The case of Nintendo and Wii U: Mistakes in Marketing and Communication | MTP e.V.

How a high quality product flops due to serious mistakes in marketing and strategic communication

After its launch in Europe in November 2012, Nintendo’s flagship, the Wii U, unfortunately turned into a flop. But why did that happen? Just after the huge success of the Wii, it would be more than reasonable thinking it shouldn’t be a problem to establish a new, innovative product at least relatively successful on the market. Yet, far wrong! Fatal errors in marketing made the traditional manufacturer look like a fool – let’s attempt to explain.

Background and Presentation of the Product

The preceding console Wii has been a success all over the world – with over 100 Mil sold consoles [1], it developed into one of the top-selling gaming consoles of all time. The crucial innovation was the motion control and the targeting of a completely new market segment: the so called casual gamer. The focus of marketing strategies on this target group redefined marketing in the gaming industry.

But when, in 2011, Wii‘s zenith was exceeded, Nintendo was forced to come up with something better. In 2012, the successive console was introduced: the Wii U. It was not only supposed to dissolve in HD, but also to implement one of the biggest trends at this time: the second screen (by the controller including a touchscreen). In addition, they aimed to appeal to the former target group, the core gamer, at the same time, which can be viewed as the changing point. And this is where the disaster developed. They not only failed to name a final price at the E3 (most important gaming exhibition worldwide), but concealed also the technical specifications. This information as well as some new launch titles were published later, a day after the launch of the iPhone 5, which lead to the information not being heard under the rumors about the iFuss. This is where the strategic communications department leaked in adequate scanning of the environment and their stakeholders. Consequently, the information gap arose.

The Introduction of the Product

The introduction in November 2012 was organized quite cleverly as far as the Christmas bargain was concerned and bore fruit at least partially: A pretty good sales volume has been announced at the beginning of 2013 [2]. However, this volume could mainly be traced back to fans of the brand with a high awareness, who have been buying each Nintendo console with its introduction since forever. The broader target group was too bewildered. Is this a new product? Accessories for the Wii? An upgrade? The following launch spot from the USA exemplifies the improper communication:

This is why comments like “isn’t this the new tablet controller for the Wii?!” were not rare. Nintendo failed to position the product precisely from the very beginning due to several different reasons. At a first glance, the name was too similar to the predecessor and moreover, the TV commercials did not communicate the launch of an all new product clearly to their potential customers.  Especially targeting a group that goes beyond the classic core gamer demands a clear statement. Concerning the classical gamer, it remains to say that the commercial did not appeal to them either: playing kids and jumping grandmas? Not even the Dubstep background music could compensate for that. After the adequate volume of sales at the beginning, disillusionment started to spread soon. The supplies of games had been missing almost completely and through steadily sinking figures, even the scarce support of the third party manufacturer dropped.

The Network Effects on Gaming Consoles and Wii U’s Downwards Helix

Let’s get to the marketing knowhow – time to take out the nerd-hipster-glasses and take a deep breath! Consoles are network products composed by two product benefits: the original one, denoted by the product’s characteristics, and the derivative one, marked by the dependence on the current and future distribution of the product [3].

Besides, the indirect network effects play an important role. Those imply that the utility of the product increases with the distribution of complementary products. In this case, a broader offer of software would raise the utility and therefore the sales volume of the Wii U [3]. This is the effect that also leads to the downwards helix in sales. Due to the low basis of hardware, publishers backed off and fewer games were published. With the continued decrease of the console’s utility, the demand got lower and with this, the support by the publishers declined.

Current Status and Outlook

Nintendo predicted 9 Mil sold units for last year. The actual result were foolish 2,8 Mil [4]. Subsequently, CEO Satoru Iwata shortened his salary by 50 percent. Software is supplied by e.g. Donkey Kong Country: Tropical Freeze, Mario Kart 8, and Super Smash Bros. U. Nevertheless, three top-sellers are insufficient.  Above all, if you consider what third party manufacturers have up their sleeve for Xbox One and Playstation 4. At the latest media conference, Nintendo announced to having understood the problem – at least the first discretion one year after the launch. For future measures of communication, they will go more into the capabilities of the gamepad and will advertise their own products more within apps for smartphones. They can also imagine buying up foreign development studios and in this way widen the portfolio. If this will be sufficient is more than questionable – just in this situation an extreme change of course would be necessary. One should not only blow one’s own trumpet in advertisement and advertise with finally enough media budget. One should also decide on which target group to reach with this console. Furthermore, Nintendo needs to change track after having lost almost all of the support of third party manufacturers, and get a move on software development – a real system seller is still missing. The required qualifications exist. The console involves, due to the second screen and the adapted motion control, an absolute high potential plus benefits from the strong exclusive brand Nintendo, this reputation can be viewed as unique selling proposition. The alternative would be to just sit it out with the Wii U for another 1-2 years and then launch something new on the market. Perhaps they will then consider how to merchandize the product beforehand and not only when it is already too late

PS: In this way, we kindly invite Nintendo to discuss this topic with us; a chance would be the Digital Marketing Congress in Hamburg.

Article in German

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