What’s Going On with Nintendo’s Wii U?

Last night, as part of its monthly ritual, retail-tracker NPD Group released its estimates of February's video game hardware and software sales.

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Last night, as part of its time-honored monthly ritual, retail-tracker NPD Group released its estimates of February’s video game hardware and software sales. As usual, the company excluded specific console numbers. NPD backpedaled from showing us this data a few years ago, I’ve always assumed, because of pressure from the various players to frame their numbers in the best possible light. Recall all the years the Wii decimated the Xbox 360 and PlayStation 3 in monthly units sold, or more recently, the unbroken stretch Microsoft‘s Xbox 360 has been lapping everyone: blogs and message boards flock to make hay of this stuff, and “systems wars” wonks then complete the feedback loop.

These days you have to dig to find anything really construable as bad news about a specific company in NPD’s figures, with its analysts doing their best to give each player an attaboy. At worst, you’ll find bits of overall industry gloom — inescapable, really, since the recession finally caught up to the industry (albeit belatedly, and after years of unprecedented growth).

And so this month’s look back at February was another barrel of disappointment from a retail standpoint, with year-on-year declines in hardware sales (-36%), software (-27%) and accessories (-3%) for an overall 25% decline.

But wait, what about digital? NPD says that if you add $90 million for used game sales and rentals, plus digital sales (full games, add-ons, microtransactions, subscriptions, mobile apps and social network games) of $319 million, the total consumer spend for February would be just under $1.2 billion. NPD’s tracking of these newer markets has been incremental as it works with industry players to reveal this stuff, so you can’t really compare February 2013 with February 2012′s total consumer spend of $1.09 billion, but — assuming online transactions have only increased over the past 12 months — it seems reasonable to wonder, as we’ve been for years now, whether the downturn (if indeed it still is a downturn) is less than it seems. After all, NPD says its “new physical retail sales” figures only account for about 50% of total consumer spend at this point.

Where’s Nintendo’s Wii U in all this? We know Nintendo’s new console didn’t do so hot in January, moving just 57,000 units (well, unless you buy this theory involving holiday speculators, though it’d be only marginally better news numbers-wise). Putting a positive spin on Nintendo’s February numbers, NPD noted they increased 40% (on an average per week basis) over January, meaning Nintendo probably moved around 64,000 units (note that January was a five-week month). That’s still a paucity compared to the Wii’s extremely strong post-launch sales, and a fraction what Microsoft’s Xbox 360 and Sony‘s PlayStation 3 have been selling in their waning days.

Speaking of, Microsoft says it sold 302,000 units in February and that this marks the Xbox 360′s “26th consecutive month as the number-one selling console in the U.S.” (NPD says it’s actually the 19th straight month if you count the handheld systems as consoles, which seems more appropriate these days.)

When I spoke with Nintendo’s Shigeru Miyamoto last week, I didn’t bug him about Wii U sales — not because I couldn’t have, but because Miyamoto’s a designer, not a bean counter. And yet we’d be foolish to ignore the criticality of sales when it comes to questions like “Will X company develop Y game(s) for system Z?” You can’t ignore the bottom line. If a system fails to catch fire, well, I know a lot of people who loved Sega’s Dreamcast. Love and wonderful ideas alone won’t see you through.

Does that mean it’s time for a Wii U price cut? It’s the conventional wisdom when a console’s in trouble (or seems to be) — like Nintendo’s 3DS, which surged from the gate, then stumbled for months before Nintendo’s price cut put it back on track. After all, the Wii U’s target demographic isn’t the 300,000+ that bought Xbox 360s last month — the same group, I suspect, fond of bashing the system for not raising the computational bar as Sony’s forthcoming PlayStation 4 appears to be. In any case, $350 is asking a lot from that other, ostensibly broader demographic — the one that paid just $250 years ago for the Wii with Wii Sports, and that can nowadays pick up a Wii for as little as $130 (or significantly less still used).

Buying a game console early in its lifecycle is an investment, a sign of good faith, an indication that you believe in a company’s vision as well as its ability to deliver the kinds of games you want to play. But you have to move systems to stir developers. For all the Wii U’s promise — and I still see plenty — I can’t imagine the water cooler conversations at third-party game developers are exactly uplifting just now.