Nintendo will end production of its Wii U console on Friday () as it gears up to launch the Switch in March.
The game maker's follow-up to the super successful Wii, which sold more than 100 million units, should have been another hit, but instead it pretty much flopped. Only about , which launched in November 2012, were sold.
In fact, it may have been this past success that caused the Big N to stumble.
"In an internal sales representative meeting, someone projected that we would sell close to 100 million Wii U systems worldwide,” said Nintendo President during the company’s most recent shareholders meeting. “The thinking was that because Wii sold well, Wii U would follow suit. I said that, since the Wii had already sold so well, we need to clearly explain the attraction of the Wii U if we are to get beyond that and sell the new system, and that this would be no easy task."
Here's where Nintendo went wrong — and what you can learn from its mistakes.
1. Customers were too confused about the product.
The Nintendo Wii was a phenomenon, appealing to people who didn't consider themselves to be gamers with its first-of-its-kind motion controls in a home console. It was smart for the company to want to take advantage of the machine's success, but the name it chose for the Wii's successor, Wii U, didn't communicate to customers that this was a brand-new device.
Meanwhile, the company's marketing efforts focused on the tablet-like controller, which conveyed to some customers that the Wii U was just a peripheral, instead of a full-blown console.
"Some have the misunderstanding that Wii U is just Wii with a pad for games, and others even consider Wii U GamePad as a peripheral device connectable to Wii," , the former Nintendo president who died last year, said during a company meeting in April 2013. "We feel deeply responsible for not having tried hard enough to have consumers understand the product."
Takeaway: Branding and marketing can sink your company. Always make sure to effectively communicate what makes your product different.
2. It was questionable whether the market even wanted it.
The Wii U's biggest selling point is its tablet-like controller, which makes checking in-game maps or switching in-game items a breeze. But with the proliferation of mobile phones and tablet computers, Nintendo may have been off target with the device from the start, because people already had something similar.
“Unfortunately, because tablets, at the time, were adding more and more functionality and becoming more and more prominent, this system and this approach didn’t mesh well with the period in which we released it,” , the creator of Super Mario Bros., Donkey Kong and The Legend of Zelda, in an interview with Fortune.
Nintendo had been reluctant to put its games on mobile devices, but that changed this year when it announced that .
Takeaway: Be aware of market forces beyond your industry. You may be competing with something you wouldn’t have thought of as a competitor.
3. Nintendo didn't create strong partnerships for the Wii U.
Not only were customers confused about the Wii U, but apparently so were the people responsible for selling the device in stores. The responsibility falls on a creator to teach its retail partners about its product.
"If you went into a retailer and you talked to somebody in the games department, they didn't even understand what it was," said Christine Arrington, senior games analyst at IHS Electronics & Media, . "I did the secret shopper kind of thing, and they would say, 'Well, there's no difference between the Wii and Wii U.'"
Meanwhile, many of the Wii U's best games, such as Mario Kart 8, Super Smash Bros. and Super Mario Maker, came directly from the company itself. Quality third-party titles, from companies such as Electronic Arts and Activision Blizzard, were few and far between. The system launched with a small library, and as sales slowed down, support dropped further.
"The issue is the lack of a steady rate of software launches to motivate the consumer to drive buzz and engagement and to highlight the wide variety of uses of the GamePad," Nintendo of America President Reggie Fils-Aimé . "That's the issue."
The company tried to rectify this issue in the past couple of years, but, it was too late.
Takeaway: Your business depends on a network of partners. Make sure that they understand what you're doing and are excited about it before reaching out to customers.
Despite the Wii U's struggles, Nintendo had a huge success with its 3DS, which has sold more than units.