wii U.

Highlights

The Wii U has been unable to offset declining revenues following the shift away from Nintendo's previous home console, leading to a net loss in FY 2014. However, Nintendo's handheld business is in a much better state than its home console operations, and the company's revenue mix has shifted towards handheld software and hardware.
Nintendo is looking to leverage the strength of its existing IP in order to boost sales of the Wii U, and the company is focusing on two key Wii U entries into historically popular franchises in 2014 – Mario Kart 8 and Super Smash Bros. for Wii U – the latter has already had a successful launch.
Nintendo has announced new software that takes advantage of the Wii U's unique GamePad to produce compelling gameplay experience in order to boost the console's appeal. Additionally, Nintendo has announced amiibo, a 'toys-to-life' platform that enables Nintendo figurines to interact with selected software through the GamePad's NFC capability.

Your key questions answered

* Why has the Wii U lost momentum since its launch in 2012?
* What is Nintendo doing to reverse the Wii U's slide?
* What titles are in Nintendo's software pipeline, and how do they reflect the company's strategy?
* How can the amiibo platform help to bolster the Wii U's appeal?
* How has Nintendo sought to ameliorate declining third party software support for the Wii U?

Table Of Contents

Nintendo Co., Ltd: Can software save the Wii U?
OVERVIEW
Catalyst
Summary
UNDERWHELMING RECENT PERFORMANCE
Falling revenues, non-existent profitability
Wii U sales are very weak
Handheld hardware also weaker than before
Nintendo has struggled to demonstrate the unique potential of the Wii U
Software success has been mixed
Nintendo has a strong software pedigree, which it is now falling back on
Home console software sales lag behind handheld
Third party software support waning for Wii U
Nintendo still believes that unique software sells hardware
EXISTING FIRST PARTY IP STRATEGY
Nintendo pinning hopes on system-selling Wii U software titles
Mario Kart 8 and Super Smash Bros. "pillars" of Nintendo's marketing strategy
Both titles leverage Nintendo's strong character IP and brand identity
Super Smash Bros. releasing on Wii U and 3DS
Mario Kart 8 successful so far
Nintendo continues to leverage existing IP strength
amiibo figures represent new revenue stream from existing IP
Activision Blizzard already seen success with interactive Skylanders figures
amiibo platform utilizes Wii U's unique hardware features
Nintendo's strong character IP utilized to create "new platform"
amiibo set to launch during lucrative holiday season alongside key software
NEW WII U SOFTWARE INITIATIVES
Third party partnerships to launch Nintendo-published titles
Bayonetta 2: Mature third party franchise exclusive to Wii U
Hyrule Warriors leverages Nintendo IP without first party development
New IP tailored to Wii U gamepad
Splatoon offers a new take on popular multiplayer shooters
New Wii U IP from veteran videogame designer Shigeru Miyamoto
Wii U titles dominate Nintendo's software pipeline
CONCLUSIONS
Nintendo moves in the right direction, still faces uphill struggle
APPENDIX
Definitions
Sources
Further Reading
Ask the analyst
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