Nintendo Wii Left Out in the Cold This Holiday Season

Nintendo's charmed status as the holiday gift that defied even the recession seems to be ending. Should Nintendo's supply chain planners have seen this coming?

For the last three holiday shopping seasons, the Nintendo Wii gaming console has been the gift that has keep on giving for the Japanese videogame manufacturer: Record sales, insatiable demand and tons of never-ending buzz.

During that time, Nintendo's manufacturing facilities, supply chain planners and merchandising decisions-makers have been questioned and tested by a product like few others in modern retailing history. The Wii's three-year run as the gotta-have gift even earned the rare retail label of "recession proof" in 2008. Wii demand defied many basic economic principles and happily flummoxed its executives with Oprah Effect-type sales. "We are selling hardware at rates that no system has ever experienced," Nintendo president Reggie Fils-Aime proclaimed at a media event in October 2008.

But the Wii's heyday appears to be over.

Last week, executives announced that sales and profits fell sharply during the first half of Nintendo's financial year (which starts in April) as demand for the console dropped, according to an IDG News Service article. Sales of the Wii consoles from April to September plunged 43 percent when compared to the 2008 period, and beleaguered executives offered up a dismal outlook for the rest of the fiscal year's sales and profitability.

And yet it would appear, again, that the global economic conditions weren't a factor—one way or the other—as was the case with previous year's sales. In other words, a good or bad economy had virtually no impact on sales.

Industry analysts point to two factors contributing to the Wii's sudden demand decline: First, Nintendo delivered just a few hit videogames in 2009, notes a FinancialTimes.com article. Hot, new games typically sell more consoles. Second, midway through 2009, competitors Sony (PS3) and Microsoft (Xbox) cut the prices on their consoles. (Nintendo trimmed the Wii's price tag to $199 in September.) In turn, Wii sales that were once-certain may not be anymore.

Nintendo Wii Console Sales

Worldwide unit sales since its U.S. debut in November 2006

Fiscal Year Unit Sales
FY April '06- 5.8 million
FY April '07- 18.6 million
FY April '08- 25.9 million
FY April '09- *Forecasted: 26 million; Actual: 5.75 million (April-Sept. '09); New Forecast: 20 million units

Perhaps, too, the Wii has saturated all the U.S families that want the gaming system, and some of the buzz might have finally died down. (Rumors abounded that Nintendo was planning to release a new version of the Wii console this holiday season, which turned out not to be the case.)

Nintendo execs aren't publicly saying why they think Wii sales are trending downward. In July 2009, Nintendo of America VP of corporate affairs Denise Kaigler told Wired.com, "There are a lot of factors when sales go either up or down. And it's hard to point to any one particular factor. I've read reports from analysts that point to any number of factors. What I can say is our launch calendar is very different from 2008 versus 2009."

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