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iSuppli Warns Wii U Will Be In Short Supply

11/12/2012 06:24:00 AM Eastern

El Segundo, Calif. — By the end of December, consumers worldwide are expected to snap up 3.5 million Wii U consoles, compared with the 3.1 million Wii consoles that were bought over a similar sales period at the end of 2006, according to new study released by IHS Screen Digest.

Nintendo’s latest gaming console will debut in the U.S. on Nov. 18 and is forecast to outperform the sales of its previous hugely successful Wii platform in its opening months on the market, according to iSuppli.

The market research firm is pinning “pent-up demand from Nintendo evangelists,” including many first introduced to console gaming through the Wii as the leading driver of the expected buying surge.

“Based on expectations of shipped Wii U units and overall consumer activity, IHS believes this will lead to supply shortages over the holiday shopping season, leaving some shoppers empty-handed and having to wait until the new year to satisfy their need for the next-generation Nintendo product,” the company said in a statement.

"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, iSuppli senior principal analyst and head of games, said. “Stock will be replenished in ongoing fashion, but some unlucky shoppers may well miss out.”

But, he continued, translating Wii U launch performance into longer-term success will be a major challenge.

“IHS forecasts that Wii U sales over the first four years of its life are expected to reach around 70 percent of the Wii's sales volume in the corresponding time frame,” Harding-Rolls added.

 iSuppli cautioned that Nintendo “should be laser-focused on consumer engagement in order to remain relevant.”

Since its launch in 2006, the gesture-control-based Wii has revolutionized the console-game playing landscape. The system brought innovation and new social and lifestyle software that triggered word-of-mouth and mainstream successes, iSuppli noted.

Nintendo's strength of innovation and first-party content have driven consumers to buy 92 million Wii consoles worldwide since its launch.

The Wii U will introduce the first dedicated and fully integrated second-screen game experience.

“Yet the fragmented landscape for games consumption and the proliferation of always-on, connected devices, means that product innovation alone is not enough to stay relevant to today's mainstream consumer,” iSuppli said.

 “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.”

Nintendo's recent strategic announcements show a company that has identified its weaknesses and is willing to adapt in order to remain competitive. The Wii U games lineup for the launch window features more third-party developers than Nintendo has had for its consoles in the past. The company has also partnered with 3D game engine provider Unity to encourage new games developers to come on board, and it has additional titles in the pipeline to keep content fresh as the new year progresses. Nintendo is also focusing needed attention on its digital and online strategy with its own upgraded store and community platform.

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