Market Overview

Nintendo Wii U Sales to Exceed Predecessor

Nintendo's (OTC: NTDOY) latest console, Wii U, is expected to outperform its predecessor when it is released on November 18.

IHS (NYSE: IHS) researchers estimate that global sales of the new console will reach 3.5 million units by the end of December 2012. The original Wii sold 3.1 million units during the same period when it was released in November 2006.

The researchers also believe that the high demand will cause a supply shortage that will last from now until the end of the year. Evidence of that shortage is already prevalent; GameStop (NYSE: GME) stopped taking pre-orders almost immediately after the campaign started. On Amazon.com (NASDAQ: AMZN), third-party sellers are charging more than $500 for the deluxe model, which contains an MSRP of $349.99. The prices are a bit more reasonable on eBay (NASDAQ: EBAY), where shoppers can currently bid on a new deluxe unit for $370.01.

"As a result of the tight inventory control Nintendo employs to manage its supply chain and strong consumer demand in these opening weeks of launch, we believe it's highly likely that retailers will experience some Wii U shortages in the run-up to Christmas," Piers Harding-Rolls, senior principal analyst and head of games at IHS, said in an e-mail to the press. "Stock will be replenished in ongoing fashion, but some unlucky shoppers may well miss out."

Stock may be replenished, but it is unclear how many Wii U consoles will actually be available this weekend. Calls to GameStop outlets in the Metro Detroit area found that many are not currently planning to hold a midnight launch. This is very unusual for the retailer.

One Sterling Heights, MI location -- which held midnight launches for the original Wii, Xbox 360, PlayStation 3, Nintendo 3DS and dozens of individual video games -- said that it may not hold a midnight launch for Wii U because it did not receive many units. "Those who got one are lucky," an employee told Benzinga.

Even so, that may not be the source of the midnight launch conundrum. According to GoNintendo, GameStop may have cancelled its midnight launch plans for security reasons. Other rumors suggest that Nintendo is the source of the security concerns and may have asked GameStop to comply.

Long-term, IHS suspects that Nintendo will sell fewer Wii U consoles than the original Wii. By the end of 2013 (its first full year on the market), IHS believes that Nintendo will have sold 11.3 million units. This is in addition to the 3.5 million units it expects Nintendo to sell this year. By the end of 2014, Nintendo should sell another 12.9 million units, followed by 14.7 million units at the end of 2015 and 14.3 million units at the end of 2016. That amounts to 56.7 million units -- down from the original Wii, which sold 79 million units during its first four years on the market.

"This time around, Wii U's pure innovation, coupled with a limited volume of high-quality Nintendo software, will not be enough to drive the ongoing sales momentum we witnessed with the Wii console, especially at a higher price point," said Harding-Rolls. "Long-term success depends on ongoing consumer engagement delivered through the constant release of high-quality content from both first and third parties, a competitive non-games entertainment proposition and a sound digital and online strategy to go along with such innovation. Nintendo is still some way short of delivering a comprehensive engagement-led value proposition at the launch of the Wii U."

Follow me @LouisBedigianBZ

Posted-In: IHS Nintendo Nintendo 3DS Wii Wii UNews Success Stories Tech Best of Benzinga

 

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