The DeanBeat: The Nintendo Wii U’s troubles start with a dearth of developers

We all know that Nintendo’s Wii U is in trouble. It sold more than 3 million units during the holidays and was in short supply. But with a dearth of new titles after that launch, sales have slowed down. Nintendo shaved its sales target for the period ending March 31 to 4 million, down from its previous estimate of 5.5 million hardware units.

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And now the Game Developers Conference has published a survey showing that U.S. developers are making few titles for the Wii U. The GDC’s survey of 2,500 attendees showed that only 4.6 percent of developers are creating a Wii U game, and 6.4 percent plan to make their next game on the console.

This is a critical problem because the developers are the canaries in the coal mine. When they start dropping, there’s a bigger problem.

The Wii U is a brand-new console, but its developer support is significantly below the level for the Xbox 360. About 13.2 percent of companies are making games for Microsoft’s current machine, and 14 percent plan to make their next title for the Xbox 360. About 13 percent are making current games for the Sony PlayStation 3, and 12.4 percent will do so again. Sony’s announcement of the PlayStation 4 could put a big dent in developer support just as Sony’s early announcement of the PlayStation 2 helped kill off support for the Sega Dreamcast.

By comparison, developers are moving en masse to mobile. About 55 percent are making games for smartphones and tablets, and 58 percent plan to do so for their next title. And 48 percent are making games on the Mac and PCs. The only weaker platforms than the Wii U are the Nintendo 3DS and the Sony PlayStation Vita. Despite the grim picture, Nintendo chief executive Satoru Iwata said that no price cut is coming for the Wii U, whose basic version is selling for $300 in the U.S.

It’s not a happy state of affairs for Nintendo, which launched the Wii console in 2006 and sold more than 100 million units worldwide. It has sold more consoles than Microsoft and Sony in this generation, but for the last couple of years, the Wii has been weak. That’s why Nintendo introduced the Wii U, which has a tablet controller, last fall. But the naysayers were out early, saying the Wii U’s processing power was feeble and that its support for only one tablet controller was a major problem.

Cevat Yerli, the chief executive of game studio Crytek, said that his company made a Wii U version of Crysis 3, its flagship game that just debuted. But Crytek didn’t have a license to publish games on Nintendo, and his publisher, Electronic Arts, hit its own impasse over deciding to publish on the Wii U. And with that, Yerli said in an interview with GamesBeat, “Crysis 3 on Wii U had to die.”

Now a lot of people are tossing rocks at Nintendo. EA has offered very little support for the system, and EA chief executive John Riccitiello said that the “true next generation” consoles will begin with the launch of machines from Sony and Microsoft. Cliff Bleszinski, the former design director at Epic Games, said that Nintendo may need to get out of hardware.

Michael Pachter, an analyst at Wedbush Securities, said that Nintendo “misfired on the Wii U.” Sales were weak in January, and Microsoft’s old Xbox 360 outsold the new Nintendo machine that month. Another marquee developer, who asked not to be identified, said, “The Wii U is already a non-event. I couldn’t be more disappointed with the launch titles.” Mario Wynands of gamemaker Sidhe said that he had multiple conversations with developers who are dialing back their support of the Wii U because of the weak sales.

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“While I believe they need to build a very strong digital marketplace for both developers and consumers longterm, their current business model demands they continue to respond to the needs of retailers and hardcore consumer,” Wynands said. “Fundamentally, they just need to start selling a lot more hardware in order to create a viable marketplace and survive long enough in order to be able to transition their business.”

David Cole, a longtime analyst at DFC Intelligence, said, “The Wii U is in big trouble. Nintendo didn’t get out in front with [games on the Wii U], and that means third parties are cautious. We are lowering our Wii U forecasts quite a bit, and it can become an ugly cycle. It is really on Nintendo’s shoulders to turn it around. They can’t rely on third parties.”

Ben Sawyer, a leader of the games for health movement, said that Nintendo’s ecosystem isn’t open enough compared to smartphones and tablets.

Nintendo isn’t giving up yet. In a statement to GamesBeat, the company said, “[We are] proud of the relationships we have built with all our third-party partners, from the large publishers and their well-known franchises to our independent developer partners making incredible downloadable games for the Nintendo eShop.”

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Indeed, while the Wii whiffed at coming up with a rival to Microsoft’s Xbox Live, some developers say they like the eShop, where gamers can download new titles.

Nintendo also said it “has robust third-party support on both Wii U and Nintendo 3DS. The biggest publishers in the world — Ubisoft, Activision, EA, 2K, SEGA, Disney, Warner Bros. and Namco Bandai, to name a few — have brought their best franchises to Wii U with games like Call of Duty: Black Ops II, ZombiU, Scribblenauts Unlimited, Batman: Arkham City Armored Edition, Assassin’s Creed III, Disney Epic Mickey 2: The Power of Two, Just Dance 4, and Sonic & All-Stars Racing Transformed. On Nintendo 3DS, Nintendo has a great lineup of third-party games, including the upcoming Castlevania: Lords of Shadow — Mirror of Fate from Konami and Monster Hunter 3 Ultimate from Capcom.”

Nintendo has also done a good job of recruiting smaller developers. Nicalis, WayForward, Gaijin Games, Tomorrow Corporation, and Renegade Kid are all in the midst of working on downloadable titles for the Wii U.

Alex Neuse and Mike Roush, co-founders of Gaijin Games, said they enjoy developing on the Wii U and it is a step up from the Wii. They just released Bit.Trip Presents Runner 2: Future Legend of Rhythm Alien for the Wii U eShop.

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“We see great business potential in the Wii U eShop. It’s a particularly indie-friendly distribution channel, and if you’re an independent developer and want to get your game on a console, the eShop looks like it might be the next big thing,” the Gaijin founders said in an email. “But above and beyond the eShop, the Miiverse has been an integral part of growing our community of fans. Being able to interact with fans in real time, on the console, while the game is running is an incredible feature that only Nintendo has. If Nintendo can manage to continue their efforts towards wooing indies, as they have been doing so far, they could probably corner the console indie market without much trouble.”

Of course, Nintendo has always been its own savior. First-party games on the Wii U are spread out and slow in coming. But if its own gamemakers create bigger hits, then console sales could pick up, the third-party developers could return, and the ecosystem will look better.

Even if this griping about the Wii U’s prospects continues, don’t expect Nintendo to waver. The company has been in tough spots before, and it has pulled off turnarounds. It can still point to Sega and say that getting out of hardware is not always a good solution. Nintendo is working on some big games. And it still has a hold on young audiences and families, which are different from the audiences for the other consoles, said Jon Peddie, an analyst at Jon Peddie Research.

Whatever happens with Nintendo, Microsoft and Sony shouldn’t gloat about the slow acceptance of the Wii U.

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Alex St. John, the co-creator of Microsoft’s DirectX technology, who has been predicting the death of consoles for years, said, “I think Apple is the next-generation console and that all of the next-generation consoles will fade. If your next-generation ‘console’ isn’t a cell phone that can deliver a console experience to a TV, you’re already obsolete.”