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Mario Kart 8 Sells 2.82 Million Units, But Nintendo Loses $97 Million During First Quarter FY15

Let’s start with the good news. Mario Kart 8 is an overwhelming success, as Nintendo has announced that 2.82 million copies have been sold worldwide. Given the install base of 6.68 million, that works out to 42 percent of Wii U owners racing around the Mushroom Kingdom.

Despite the monstrous attach rate on Mario Kart 8, things aren’t terribly pretty on the financial front. Nintendo lost ¥9.92 billion ($97 million) in the first quarter of its fiscal year (April - June 2014), which is an enormous shift downward from the ¥8.62 billion ($84.59 million) positive net income at the same time last year. Nintendo still projects closing the year with ¥20 billion ($196 million) in positive net income.

Nintendo sold 510,000 Wii U units, up from 160,000 in the same quarter 2013. Nintendo maintains that it will reach the 3.6 million unit sales goal for the fiscal year ending March 31, 2015.

3DS sales are down from 1.4 million in first quarter 2013 to 820,000 this quarter. Nintendo targets sales of 12 million units for the year ending March 31, 2015.

On the software side, Nintendo sold 4.39 million units, with 1.57 million not attributed to Mario Kart 8. It is not clear if those numbers include free titles included as promotion with Mario Kart 8 (with many left unredeemed), a ripple effect of 510,000 new consoles installed, or both. These numbers are inclusive of bundled titles and digitally delivered versions.

Currently, the only first-party title with a firm release date for the remainder of 2014 is Hyrule Warriors. Bayonetta is still listed as “October 2014,” and Super Smash Bros. Wii U still carries “Holiday 2014” for a release window. 3DS has Professor Layton vs. Phoenix Wright on August 29, Super Smash Bros. on October 3, and Pokémon Omega Ruby and Alpha Sapphire on November 21.  

Just Dance, Skylanders, and Disney Infinity are likely to be strong performers on Wii U this year. Skylanders: Trap Team will bundle a Wii U game download code with the Wii version, also. Watch Dogs is still listed for release later this year on Wii U.

[Source: Nintendo (1), (2)]

 

Our Take
I don’t expect Nintendo to reach its Wii U sales goal of 3.6 million units by March 31, 2015. Even with the holiday and Super Smash Bros. for Wii U slated for this fiscal year, it’s a stretch. I also don’t know how the company is going to reach its income goals starting behind the ball like this.

Right now, we also don’t have dates for key titles still allegedly coming this fall, during the crucial holiday season. Nintendo needs to start pinning down Bayonetta, Smash Bros., Captain Toad (which isn’t hitting Europe until January 2015), and others. 

There are also huge question marks about 2015, as four titles (Mario Maker, Project Giant Robot, Splatoon, and Yoshi’s Wooly World) are currently the best hopes for arriving in this fiscal year. All four are currently listed as “first half 2015.” That doesn’t inspire confidence in the first-party lineup for the rest of this fiscal period.

With third party publishers fleeing the Wii U, Nintendo needs to get its development pipeline in order. Right now, I see another year of missed goals.

As for Mario Kart 8, I’ve written frequently about install base being a hard limiting factor for success. On Wii, the attach rate for Mario Kart was 35 percent. On Wii U, it’s 42 percent. 

Had Nintendo prepared the market with a broader install base, the title’s sales explosion would have been even more significant. It will continue to sell well as more consoles are added, but nothing else in the lineup has the pop to move units like Mario Kart does. The momentum is petering out.

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