Let’s talk sales. It’s all too easy to look at the December NPD numbers and come to a bunch of conclusions about the current state of the various game console manufacturers and publishers simply based on sales. While sales are important – you can’t make money without people spending money on your stuff – they’re also not the end all be all indicator of how things are doing.
The goal of sales is to accrue profits, yes, but the best way to ensure profits not just in the short term but in the long term is to work more on creating a system of value exchange between you and your customers. To put it another way, you don’t just want to grab as many customers as you can. You want to grab the ones that you’ll be able to hold onto and continue to do business with for years to come.
It’s tempting to look at the diminished sales volume of Wii U compared to Wii and GameCube, both in the hardware and software department, and conclude that Nintendo’s in dire straits. But the fact that Nintendo’s decided to focus on highlighting their increased Wii U revenues tells us something different: they see the situation as actually favorable. And judging by the fact that Nintendo’s stock prices have actually climbed in light of this news, that’s something we should look at more closely.
The talk of revenues should send up a flag for anyone who’s studied marketing. Nintendo’s highlighting their revenues because they see the current Wii U customers as delivering high value for the company in the form of those extra dollars. At the same time, that they’re managing to actually pull in more money than one of the biggest overnight success stories in the gaming world stands to demonstrate something critical – their current Wii U customers themselves see Wii U itself as delivering high value, which is why they’re willing to shell out over $100 more than Wii cost at launch.
And, lo and behold, if you look at what Nintendo of America executive VP of sales & marketing Scott Moffitt had to say about the NPD numbers, you’ll find that the focus on value is right smack in the center:
While the Wii launch established new benchmarks in the United States, Wii U has surpassed its predecessor in perhaps the most important category: revenue generation. The demand for the Deluxe SKU, which was essentially sold out at retail this holiday, and the strong attach rate of New Super Mario Bros. U, shows that we have the value and the games to drive momentum in 2013. We look forward to offering great new experiences and bringing smiles to millions of new faces throughout the year.
Some may look at the relatively low software sales at present and wonder what Mr. Moffitt means when he says that Wii U sales indicate that Nintendo has the games (plural) to drive momentum in 2013. Didn’t he just say that the driving force for the system was actually one game – New Super Mario Bros. U?
Certainly, when it comes to games already sold, New Super Mario Bros. U is leading the pack. However, let’s give the people who shelled out more than $400 for a Wii U at launch (the cost of the Deluxe Set + Mario) a bit of credit. They’re not going to invest that much in a new game machine just to play one game – they’re going to want to buy more games later on.
With the higher cost of entry comes a consumer who’s more mindful about getting the most out of his or her hard-earned dollar, especially in today’s cash-strapped economy.
While I don’t have the power of unlimited information at my disposal, I’d be willing to guess that most of those Wii U sales – and specifically the Wii U sales accompanied by New Super Mario Bros. purchases – went to single-console gamers who owned a Wii and no other game consoles last generation. These are gamers who were satisfied with what Wii had to offer and ready to upgrade to the next system to enjoy the next round of content from Nintendo and maybe occasionally something from whatever third-party companies they manage to get on board for multi-platform titles or exclusives.
As long as Nintendo can deliver a steady stream of quality content for these players to enjoy, their customer loyalty is sure to prove a much bigger and more sustainable asset for Nintendo than trying to sell to customers who might not be such big consumers of video games. It’d be better to lose out on “more sales” in the short term if it means focusing on maximizing relationships with high-value customers. They can always go after those less valuable customers later with a round of price cuts once they’re ready to sell the system at a lower cost.
If you ask me, judging by today’s economic conditions, the keyword this generation is going to be loyalty. Will next-gen platforms be able to attract fans of last gen’s games with new offerings? Or will those franchises and genres that rose to the top in the last 5-6 years wind up stagnating during the transition? The companies who can rein in those customers all over again will be the ones to thrive.