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Analyst Blog

This time Nintendo Co. Ltd fans will not be able to play the new installments of either Ubisoft’s Assassin’s Creed or Activision Blizzard’s Call of Duty (COD) on Wii U. This is a serious blow for Nintendo, considering that it has limited video game offerings developed by other publishers.

Ubisoft recently stated that the upcoming Assassin’s Creed: Rogue will not be launched on Wii U due to lower sales of the previous version. Per Ubisoft, Nintendo Wii U sales represented only 3% of its revenues for the fiscal year ended Mar 31, 2014. Post the upcoming Watch Dogs, Ubisoft will not release any mature game on the console.

Although Activision’s reason is not yet official, it seems intent on gaining market share on the new generation consoles from Microsoft and Sony. The COD developer is set to launch Call of Duty: Advanced Warfare in November this year on Xbox One, Xbox 360, PlayStaion 4, PlayStation 3 and personal computers.

Despite being in the market for a much longer period than Microsoft’s and Sony’s next-generation consoles, Wii U’s failure has been primarily attributed to growing preference for smartphones and tablets as well as lack of compelling third-party gaming titles on the platform.

Wii U reported dismal sales in the recently concluded first quarter, despite strong sales of Mario Kart 8 (released in May). The worldwide sales of Wii U hardware and software were only 0.51 million units and 4.39 units, respectively.

Nintendo has a strong product pipeline that includes the likes of BAYONETTA 2, Captain Toad: Treasure Tracker, Super Smash Bros. and The Legend of Zelda for Wii U. However, we believe that the lack of hit games like COD will continue to negatively impact Wii U’s growth prospects in the long run.

Nintendo should also rethink its policy regarding developing gaming titles for other platforms including Apple’s iOS as well as Google’s Android in the near future. This will not only expand its market share but also help to revive its profitability over the long term.

Currently, Nintendo has a Zacks Rank #3 (Hold).

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