Can Nintendo's Wii U Win the Holiday?

Sampling, Marketing, Will Be Key to Determining Gaming Device's Success

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It's a gaming device. It's a TV remote. It's a Netflix player.

In fact, Nintendo's Wii U, its second-generation motion-enabled video-game console with a second screen, is all of those things. The Wii U GamePad, a chunky tablet lookalike, controls game play with touch or a stylus and is also a universal remote for the TV and works as a standalone gaming device. It's compatible with the Wii remotes already out with the original console, but also acts as a central controller in some games to manage or help other players in what Nintendo calls "asymmetric game play."

Nintendo is promising a second-screen TV experience through its Wii U console.
Nintendo is promising a second-screen TV experience through its Wii U console.

Seems a little hard to explain? That's why Nintendo is trying to show consumers how to use the device. "The challenge … is to have consumers understand and experience the product hands-on," said NPD Group analyst Liam Callahan, with events and in-store set-ups. A Nintendo "Mall Experience" begins Monday in 26 malls across the country for hands-on play on the Wii U, as well as with 3DS handhelds. More than 5,000 hands-on Wii U kiosks are already in retailers such as Target , Best Buy, Gamestop and Walmart.

Nintendo is also advertising the Wii U heavily in TV and online ads, along with those events and co-marketing partnerships including one with Old Navy on Black Friday and a special launch event at Toys 'R' Us in Times Square where the store will open at 12:01 a.m. on Nov. 18 for the Wii U launch. Three TV spots, tagged "This is how U will play next," show general play in one, while the two others focus on specific games, "New Super Mario Bros. U" and "Sing Party." Nintendo declined a request for interview; a spokeswoman said, "We can't go into detail about marketing strategy." Publicis' Leo Burnett, Chicago, is the agency.

But a lot will rely on that wild card. Michael Cai, VP-games and technology at Interpret, attributed the success of the original Wii to both innovative and intuitive game play, but also to Nintendo's extensive marketing efforts including the Wii ambassador program targeting mom bloggers, and seeding the devices into nursing homes and on cruise ships. "They got millions of moms buying into it. For Wii U, I'm not seeing that replicated," he said.

"After the initial wave of enthusiasm, I'm not sure we won't see a chasm between the early adopters and the mainstream. I certainly don't think it will be a smooth curve like it was for the original Wii. ... Wii really introduced a lot of people into gaming who weren't into gaming, but it just doesn't feel like those people are going to latch onto Wii U."

The Wii U launches with 23 games, and while Nintendo franchise and kid-friendly games such as "Mario" and "Nintendo Land" figure prominently, Nintendo is offering more M-rated games for the first time. Titles such as "Assassin's Creed III," "Call of Duty: Black Ops II," "Batman Arkham City" and even an original first-person shooter called "ZombiU" from Ubisoft lend plenty of violence and gore to the launch title lineup. "That tells you that they want those hardcore gamers too," said Jeremy Miller, analyst with DFC Intelligence. "They're saying we're not just a kids and family platform."

Another challenge is pricing. The Wii U costs more than competing Microsoft Xbox 360 and Sony PlayStation 3 consoles. Wii U is $300 for a basic unit with no games, and $350 for the deluxe model with more memory and an included game. (The original Wii cost $250 at launch and included a Wii Sports game.) However, it's a next-generation system and more complex, and the 360 and PS3 bowed at even higher list prices when they bowed in 2005 and 2006, respectively. Premium Wii U games also cost more this time at $60, versus $50 for original Wii premium games.

"Part of the problem is that while $60 may be worth the same or less than $50 in 1997, or even $50 in 2004, people don't care about that . They just know there are a lot of other options for gaming that are a lot cheaper," Mr. Miller said, referring to the influx of casual gaming on tablets and smartphones since the original Wii launch.

So can the Wii U be as successful as the original, which has sold some 95 million units? Analysts predict success, at least initially. IHS iSuppli estimates that 3.5 million Wii U consoles will be sold by the end of the year, compared with 3.1 million original Wiis that were bought in a similar time frame in 2006. The firm predicts another supply shortage over this holiday season, leaving some Wii U wannabes wanting.

However, IHS analyst Piers Harding-Rolls also cautioned that "this time around, Wii U's pure innovation, coupled with a limited volume of high-quality Nintendo software, will not be enough to drive the ongoing sales momentum … especially at a higher price point." Long-term success will come from high-quality software from both Nintendo and partners, a solid non-gaming entertainment plan and a sound co-coordinated digital and online strategy to make that happen, he added.

Wii U also has a timing advantage over the competition. Microsoft's next-generation console, the so-called Xbox 720, and Sony's next PlayStation 4 haven't announced launch plans, but aren't expected until next year or possibly even 2014.

"Nintendo is getting a jump on the competition this time around," said Ted Pollak, analyst at Jon Peddie Research. "Some people may wait to see which console is best suited for them, some may purchase multiple consoles, and some may buy Wii U exclusively. I expect that Microsoft and Sony will create some amazing offerings and the competition will be stiff once they're on the market. The answer to how all this plays out? Perhaps only those in possession of magical crystal balls."

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