Wii 2 delay is hurting Nintendo

In the wake of today’s financial report that reveals falling Wii hardware and software sales, analyst Michael Pachter has told MCV that Nintendo is leaving it far too late to reveal its successor to its popular home console.

In the last financial year Wii software unit sales fell to 192m, down from 205m the year before. That’s despite the sale of an additional 2.5m Wii consoles – a fact that should naturally lead to growing software sales.

Total Wii sales stand at 71m. Nintendo’s own forecasts predict that number reaching 88m by the end of fiscal 2011 with software sales of 165m units. As Pachter points out, this represents a ratio of around two games to every console. Two years ago this ratio was four games sold for every console.

That decline is a serious problem for their profitability and suggests that the Wii audience is just not buying software,” Pachter told MCV. The reason for this is clear: the software being created is just not interesting enough or compelling enough to drive Wii owners to buy more than two per year, and most of those purchases are first party software.

We can blame the third party publishers for making shovelware, or for misjudging the Wii market, but the simple fact is that the publishers have to develop completely separate games for the Wii because its CPU is not powerful.”

Pachter goes on to add that if Nintendo were to bring forward the release of a successor to Wii it could help to reverse this trend.

If Nintendo introduces a Wii 2 that is similar in processing power to the PS3 or 360, there would be far more games made for all three platforms, and Nintendo would see attach rates and royalties rise, driving profits higher,” he added.

With all that said, I think that the company intends to remain complacent about its hardware leadership position, and expect it to wait too long to introduce another console. It’s too bad, as I think that the right business decision is to launch a Wii HD this year, but they appear to disagree with me.”