At a loss: Nintendo still not out of the woods

Company lost more than three quarters of a billion last year and even announced more expected losses into this year. That’s to be expected from other console makers who lose money on new hardware in the first year, as they hope to recoup losses and turn a profit in the coming years. But for Nintendo, that’s rare. They usually turn a profit in the first year, with exception to their lackluster hardware, which 3DS still appears to be (at least on the cusp of it).

What do you think?

0 Responses to At a loss: Nintendo still not out of the woods

  1. David says:

    I guess I just don’t understand what they lost money on if they were selling units. Don’t they traditionally not pull the PS3/Xbox thing where they sell consoles at a loss?

  2. Blake says:

    They didn’t expect to drop the 3DS price so dramatically after only four months, David. I suspect that attributed to losses, coupled with waning Wii/DS interest.

  3. Mohan says:

    Well this happens when you don’t make new games for your console, and want to push casual crap to a audience that only want to play Wii Sports or Zumba fitness. Hopefully they learned their lesson and have more of what their core audience wants with the Wii U.

  4. Keith says:

    From what I’ve seen reported, game sales really hurt them. They adjusted their forecasts down by almost 20 million units for the 3DS. It’s the first time in 30 years they have lost money, not just reported lower than expected profits. It doesn’t matter if you sold 100 million Wii’s if no one is buying games for them anymore. You don’t get to count that money each year.

  5. Tanner says:

    The high value of the yen is screwing Nintendo and other Japanese companies right now. When the Wii was first being sold in 2006 the Dollar was worth about $1.17 in yen. where as right not the dollar is only worth , which meant they could produce the Wii with a cheaper yen and make bigger buck in yen. Where as right now the dollar is about 77¢ in yen right now, meaning they lose 23¢ on every dollar.

    The suggested retail price of a Wii in Japan right now is ?20,000 ($257.80), although sites like amazon are selling them for ?18,498 ($238.44) On the other end the Wii is selling for around $150 (?11,637) to about $170 (?13,189). So Nintendo is losing about a hundred dollars on every Wii sold in the U.S.right now just because of the exchange rate.

    In Japan the 3DS is selling at a suggested price of ?15,000 ($194), ?14,222 ($184) on Amazon. In the US it is selling at 184 ($14,380). So it is actually doing better on the 3DS with probably only losing about 10 dollars to the exchange rate. But where the 3DS is really losing money Nintendo is selling the 3DS at a loss or close to making no profit at all as to what the 3DS production cost is.

    The other problem I think Nintendo had across the board was their release schedule of games. The 3DS didn’t launch with any killer software and should of not have been released till there was. The Wii had some killer software made it just wasn’t being released stateside (project rainfall anyone) expect for a game like Zelda.

    So it isn’t all Nintendo’s fault they are losing money the exchange rate is definitely is taking a toll, but Nintendo wasn’t helping themselves with decisions on when they released their products.

  6. dek says:

    I have been loyal to Nintendo for all my gaming life, owning a GameBoy, SNES, N64, Gamecube and Wii. And I have never regretted it once. But this development doesn’t surprise me at all. While I love Nintendo for the great games they have created and made gaming history with, it feels like they have passed their zenith. The Wii was a surprise hit, and a last hurra from a once great company. But the success can be mostly credited to the novel hardware and the expanded audience they where able to reach. But now that the competition has surpassed Nintendo on the motion controls/casual games, they have no good arguments left in their favor. Franchise overuse fatigue has been going on for a long time, there’s no innovation whatsoever. Nintendo is completely incapable to expand their horizons, trapped in yesteryear, keeping hold on their once great franchises, unable to fight their “kiddie”-stigma. This painfully shows by them not being able to build a reasonable online gaming/multimedia-distribution system. Friend Codes, anyone? All “megaton” announcements in the past years have been conservative and predictable. The 3DS is a fad, a completely overrated technology slapped on to a DS, in the hopes of whooing the masses again. They obviously miscalculated the fleeting enthusiasm for 3D as the next big thing. Even worse so for the Wii U. What a schizophrenic heap of non-sense! And all the time down-playing the success of smartphones as “primitive” gaming platforms. Yes, 0.99$-games lack depth, but maybe people don’t need more. Until recently, the sophisticated 50$-handheld games where the only buying-option, so people in want of entertainment had to buy them. Not anymore. Time for Ninty to open their eyes and accept the new reality. Sure, deeper gameplay will always have it’s price, and there are enough people out there willing to pay for it, me included. Just not at the price that Nintendo is used to.

    A few month ago I predicted that within three years max, traditional Big N franchises will be playable on non-Nintendo hardware. We’ll see. Maybe it’s for the best. Because their games can be awesome.

    Sorry for the rant, but I’ve been channeling several years of frustration now.

  7. Tanner says:

    How can you form such a firm opinion on a system that we still don’t know so much about?

  8. GameCollector44 says:

    So…one year of loss after how many years of profit?

    I guess everybody should just jump ship, seeing as Nintendo’s losing money. This ONE year in losses is sure to just completely destroy them, and Apple will become the dominant gaming race. o-o

    All sarcasm aside, they’ll be fine. The media is just blowing this all out of proportion.

  9. cmdg says:

    As much as I hate to admit it, Dek really hit the nail on the head. It would really be in Nintendo’s best interest to just drop the whole Wii-U idea and start building a completely different next gen system. The honeymoon of motion gaming is over, and a company can only ride that wave for so long. Here’s to hoping that whatever happens, Nintendo will still be around to make games that we love.

  10. Tanner says:

    @cmdg- Dropping the whole Wii U idea and starting over would be disastrous for the company. Think of the game drought that would be if this happens! I think Nintendo has big plans at E3 and its looking like it won’t launch until late Q3-early Q4 giving time for a strong launch. The tablet is the combo of traditional and motion based and I believe it will be great. Do you want them to just make a dualshock controller? I’m not sure the honeymoon for motion control is over as the rumors of the new X-Box and Kinect.

    @dek- Everything you mention about problems Nintendo has with their home consoles are problems of the Wii, and I agree with them to an extent. How do we know the Wii U will have those problems? “What a schizophrenic heap of non-sense!” you don’t explain why you feel this way? Because with the rumors I’ve heard and have been posted on this site it seems that online play and multimedia distribution will be in the Wii U’s strategy. I’m just not buying the no innovation either. Just because they use the same characters doesn’t mean that it is not innovated? The difference between Skyward sword and Twilight princess is much more different than COD and any other shooter. There are the every system franchise such as Smash or Mario Kart, but how can you blame Nintendo on this when you see the sells of them.

    The only thing the miscalculated about the 3ds is that 3rd parties could carry a system launch and not having the new Pokemon on that system. It will still sell 14-15million in a fiscal year and has a very strong line up for the rest of the year. Look at the weekly software sells in Japan try to prove to me its not a fad. A remake sold over a million copies how often does that happen?

    Sorry for my rant, but I disagree with you opinion of Nintendo, I’m a fanboy for sure and don’t believe its close to abandoning ship.

  11. dek says:

    @Tanner – To be honest, I haven’t crunched the numbers like you have. So yes, anyone can hold this lack of analysis against me. My previous (and following) rant should be understood as a very subjective take on things.

    Still, what has been frustrating me with the 3DS and Wii-possibly-not-much-longer-U, is a seemingly hastened feature-creep instead of a steady evolution of hardware. Instead of progressing the hardware to faster graphics and more cpu-power and developing a modern digital content distribution system and allowing for solid multiplayer experiences, it’s “Here, 3D! Now buy!”. But I have yet to find the single game for which I’m willing to fork over the money for the system, where 3D is absolutely necessary.

    The Wii U… what is it? Motion, speech, touch, portable. All good, but where is the focus? We know from smartphones, that touch can lead to extremely fun games. But we’ve also seen the limits. A lack of complex input system leads to shallow gameplay. Great for short bursts of entertainment, hard for deep experiences. The touch-controller-tablet-thingy in the Wii U feels like an acknowledgment it this direction. “We keep motion controls, because they brought us cash. And we will take touch, because that has brought others cash.” As great as the possibilities may seem initially , the experiences with the Wii have taught me caution. Remember when we all where like “Awesome, we will be lightsabering all day!” or “Kewl, shooters will be revolutionized!”. And what did we get? Up until Skyward Sword, completely laggy sword-duels. And not-so-precise on-rail shooters. And in between tons of casual gaming filler. Having a new feature in a system means having to create game-mechanics for it, to justify the investment. Having lots of features, means having a system with many subcategories of games. Some might work, others might fail. But (and this is entirely my personal opinion), I’d prefer a system which does one thing well, instead of offering a little bit to everybody, in the process watering down the overall output through compromise.

    Please don’t get me wrong. I’ve always valued gameplay over graphical prowess. And I don’t necessarily need adult themes, buckets of gore and realistic titty-jiggling to enjoy a game. Nintendo has arguably the best track record of creating awesome gameplay-driven franchises and that’s what has kept me loyal to them. And I’m not saying that Nintendo is on it’s last breath. It just has lost focus. Juggling various, partially experimental technologies leads to many loose ends which are difficult to channel into one clear output.

  12. EdEN says:

    They launched 3DS last year, and had to loose more money after the price cut. The Wii U ain’t cheap, and R&D costs are added into the loss. Add a launch for a new console and the numbers make sense.

    Nintendo still has billions of dollars in the bank, and with the way the 3DS has bounced back, and if do things right with the Wii U launch, they’ll post a profit by march 2013.

  13. EdEN says:

    @dek: What are you smoking? The 3DS has been a lot of fun, has lots of great games, and is selling like crazy. The Wii U will still have Nintendo games (which is WHY we buy their hardware in the first place) and if Nintendo releases 3 GC in a row (that is, a console they make a profit on from day 1 but doesn’t get to the #1 spot as the Wii did), I’d still buy their new consoles and hardware for the innovation they bring and, again, for the Nintendo franchises.

    By you “argument”, all dedicated consoles and portables are doomed and they should get out while they still can.

  14. EdEN says:

    @Tanner: Thanks for the link to the report!

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