Nintendo's Wii U Is Costing It Billions

Unlike video game publisher Take-Two Interactive or Activision-Blizzard , Nintendo only releases games for the consoles it makes, a strategy reiterated earlier this week by Nintendo of America's President Reggie Fils-Aime. In an interview with KING 5 News, Fils-Aime defended his company's policy, stressing that Nintendo will not be bringing Super Mario to Apple's iOS platform anytime soon.

While Fils-Aime makes some valid points about the unproven nature of mobile gaming monetization, iOS isn't the platform Nintendo should be focused on. Rather, Nintendo's continued support of its Wii U console in the living room is clearly costing the company billions of dollars in terms of lost sales

Grand Theft Auto 5 vs Call of Duty: Ghosts vs Super Mario 3D World
This becomes overwhelming evident when one compares the sales data of three of the fall's most anticipated video games: Take-Two's Grand Theft Auto 5, Activision-Blizzard's Call of Duty: Ghosts, and Nintendo's Super Mario 3D World. All three titles were designed for living room video game consoles, and all three titles received positive reviews. And yet -- sales data couldn't be any more different.

Grand Theft Auto 5 sold 11 million copies in its first 24 hours on sale, ultimately generating $1 billion within its first three days on the market. It was the top selling video game in both September and October, and only slipped to the five slot in November. By the end of its second month on the market, Take-Two said Grand Theft Auto 5 had sold 29 million copies.

Likewise, Activison's Call of Duty: Ghosts also did $1 billion worth of sales -- in its very first day. According to NPD, it was the best selling video game in the US in November, but ironically, that wasn't good enough. Sales of Ghosts were actually worse than last year's Call of Duty title, to the point where analysts at Cowen called it "troubling."

Super Mario 3D World is a masterpiece, but few will ever play it
But compared to Nintendo's Super Mario 3D World, Activision's game is a stunning success. In Super Mario 3D World's first week on sale in Japan, estimates pegged sales at just more than 100,000 and in the US, Nintendo admitted that it had sold only 215,000 units in its first 8 days on the market.

To be fair, both Call of Duty: Ghosts and Grand Theft Auto 5 are different types of video games -- Mario is a platformer, which might be less appealing to gamers in general. However, in the UK, Super Mario 3D World was apparently outsold by the PlayStation 4 launch title Knack -- notable because Knack, like Mario, is a platformer -- one that has received poor reviews.

On Metacritic, an aggregator of video game reviews, Knack has a score of just 55. In comparison, Super Mario 3D Worldhas a 94 -- an almost perfect score. Grand Theft Auto 5's score is just marginally higher (97 for the Xbox 360 version), while Call of Duty: Ghosts' score is lower (78 for the Xbox One version)  but quality doesn't account for the vast difference in sales.

The Wii U is a failed platform
Rather, the extremely low installed base is to blame. When Nintendo reported earnings in October, it said that it had sold just 3.9 million Wii U consoles. Factoring in more recent sales estimates, Nintendo has sold just under 4.5 million Wii Us.

Even if every single person who owned a Wii U had ran out and bought Super Mario 3D World on the first day, Nintendo wouldn't have been able to even come close to Take-Two's numbers with Grand Theft Auto 5 or Activision's numbers with Call of Duty: Ghosts -- at the absolute max, Nintendo can sell just more than 4 million copies of a game that some have called a "creative masterpiece."

In contrast, Take-Two's game launched on the PlayStation 3 and Xbox 360. In total, those two consoles have sold about 160 million units combined. That isn't to take away from Take-Two's achievement -- capturing about 19% of the total installed base is still impressive, but it's far easier to generate so many sales when the platform is so much bigger. Activison's Call of Duty: Ghosts was launched on even more platforms, including the recently released Xbox One and PlayStation 4.

Going third party
Various observers have long called for Nintendo to consider going third party, but in light of the Wii U's failure, that suggestion seems more valid than ever before. Despite the fact that, as a video game maker, Nintendo to appears to be at its best, few gamers can buy the company's titles when so few of them own its hardware.

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