Depending on who you ask, the Wii was either the saving grace of Nintendo that revolutionized the gaming industry as we know it or the sorriest excuse for a console ever and the beginning of the end for Nintendo. Gaming journalists have positioned the Wii in the number one spot on lists of both the best and worst consoles of all time. Analysts have pointed to it as both the greatest success of Nintendo Global President Satoru Iwata and the reason he should be removed from power.
So is the Wii the greatest console in a rich Nintendo history, or is it the company’s most glaring shortcoming? By taking a close look at the impact the Wii has had on Nintendo’s success in both the short term and the long term, we can see that the answer is…well, both.
Nintendo’s Most Successful Home Console Ever
When Satoru Iwata inherited his position as the Global President and CEO of Nintendo, he was tasked with the responsibility of turning around an ugly downward spiral of hardware sales. The NES netted an impressive 61.91 million in units sold, helping popularize video games and firmly establishing itself as the leader in the industry. At 49.10 million units sold, the SNES was still very respectable, but tough competition from SEGA and Sony had started to chip away at Nintendo’s market.
The N64 declined further to 32.93 million, and it was clear that the seat of power had shifted away from Nintendo. The Gamecube, launched just prior to Iwata’s promotion, saw Nintendo hardware sales hit rock bottom as the struggling console only managed around 21.74 million units sold.
Nintendo wasn’t facing stiff competition anymore; they were getting dominated. The enormously popular PlayStation 2 sold more than seven times as many units as the Gamecube, and even the Xbox – Microsoft’s first attempt at a home console – managed to outsell the Nintendo brand. With Sony and Microsoft preparing to launch powerful HD consoles with a focus on online gaming, Nintendo opted for a change of pace. Rather than attempt to directly compete for an already divided market, Nintendo carved out a brand new market with the Wii.
Originally codenamed as “Revolution,” you could argue that the Wii was exactly that. The Wii was instrumental in making video games truly mainstream. People who had never even considered themselves gamers before flocked to the console in such great numbers that it was nearly impossible to walk into a store and find a Wii on shelves for almost two years.
While Microsoft and Sony got off to slow starts with their super-powered $500-$600 gaming machines – losing money on each unit that they sold – the Wii offered a cheap, fun way to play for people of all ages and backgrounds, and Nintendo was racking up around $100 per console sale. Not only was Nintendo selling consoles as fast as their top two competitors combined; they were making bank. In a few short years, Nintendo’s market capitalization had risen astronomically from around $16 billion to over $75 billion.
To date, the Wii has sold just shy of 100 million consoles. By comparison, the PlayStation 3 and Xbox 360 have each sold in the neighborhood of 77 million. In terms of both units sold and profits generated, the Wii was a complete success and thoroughly bested the competition.
The Console That Cost Nintendo The Industry’s Respect
This past generation was arguably the biggest stepping stone in video game history. For the first time ever, you could experience impressive HD graphics and a robust online experience on a home console…unless you bought a Wii. Microsoft set the new industry standard with the launch of the Xbox 360, and Sony pushed things even further when they launched the PlayStation 3 a year later. Meanwhile, the Wii offered only moderate improvements over the Gamecube in terms of processing power and graphical capabilities, and its online experience was limited at best.
The Wii’s underwhelming specs and online experience cost the console what little third party support they had left from the “hardcore” gaming market, and Nintendo was unable to support many of the biggest and best games of its generation. Many of the multiplatform games that were ported to the Wii had to be stripped down significantly to the point that they were almost completely different games.
The Wii craze, impressive as it was, began to die out as the system aged. While the Xbox 360 and PlayStation 3 continue to sell at a fairly healthy rate late in their life, the Wii has declined from selling nearly 30 million units a year to just 15 million units in the last two years combined. As the PlayStation 3 and Xbox 360 have dropped to a more competitive price, being cheap is no longer enough to keep people interested in the Wii.
Of course, any console is bound to see some decline in hardware sales as its life cycle comes to a close, but the Wii’s situation shows a steep software decline as well. A look at the highest-selling Wii games shows that just one game (Legend of Zelda: Skyward Sword) has managed to crack the top 20 in the past two years, and no recent Wii games have managed to sell more than 3.52 million.
The new market carved out by the Wii is both the system’s greatest strength and its most glaring weakness. Attracting a “casual” crowd allowed Nintendo to sell millions of consoles quickly, but the majority of the Wii’s consumer base simply isn’t that interested in purchasing AAA titles. A large percentage of Wii owners didn’t buy the console with the mindset of wanting to make it their primary gaming device. Many of the members of Nintendo’s new market bought it as a machine that lets them play sports from the comfort of their living room and watch Netflix.
As many gamers moved on from using the Wii as a gaming device (or never really utilized it as one in the first place), quality Nintendo software has undersold in the last few years of the system’s life. For comparison’s sake, The Legend of Zelda: Twilight Princess sold nearly 6 million copies on the Wii as a launch title (despite being available on the Gamecube as well) but The Legend of Zelda: Skyward Sword only sold 3.52 million copies towards the end of the Wii’s life.
Millions of Wii consoles across the world have started to gather dust, and it shows. Meanwihle, the Xbox 360 and PlayStation 3 continue to have a strong user base late in their lives, and there are still top-selling AAA titles each year.
Still, the immense amount of revenue that the Wii generated early on is more than enough to cancel out the dismal late-life numbers that the console has put forth. However, the case can be made that the Wii’s casual nature not only damaged its own longterm success, but the longterm success of the company in general.
Since the early days, Nintendo has seen its perception by the video game market shift. Nintendo was unquestionably the most respected and powerful video game company in the late 80s, but Sony was able to steal quite a lot of its thunder in the 90s. By the time the Gamecube rolled around, it seemed that Nintendo had been rebranded as the retro gaming company, only appealing to the dedicated Nintendo fanbase. With the Wii, that perception has been downgraded again, and Nintendo is now perceived by most as the casual gaming company.
This puts Nintendo in a hole with the Wii U, as they are attempting to appeal to both casual and hardcore gamers alike. Nintendo is having a hard time maintaining the casual audience of the Wii, because they have been groomed and conditioned to expect low prices, but the Wii U and its games are a little more expensive. Meanwhile, third parties are hesitant to bring their core titles to the console, because they don’t believe the fanbase is there. This creates an ugly downward spiral, as there’s no reason for hardcore gamers to buy the Wii U if it doesn’t have the hardcore titles they want, and there’s no reason for developers to bring hardcore games to the console if they don’t believe hardcore gamers are interested in it.
Essentially, the Wii has branded Nintendo as the casual company, but the casual market isn’t very sustainable. Your grandparents may have bought a Wii, but they don’t want to buy a Wii U. Between the Wii and the ever-increasing popularity of social and casual gaming on smartphones and tablets, most of the casual fanbase already has their needs met. Meanwhile, most of the hardcore fanbase remains unconvinced that the Wii U is capable of meeting their needs.
This puts Nintendo at the risk of being back where they were in the Gamecube era, as it limits their range of interest to just the dedicated Nintendo fanbase once again. Accordingly so, Nintendo’s stocks have slipped back to where they were in the Gamecube era as well, and that $75 billion in market cap is back down to around $15 billion.
The Reality of the Situation
So when its all said and done, was the Wii the greatest success in Nintendo history, or was it an enormous detriment to the company’s reputation? As is often the case when two extreme views are commonplace, the truth involves a little bit of each. The Wii brought Nintendo out of its lowest point in history, but it also made it harder for Nintendo to attain sustainable success.
The fact of the matter is that if Nintendo had not launched the Wii, the company would likely be in much worse financial shape than it is now. Unlike Sony and Microsoft, Nintendo is strictly a video game company. They didn’t have the luxury of being able to borrow money from their non-gaming divisions in order to finance a powerful, HD console. If they had taken the same route as their competition and launched a state of the art gaming machine that sold each unit at a loss, they would have run the risk of bankruptcy. If they chose to launch an HD console without selling at a loss, they would either have to place an extremely high price tag on the system or make it (still) significantly less powerful to cut costs. Either way, the console would not be able to put up much of a fight against the Xbox 360 and the PlayStation 3.
By opting for the cheap and fun Wii, Nintendo was able to pad their bank account to well over $10 billion. If you think Satoru Iwata is feeling the heat right now over the fact that Nintendo has lost a few hundred million dollars over the past two years, imagine how bad things would be if Nintendo didn’t have that $10 billion safety net.
So was the Wii a success or a failure? That depends on how you look at the situation. From a financial standpoint, the Wii was a massive success, and may have saved the company, but it came at a cost. Nintendo now has a tough task ahead of them with the Wii U: They have to find a way to make the gaming market take them seriously again. Thanks to the Wii, they have plenty of money at their disposal to figure out how to do that.