Nintendo Co Ltd 7974.OS sold more than 400,000 "Wii U" video game consoles in the United States in the first week of its release, the money-losing company that badly needs a hit to lift its fortunes, said on Monday.
Nintendo, which has gradually ceded ground to Microsoft Corp's (MSFT.O) industry-leading Xbox 360, introduced the Wii U with a touchscreen controller at a time when the video game industry is under threat from a growing smartphone and tablet gaming market.
"The Wii U is effectively sold out at retail...we are gratified by the consumer response," Reggie Fils-Aime, president of Nintendo of America said in an interview about the November 18 release in North American stores.
The company revealed only United States sales for the Wii U, successor to the Wii that was released in 2006. Wii has been a bonanza for Nintendo, with more than 97 million sold, although demand had tapered off in recent years.
Wii U's success or failure will also provide clues to rivals Sony Corp (6758.T) and Microsoft as to whether advanced games machines can withstand the challenge from mobile devices.
"It's pretty much sold out and that's a testament to a large and loyal fan base," Wedbush Securities analyst Michael Pachter said.
The Wii U is probably Nintendo's biggest bet in the last 20 years as a company and keeping the sales momentum going after the holiday shopping season could be a challenge, Jesse Divnich, an analyst at video game research firm EEDAR, said.
WII VERSUS WII U
The results are "comparable" to Wii sales in its first week in 2006, but it was early to do an apples-to-apples comparison, according to Nintendo's Fils-Aime.
"At this point in the life of the Wii U, its sales are based on how quickly we can get the product to retailers," he said.
Nintendo said it sold 475,000 units of the Wii in the United States after its introduction in November 2006 compared with 400,000 for Wii U in the past week.
Looking at signs on the grey market, the Wii U is selling on sites like Ebay at more than 10 to 20 percent of the suggested retail price. By comparison, the Wii sold 25 to 30 percent over the retail price in 2006.
The Wii U, Nintendo's first new gaming console in six years, has had a few hiccups. Shortly after it hit store shelves, buyers complained on blogs and on Twitter of technical hitches such as excruciatingly slow software download speeds. It also initially sold absent some much-touted TV-related features and applications.
The selling points have been a tablet-like touch screen "GamePad" controller, a social network called Miiverse and a feature termed TVii that lets users record TV shows through TiVo and other digital recording services.
Before introducing Wii U, Nintendo told American consumers that the TVii application would only be available in December.
In addition to the basic 8 gigabyte model costing $299.99, Nintendo is selling a "deluxe" 32 GB version for $349.99 in the United States and 31,500 yen in Japan. The "deluxe" package will include its new Nintendo land game.
Nintendo is offering 23 original games for the Wii U. The machine is the first Nintendo console to launch with a dedicated "Super Mario" game title in 16 years. Third-party titles include Ubisoft Entertainment SA's (UBIP.PA) exclusive Wii U title, Zombie U, and Activision Blizzard Inc's (ATVI.O) Call of Duty: Black Ops 2.
Before the new devices hit store shelves, Nintendo conducted a massive advertising campaign on television and social media, with marketing tie-ups with Burger King Worldwide Inc BKW.N and Walt Disney Co (DIS.N).
It also dressed people up as animated characters from its MiiVerse network who were spotted around New York City inviting fans to check the console. Nintendo set up kiosks in malls and retails stores to give gamers a chance to play the Wii U.
MOBILE DEVICE INVASION
Growing competition from tablet PCs and smartphones that are increasingly eating into the $78 billion gaming market mean the Japanese company might struggle to repeat the hit it had with the Wii and keep the holiday sales momentum going into 2013 and beyond.
But Fils-Aime said Nintendo would leverage its exclusive franchises such as its legendary Super Mario Bros and Pikmin to draw gamers to the Wii U.
"We'll be able to continue driving momentum for Wii U as these are experiences that they can't get on smartphones and tablets," Fils-Aime said.
Moreover, Nintendo -- which began in 1889 making playing cards in the back streets of Kyoto before gaining popularity as the creator of the "Super Mario" franchise -- will compete with a new Microsoft Xbox and updated Sony Corp Playstation expected in 2013. Wii U goes on sale in Japan on December 8 for about $340.
(Reporting By Malathi Nayak; Editing by Andre Grenon and Grant McCool)