MarketLine Blog

Nintendo toppled by Sony as Wii U sales slump

A report from Japan’s Nikkei Asian Review has revealed that, for the first time in eight years, Sony’s console sales outstripped those of Nintendo to take top spot in the console sales charts (FY ending March 31st 2014). The release of the PS4 console last year helped boost Sony’s console sales both in terms of unit sales and revenue – which increased 38.5% to JPY 979 billion. Meanwhile Nintendo saw a slump in net sales, partially caused by markdowns of Wii U hardware in the US. Growth in higher margin markets such as software sales was not sufficient to compensate for the loss of revenue from hardware sales.

The Wii U was released in November 2012 and seeing sales of a relatively new console dropping may give Nintendo cause for concern. Indeed, total units sales of the Wii U console since its launch are less than sales of Sony’s PS4, which came to market a whole year later.

Conversely, Sony can expect to see hardware sales increase as demand for next generation consoles increases. Microsoft, the third major player in the console market also saw its sales swell by 16% to 11.6 million units, again thanks to the launch of their next-gen console, the Xbox One. The launch of a new console often sees an initial uptake by so called ‘hardcore-gamers’. Sales then increase as prices drop and more software becomes available, attracting more casual gamers looking to replace older hardware. Microsoft and Sony can therefore expect next-gen console sales to grow over the next few years.

Nintendo has struggled to compete with Sony and Microsoft in recent years as its hardware is not as powerful and some blockbuster game titles are not released on its consoles. As discussed in the Marketline case study; Nintendo Co., Ltd: Innovating in a reactive market, Nintendo has attempted to innovate in order to carve itself a niche in the market – positioning itself as family-oriented and health conscious. However as Sony and Microsoft move into these markets by expanding their motion-controlled offering Nintendo may find itself losing market share.

It remains to be seen whether Nintendo can reinvigorate hardware sales, crucial in driving sales of higher margin products such as software, or whether it will once again need to innovate to find another untapped niche in the highly competitive market. The upcoming E3 industry conference in Los Angeles may offer an insight into Nintendo and its rivals’ vision for the future.

For further reading, take a look at our following reports:

Microsoft Xbox: How Microsoft challenged the dominance of Nintendo and Sony

Microsoft Xbox One: The battle against Sony Playstation 4

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