Is a 200% Sales Increase Enough to Save the Wii U?

Is a 200% Sales Increase Enough to Save the Wii U?

Video game sales tracker NPD Group recently released its retail numbers for the month of September. Industry sales were up 27% year-over-year largely thanks to the blockbuster performance of Grand Theft Auto 5 from Take-Two Interactive . Nintendo's Wii U console also enjoyed a bump after a price drop and bundling with The Legend of Zelda: The Wind Waker HD. In fact, Wii U sales saw an approximate 200% month-over-month increase. Is this the type of performance that Nintendo needs to get the system back on track?

How big is the bump
After the release of the NPD numbers, Nintendo's press release touted its 3DS handheld's position as the best-selling hardware for the fifth straight month; it also announced a 200% increase in Wii U sales. The NPD Group releases its numbers only to subscription holders, who are not supposed to disclose them publicly, though leaks are not uncommon. Going by the rumored 31,000 unit performance for the console in August, that brings the Wii U's September sales to somewhere around 93,000 units.

Even if numbers were substantially north of that figure, tripling the Wii U's August sales would not represent a great performance. In August, the Microsoft Xbox 360 was the best selling console on the market with 96,000 units. A three-fold increase in this number brings you to 288,000, which would be a small increase over the console's September 2012 sales of 270,000 units. This is notable because the 360 had already been on the market for almost seven years at that point and console hardware sales were already contracting; for instance, the Xbox 360 sold 438,000 units in September of 2011. The fact that the Wii U is struggling to match the numbers of a system at the tail end of its life cycle is telling.

Going down
Hardware sales were down 13% from September of last year. This decline comes despite the Wii U's move to a more attractive price and the launch of a GTA5 PlayStation 3 bundle that propelled the Sony system to the top console hardware spot for the first time in 32 months. The Xbox 360 had previously been the best-selling home console hardware and it has shown a strong grip on the North American market, even amid declining sales. It's also worth noting that the Wii U wasn't available until November of last year. Its presence has clearly done very little to prop up hardware numbers.

Stealing the spotlight
September's biggest success story was undoubtedly Grand Theft Auto 5. The game generated a billion dollars in revenue within its first three days on the market. To give an idea of just how big of an impact the title had, overall retail software sales were up 52%, with Grand Theft Auto 5 accounting for over half of September's dollar sales. The game is exceeding even the rosiest expectations and it has had a noticeable effect on Take Two's stock price, which is up over 50% on the year.

Grand Theft Auto 5's performance is an indication that AAA console software is still a viable and attractive prospect for companies that are equipped to pursue it. While the last generation saw the deterioration of mid-tier game development, high profile series like Call of Duty and Grand Theft Auto are more successful than ever. The absence of Grand Theft Auto5 on the Wii U platform highlights a glaring problem. When Nintendo first began explaining the device to the public, there were assurances that the system's HD graphics capabilities meant that it would receive most of the biggest third-party titles. To miss out on what is likely the biggest title of the year is damaging. Nintendo should have incentivized Take Two to ensure that Grand Theft Auto 5 hit its platform.

The percentages that matter
The 200% Wii U sales increase shows at least some level of market receptivity, but not enough. The console's lineup for the holiday season isn't strong enough to turn things around. Titles like The Legend of Zelda: The Wind Waker HD and Pikmin 3 were positioned as major releases, but their sales have not delivered on that promise. That leaves the upcoming Super Mario 3D World to drive system sales. Mario titles have great draw, but not enough to save an ailing system.

Nintendo's stock has fallen roughly 11% since the launch of the Wii U. With the company set to release its second quarter earnings on Oct. 30, it could take another big hit. The relatively small impact of the price drop and Zelda bundle means that Nintendo is going to miss its nine million unit Wii U sales target by what is likely to be a spectacular margin. The console's performance could have CEO Satoru Iwata looking for a new job.

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Keith Noonan has no position in any stocks mentioned. The Motley Fool recommends Take-Two Interactive. The Motley Fool owns shares of Microsoft. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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