Wii U in Dire Straights.

This article kicks off the beginning of a 3-part article looking at the three new consoles. With the PS4 being announced next week, Nintendo are in trouble. The Wii U hasn't taken off as they would have liked and with new consoles coming, Nintendo should be seriously worried. In fact, latest reports indicates that Nintendo sold less than 100,000 units with a figure of 59,000 being mooted. This is shocking for a new console and Nintendo should seriously be worried. The Wii U is already being sold at a loss, presumably because of the high cost of the controller.



This graph courtesy of Ron Workmans blog, (http://www.ronworkman.com/) highlights the trouble Nintendo are in. in the past 4 years sales and income has plummeted. The 3DS has taken a battering due to smartphone's and Nintendo's hope that the Wii U's innovative controller would lead them to the heights of the orginal Wii has not come to fruition.

The Big Worry

Some might say the Wii U has been out for a matter of months and therefore, they should be given more time to sort things out. It's clear to see now though, that Wii U will never reach the same popularity as the Wii did. The Wii did so well because of the innovative motion controller. Nintendo have gone for the same strategy but this time the casual gamers are nowhere near as excited as before and this,for me, provides the killer blow for Nintendo.

One year advantage?


The reason I really worry for Nintendo is that they have blown that year advantage. An opportunity that Microsoft used for the Xbox 360 to get some sort of foothold. Nintendo should have had a number of stellar games out during this year, yet Wii U owners have very little games to shout about.

The Position

What perplexes me is that they have a console that can't really be called next-gen or current-gen. Yes, it's slightly more powerful than the Xbox 360 and Ps3 but what about when the PS4 and next Xbox arrive? These devices will technically wipe the floor with the Wii U and will provide Nintendo with the same problem the Wii had once the hype died down. 3rd parties will be reluctant to release games on it while they focus development on the more powerful Sony and Microsoft consoles. The casual market is open to all now and Microsoft and Sony will make sure they take advantage of that market from the beginning.

Sony

Sony are going to hit next-gen hard with the PS4 and my next article examines this. That being said, Nintendo have got it all wrong. They never wanted to compete with Sony and Microsoft directly in technical terms, but the level of innovation doesn't catch the markets attention as it did with the Wii.

My Prediction

• Nintendo start a big marketing push to combat the release of new consoles. Expect big games with a big marketing budget. Don't expect a price drop.

• The next Xbox will pick up where the Wii left off and target the causal market leaving Nintendo in its wake.

• The future looks bleak with both the Wii U and 3ds struggling too find a position in the market which appeals.

The next few years will be bleak for Nintendo. They might have already reached the point of no return. Will they be the next Sega? Leave your opinions on the comment section.

The New Cycle Begins

As I've said on numerous occasions, the PS4 and Xbox 720 will at least be announced by this time next year. In fact, developers have had a long time to work on them. I've been told that dev kits for the 720 have been in developers hands for 2 years.

With the rise of Kickstarter and the news surrounding big name developers leaving, things are changing, and just at an interesting time.

Cliffy B left Epic games last month

We've seen big name developers releasing below par games which can be attributed to publisher pressures. 
Take Rare for example. This console generation has seen them develop AAA titles to releasing Kinect party games. All that talent that made Rare so successful have gone and are working for other developers or going it alone.

What about Peter Molyneux? Did Microsoft force Lionhead into a certain direction which forced Peter to leave? I think developers are starting to realise that this is time for a fresh start, just as the new console generation starts.

I believe that in the next few years, you will see new companies sprouting up ready to unleash innovative titles and possibly be bought up by the bigger publishers. The new cycle begins.

Why the Wii U price is spot on, for now.

The price I'm taking is from the US confirmed price for the black Wii U: $350.

I am not counting the cheaper 8gb white model because Nintendo as with other companies, release a lesser SKU to try and highlight the more expensive SKU's value. For example, why buy the white Wii U for $300, when, for $50 dollars extra, you can have the better model. It's a simple marketing trick that has been used for a while now.

Lets breakdown the cost. Bare in mind these figures are not 100% accurate. 

• $100 dollars for the controller 
• $250 for the actual console

The black $350 Wii U

As of today, the 250gb Xbox 360 will set you back $250 and the 160gb Ps3, another $250.

Now considering the Wii U is slightly more powerful, you can see that the actual price isn't that dear. The console itself is would cost the same as the 360 and Ps3, if it not for their tablet. Nintendo have timed it perfectly. They can benefit from having the most powerful console for at least a year. 

The problem arises when Sony and Microsoft release their new consoles. These consoles will have been announced by this time next year and will be considerably more powerful than the Wii U. Obviously, the price point for these will be higher than $250, try $400-500 for both. The Wii U will be out-dated by then, but as seen with the original Wii, the technology doesn't have to be the best, as long as it captures the users imagination, in the Wii's case, the motion controller.. Nintendo have tried to do this with the new tablet but in my opinion this is not enough.

The price point for me, is perfect. The Wii U will sell well for at least a year. It may start to struggle as the other next-gen consoles come out, but they will be positioned as the cheaper less sophisticated console.

This worked for the Wii and it may just work for the Wii U.

Is Microsoft's Kinect strategy hit or miss?

The Video games market is currently expanding into many different segments thanks to the Nintendo Wii, no longer is gaming targeted towards the 13-40 Male consumer. There is the 60+ elderly market who love to get active by playing Wii bowling or the 30-50 range that are losing weight by using Nintendo Peripheral’s such as Wii fit. Both Sony and Microsoft must applaud Nintendo for expanding a previously narrow market.  With Nintendo monopolising these market segments Microsoft and Sony have been quick to react. Microsoft is introducing a camera that can track your body movements without the need to hold anything in your hand whilst Sony are going down a similar path to Nintendo by offering motion controllers. So what’s the deal with ‘Kinect’? Who is it targeted at? And how on earth will they provide competition to the extremely popular Nintendo Wii? This article will aim to answer these questions.

There is no doubt that Microsoft are after the casual market. This newly developed market has massive potential and is worth millions to Microsoft. Microsoft revealed the Kinect brand at E3 this year and for the first time ever it was broadcast in Times Square for everyone to see. Furthermore, they commissioned a show by the exquisite Cirque du Soleil to show of Kinect which was also broadcasted on MTV. These communication channels are not commonly used in the video game industry to show of new hardware. By broadcasting their E3 press conference live via time square it indicates that they want Kinect to entice the casual gamer into the Xbox experience.  However, is this the  right group to target? The marketing manager of Xbox recently said “I think we know that hardcore gamers will be the first to go out and buy it, as they are with any product”. This statement underlines their intentions to push Kinect onto the hardcore gamer but the thing is none of the software for Kinect will appeal to them. Casual games such as Kinect sports or Kinectimals will never a system seller for the hardcore gamer. In fact until Microsoft release a Kinect game that the hardcore can get excited about then the chances are they will hold off the purchase. Microsoft built its brand on offering a hardcore experience and it might be unwise to neglect them.

The pricing of Kinect has become a hot talking point in recent weeks. Although not confirmed it has been widely regarded that the price of Kinect will be around $150. Compared to the Nintendo Wii ($180) the value of Kinect could seem very poor. Why would the consumer who currently owns a Nintendo Wii part with a significant amount of money to purchase a peripheral that is essentially a very similar product? Microsoft needs to create a value proposition that warrants the $150 price tag and controller free gaming could be the answer. The unique selling point of Kinect is the fact that they offer a way of interacting with a game without the need to hold anything in your hands, this is something Nintendo Wii and playstation move don’t offer. Microsoft must therefore highlight this advantage when advertising this piece of hardware.  In fact by looking at Microsoft’s marketing strategy you could see why they are charging $150. They have to penetrate the market and get the casual market to take notice of this new product. Microsoft have already spent a huge amount on marketing Kinect through the Cirque du Soleil show and by displaying Kinect in various Macy stores. Make no doubt about it, they paid through the nose to do so. Marketing of Kinect is set to increase as they creep towards the release date and therefore costs will increase. Microsoft will aim to recuperate this cost and therefore will set the price as high as $150 however it is doubtful that they will make a profit on every unit sold as according to ‘Develop’ it is costing Microsoft $150 to manufacture the Kinect camera.

The casual market is here to stay and its going to grow and grow. Microsoft are entering a market in which they are determined to gain significant market share, they are in this for the long term. Kinect is just the beginning for Microsoft. It is expected to be bundled with the Xbox slim when it launches in order for Microsoft to get Kinect into homes across the world. Microsoft will initially want to focus on market share rather than profit so expect Kinect’s price to decrease and decrease quickly. Kinect or maybe an upgraded version will be bundled into the next generation of Xbox console because this will force the consumer to use it.  Consumers are more likely to see the value of Kinect and therefore use it if it becomes bundled in with the console rather than just on its own. Microsoft have a massive opportunity with Kinect and if sales are slow in the first year don’t expect Microsoft to drop Kinect. It is here to stay and if they do it right it could become a huge success just like the Nintendo Wii. Microsoft’s core customer is the hardcore gamer and they should not ignore them. Nintendo have currently realised their mistake of neglecting their hardcore consumer and rectified the issue by announcing numerous hardcore friendly titles. If Microsoft can maintain that balance then they could satisfy the hardcore whilst becoming a big player in the  lucrative casual market.

James Foti.

Contact me: jamesfoti1@hotmail.com