I'd like to put in my $0.02 as to why Nintendo won't be releasing Wii Play 2 any time soon. It's because Wii Play is still making money... and lots of it.
In Japan, Wii Play is constantly in the top 10, much like Wii Sports. Check the latest Media Create sales charts, they are 9th and 5th respectively last week. While other Wii games come and go, these two stay in there hanging onto their spots. It's a similar situation in the US. NPD has Wii Play at 5th in May, 6 months after its release. Wii Sports, as we know, is included. In Europe, it's 5th in Britain and 3rd in Spain last week.
Releasing Wii Play 2 is suicidal. Those who have Wii Play is unlikely to get it because they already have an extra controller (which was their main reason to buy Wii Play in the first place). Sure, Nintendo can release the game in 2 versions, one with and one without controller, but the games ain't that great to start with. So those who already have Wii Play is unlikely to pick it up. Besides, they won't be the reason why this stock would fall.
Those who would affect this stock are those who haven't got an extra controller yet. But why release Wii Play 2 when Wii Play is still doing exceptionally well in the market place? Gamers are still buying it in the truckload. Releasing Wii Play 2 would cut off the Wii Play revenue.
If Nintendo were to release Wii Play 2, it will require development cost (doing stuff at lunch time still cost money), marketing cost (people need to know Wii Play 2 is out there), package desgin (needs to make Wii Play 2 looks different), etc. If I were a business, and my product is making a lot of money, I see no reason to release a similar product that could jeopardise my original product. iPod is different because it continues to improve the performance and appearance of the product. In the case of Wiimote, you don't.
That said, I'm not saying Nintendo won't make Wii Play 2. What I am saying is, Nintendo won't release Wii Play 2 until Wii Play 'dries up'. The dilemma is, if Wii Play dries up, it can only mean one thing, gamers are getting controllers elsewhere. And as far as this stock is concerned, that's the end of it.
SERAPHRowen has suggested that a competing game with a controller attached will cause this stock to fall. That is true, but what kind of game would have a controller attached? A multiplayer game, of course. A one player game wouldn't need an extra controller, would it? Nintendo is unlikely to release a game with a controller attached due to the continuous high sales of Wii Play. And if they did, they would have to release the game in 2 versions, one with and one without. If the game is immensely popular, then yes, it will cause this stock to fall, at least in the short term.
Any third party games that need two players? Of course there are, but remember, the third party will probably have to pay Nintendo license fee to package a controller with their game, which will increase their cost, thus increase the price of the game. Those who already have 2 controllers would think twice about getting the game. Of course, we're assuming Nintendo would let them compete with Wii Play in the first place. And again, the game will have to be released in 2 versions to cater for those who already have the controllers, and those who don't.
Next, the price of the controller drops. This is the most likely scenario. A price drop will certainly make gamers think about whether the extra money for crappy games is worth it. In the short term, I don't see the price of controller dropping. If Nintendo is smart, they would reduce the price of Wii Play as well if/when they drop the price of controller.
In essence, Wii Play is NOT a game that comes with a controller. It's a controller that comes with a game. If you understand that, you will know why Wii Play will continue to sell.
So after all the crap that I have said, where does that leave us? Overvalued? Undervalued? Just right? I think it's undervalued in the absence of any news/hints/rumours that controllers will be included in any other games. Sales of Wii is certainly very strong at the moment. Sales continue to be strong for this game throughout the world. 3.5M worldwide in 6 months for 8M Wiis sold is quite a feat, and the momentum is not abating. If it continues to sell like it is now, it would hit 6M in less 6 months.
I'm not arguing that the game won't meet it's current estimated sales. I think it's likely it will hit six million.
What I'm arguing against, and I think what charron is arguing against, is the assumption that the sales this game has enjoyed will continue throughout the lifetime of the Wii, when essentially the game is crap, and is thrown in with a controller.
I think when you said "valued at less than half its current sales" you meant "twice its current sales"."""
Oops, yeah. Thanks for catching that.
Anyways... The more time passes without hearing a peep about a Wii Play replacement, competitor or sequel, the higher this stock should go. Nintendo are aiming to sell 20 million Wiis by March 2008, at which point Wii Play could have sold 8 million; if something isn't announced by E3, it likely isn't coming out in that time period.
I'd also like to respond to the statement "To naively assume that the attach rate will continue for the entire lifetime of this stock, I feel, is a big mistake." Actually, I said 30 million units on 100 million Wiis, or 30% as a high end, and 12 million units on 50 million Wiis, or 24%, as a low end. **The current attach rate is 44%.** In Japan, the attach rate is dropping, and could slip below 50% LTD in the next few months. In America, the LTD attach rate is still rising after the late release, up to 38.5%, and will go higher before it goes lower. Regardless, my expectations include a dropping attach rate. (All numbers derived from VGChartz.)
Some other concerns that were mentioned I just disregard completely. For example, if the price of a controller drops, the price of Wii Play will drop along with it. When Nintendo releases new controller colors, they'd be smart to make certain colors exclusive to Wii Play, to boost sales of the higher profit SKU. Etc. The valid concerns lie in that Nintendo could release a replacement, competitor or sequel to the game, but once again, it will need to be announced soon (or released suddenly), for Wii Play to actually sell LESS than 6 million.
The problem isn't even neccesarily if a Wii Play 2 comes out. The thrust of the problem is the value of this stock is directly associated with the value of the controller, not the game itself. Compounded by the fact that this stock is for lifetime sales. Any number of things could cause this stock to plummet.
Consider any of the following scenarios:
- A sequel is released. - A competing game with a controller attached is released. - The price of the controller drops.
Any of these things could have a huge impact on the future of this stock. To naively assume that the attach rate will continue for the entire lifetime of this stock, I feel, is a big mistake.
To me, it's not a matter of if this stock will crash, but when. If it's soon, this stock will plummet. The longer it goes, the safer your investment will be, as the sales have already been done.
I think there's a bit of hesitation over what's considered an inevitable Wii Play 2. I understand your argument for why no sequel could happen, but I think Nintendo is wise enough to throw together some other tech demos that someone created on their lunch break and sell that. Minimal effort, and everyone who bought Wii Play is now part of the Wii Play 2 market again, so it leads to more sales potential. If this is the only Wii Play, then it'll absolutely break through to tens of millions. My thought is, if a second, better Wii Play arrives, this one may get dropped by the wayside immediately. I do have a position in this, and I do think it's undervalued, but my position's smaller than it could be because I'm honestly expecting a sequel to eat up a lot of the sales you're anticipating.
I think when you said "valued at less than half its current sales" you meant "twice its current sales".
And VGCharts has it at 3.5 million worldwide.
I would bet on Nintendo changing the package within the year. Why? Because the minigames were nearly universally panned. Since remotes are no longer scarce, consumers will start wondering if those games are worth the extra money. I would bet on more polished games (variants on the ones out now maybe) being packaged in the near future (probably under a new name).
Another possibility is creating a new bonus with new remote colours when they're introduced, which would also take a bite from WiiPlay sales (though it's possible to keep the name and modify the games).
If any of these possibilities happens, it throws your entire prediction out of whack.
This stock remains an unimaginable steal. I honestly think this game can sell as much as 30 million copies. Wii stock is climbing towards 100 million, and Wii Play's attach ratio remains huge, yet Wii Play is valued at less than half its current sales. (VGChartz has the game at 2.5 million sales LTD between Japan and America alone. It is certainly well over 3 million worldwide.)
There is NO WAY sales just dry up and stop at 6 million. Even if this were a normal game, not a controller with a pack-in game, its sales trajectory now would indicate over 6 million sold by the time Nintendo sells 20 million Wiis. As is, we can expect over 8 million copies by the time Wii sells 20 million. For a prediction of 6 million to make ANY sense, people would have to be betting on Nintendo either altogether discontinuing the game, or turning it into a standalone title, and possibly releasing a different controller pack-in.
Let me explain why that won't happen. Wii Play's development budget is basically $0, because it was mostly a byproduct of Wii hardware development. And production and packaging of the game is only 20 cents or so, because its packaged with a remote. Marketing of the game is $0; no need to advertise extra controllers. So for Nintendo, Wii Play is basically a way to make an additional ~$7 of pure profit (after the retailler takes their share) on controller sales. So Nintendo has no motivation to EVER change the Wii Play business model, or spend the time developing a different pack-in. Not this year, or next year, or 2011. The current set-up turns Wii Play into a profit bonanza.
With that in mind, BUY THIS STOCK. I don't know when it will happen, but this stock is overdue to EXPLODE. Even if you think Wii will only sell 50 million units, its hard to value this game below 12 million, which is 100% profits on your investment. If you think Wii will sell more, there's no reason not to max out your position on this game.
I agree with the earlier comments about the huge upward potential of this stock. Don’t look at the review scores or even current sales numbers and look what this product really is. A controller with a 10 dollar/euro game attached to it. Does anyone really expect a lot of people to buy a Wii without at least 1 extra controller? So far I believe the multiplayer fun from Wii Sports to be its biggest selling point, and for that you really need at least 1 extra controller. And when you need one, why not add 10 dollars/euros to the 40 you already spend on the controller, it's really just a small price for an extra game. Sustained attachment rates at 40-50% of the units of hardware sold are a realistic estimation to me (and so far sales numbers show this to be a low estimation, with Media Create stating almost 1.3M units sold in Japan on 2.42M Wiis and NPD saying 249k units sold in the US on 360k Wiis) As long as Nintendo doesn't release similar packages with a controller combined with a game I don't see a reason why this percentage will see a huge drop. Without any releases of such kind been announced at the moment and knowing Nintendo expected themselves to sell 14M Wiis in the current fiscal year, sales of 5-7M units of Wii Play definitely seem possible up until the end of March 2008. Adding the 2.62M they already shipped up until the end of March 2007 gives a total of 7.5-9.5M units sold up until the end of March 2008, with a huge upward potential still left for the years to follow.
The only reasons I see that could prevent these numbers from being reached are: - Wii sales plummeting downwards, which doesn’t seem likely at the moment - Wii Play being discontinued by Nintendo, can’t see a reason why they would do this in the near future. I could possibly see them releasing Wii Play 2 somewhere in the future, but not just yet - Games like Mario Galaxy and Metroid Prime changing the focus of Wii more onto single player games, which would decrease the amount of controllers sold, which in turn would decrease the amount of times Wii Play is bought. Judging the current line up this could partly happen, but with enough multiplayer games also getting released (like Mario Party 8 and Mario Strikers Charged) I still expect most people who buy a Wii will at least also be interested into those type of games.
So to me this stock is highly underrated at the moment and currently I have a healthy amount of shares in my possession.
I already had a lot invested in this game, and was continually buying more of it to clear out my time trust, but I just increased my position as much as the diversification rule would let me.
This stock is an absolute steal anywhere below 800DKP, and an appropriate value would be well above 1000DKP. 249K NPD in its third month in the US... Though it finally fell from its attach rate of over 100% down to 70%, it actually increased in weekly sales from March to April, 54K to 62K. (5-week March vs. 4-week April--all number derived from NPD).
Of course that attach rate will continue to come down, but its going to stay remarkably high for a pretty long time, in every region of the world. And it should maintain a huge attach ratio across the life of the console. 15% across 80 million Wiis would be 12 million copies.
But I'm thinking higher. 15, 20, 25 million would all be defensible predictions. Though that sounds insane, remember that this game won't sell like a game, but more like an extra controller. Would you be surprised if 40 million extra Wiimotes were sold on 80 million Wiis? And would you be surprised if half of those buying extra Wiimotes opted for Wii Play? There's 20 million copies right there.
Together, these countries make up about 90% of the world market. And it seems like in each and every one of these countries, sales are holding steady, rather than falling like a typical game.
At this point it has sold 1300K in Japan (Media Create), 893K in the U.S. (NPD), probably about 90K in Canada (Wii is especially popular there), and 800K elsewhere (VGcharts). That puts it at 3.1M as of the end of April. In April it sold 420K + whatever it did in Europe (probably another 180K). That´s 600K just in April!
With the 50% increase in Wii hardware that´s about to begin (see Nintendo News) Wii Play could very well sell 7M by the end of the year.
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In Japan, Wii Play is constantly in the top 10, much like Wii Sports. Check the latest Media Create sales charts, they are 9th and 5th respectively last week. While other Wii games come and go, these two stay in there hanging onto their spots. It's a similar situation in the US. NPD has Wii Play at 5th in May, 6 months after its release. Wii Sports, as we know, is included. In Europe, it's 5th in Britain and 3rd in Spain last week.
Releasing Wii Play 2 is suicidal. Those who have Wii Play is unlikely to get it because they already have an extra controller (which was their main reason to buy Wii Play in the first place). Sure, Nintendo can release the game in 2 versions, one with and one without controller, but the games ain't that great to start with. So those who already have Wii Play is unlikely to pick it up. Besides, they won't be the reason why this stock would fall.
Those who would affect this stock are those who haven't got an extra controller yet. But why release Wii Play 2 when Wii Play is still doing exceptionally well in the market place? Gamers are still buying it in the truckload. Releasing Wii Play 2 would cut off the Wii Play revenue.
If Nintendo were to release Wii Play 2, it will require development cost (doing stuff at lunch time still cost money), marketing cost (people need to know Wii Play 2 is out there), package desgin (needs to make Wii Play 2 looks different), etc. If I were a business, and my product is making a lot of money, I see no reason to release a similar product that could jeopardise my original product. iPod is different because it continues to improve the performance and appearance of the product. In the case of Wiimote, you don't.
That said, I'm not saying Nintendo won't make Wii Play 2. What I am saying is, Nintendo won't release Wii Play 2 until Wii Play 'dries up'. The dilemma is, if Wii Play dries up, it can only mean one thing, gamers are getting controllers elsewhere. And as far as this stock is concerned, that's the end of it.
SERAPHRowen has suggested that a competing game with a controller attached will cause this stock to fall. That is true, but what kind of game would have a controller attached? A multiplayer game, of course. A one player game wouldn't need an extra controller, would it? Nintendo is unlikely to release a game with a controller attached due to the continuous high sales of Wii Play. And if they did, they would have to release the game in 2 versions, one with and one without. If the game is immensely popular, then yes, it will cause this stock to fall, at least in the short term.
Any third party games that need two players? Of course there are, but remember, the third party will probably have to pay Nintendo license fee to package a controller with their game, which will increase their cost, thus increase the price of the game. Those who already have 2 controllers would think twice about getting the game. Of course, we're assuming Nintendo would let them compete with Wii Play in the first place. And again, the game will have to be released in 2 versions to cater for those who already have the controllers, and those who don't.
Next, the price of the controller drops. This is the most likely scenario. A price drop will certainly make gamers think about whether the extra money for crappy games is worth it. In the short term, I don't see the price of controller dropping. If Nintendo is smart, they would reduce the price of Wii Play as well if/when they drop the price of controller.
In essence, Wii Play is NOT a game that comes with a controller. It's a controller that comes with a game. If you understand that, you will know why Wii Play will continue to sell.
So after all the crap that I have said, where does that leave us? Overvalued? Undervalued? Just right? I think it's undervalued in the absence of any news/hints/rumours that controllers will be included in any other games. Sales of Wii is certainly very strong at the moment. Sales continue to be strong for this game throughout the world. 3.5M worldwide in 6 months for 8M Wiis sold is quite a feat, and the momentum is not abating. If it continues to sell like it is now, it would hit 6M in less 6 months.