Currency Fluctuations Could Put the Squeeze on Nintendo

[Logan Westbrook]

Currency Fluctuations Could Put the Squeeze on Nintendo

The fluctuating value of currencies around the world could have serious repercussions for Nintendo.

It's something that a lot of us will be able to relate to: You change some money for your vacation, and when you change back what you have left a couple of weeks later, it's not worth quite as much. Now imagine trying to run a business like that, and you can get a sense of why Nintendo might be a little worried.

Speaking to the BBC [http://news.bbc.co.uk/1/hi/technology/10366102.stm], Nintendo president Satoru Iwata said that instability in the global currency markets represented a real challenge for his company. "If the Yen, or any currency, changes over one, two or three years, then that is something that we corporations have to deal with," said Iwata.

"However, if over a week a currency fluctuates by five or ten percent, there has to be something seriously wrong with the economy. From that perspective, we cannot say our [global] economy as a whole has been stabilized and there is uncertainty on how to estimate our profits," he said.

This isn't Nintendo complaining that it doesn't know if it's executives can sleep on king-sized beds of money, or just queen-sized either. Nintendo exports the majority of its products, so devaluations of the pound, dollar, and euro, can create a great deal of uncertainty for the company going forward. What Iwata is saying is that Nintendo will have difficulty predicting how much money it will make, which may result in Nintendo being a lot more cautious in the future.

Source: BBC [http://news.bbc.co.uk/1/hi/technology/10366102.stm]



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[Jack and Calumon]

Surely it could put pressure on other companies as well? Sony is worldwide, like Honda, Hyundai, Toshiba and Hello Kitty.

Calumon: I hope Nintendo won't be too cautious. I want new Kirby!

 

[DividedUnity]

Well considering theyve pretty much got people willing to sell their souls for the 3DS and its new game line-up I'd say theyre pretty secure financially.

 

[Danny Ocean]

Doesn't it seem odd that the value of something physical can be determined by something so immaterial?

I dunno. The way the money markets can cause such chaos seems odd. I understand how, but jeez.

 

[Deofuta]

I wonder what the current Mac Index is for today...

For a little info, a group of guys tried to decide what the value of one currency is to another, by seeing how much a big mac sold in the respective currency. The results were actually quite revealing.

 

[tomtom94]

I always found it strange how money can change in value.
Why can't we just decide how much a piece of paper / metal is worth once and for all?

But eh, it's Nintendo, they'll survive.

 

[JayDub147]

Well, that's what you get when you rely on fiat currencies.

I think the big N wil still be alright, though.

 

[Jared]

I thik this would affect alot of people but I can see why it might affect Nintendo more...been a primarilly japanese studio and the state of there ecomony...it could get pretty hairy

 

[vallorn]

ah, economics.

as ive noticed that some people dont know why this affects Nintendo, let me explain.

Spoiler: a theoretical example

right, in this example i will use 2 countries named A and B.
country A uses the X as its currency while country B uses the Y as its currency.

a company called D inc which is based in A wants to make a product to sell in B. the X is worth exactly 2Y's and the cost of making the product is 50X. D decides to sell thier product for 110Y which allows them 5X profit on every product they sell.

2 months after the release of P, B's economy is hit by a disaster and the Y becomes cheaper as investors sell thier currency in case B collapses.

one week later at the end of A's economic crisis the X is worth 5Y. now Ds price of 110Y means that they make a loss of 28X on every product that they sell.

is that theoretical example helpful?

 

[bjj hero]

Could Nintendo just relocate from Japan if things got hairy?

 

[rembrandtqeinstein]

Good gawd, international business 101 people. If the exchange rate isn't favorable keep the currency local until the rates improve. Invest it in local infrastructure just sit on it to improve your worldwide bond rating and make borrowing cheaper.

Yes you need to take exchange rates into account but Mr. Iwata's handlers should know better than to let him whine about the cost of doing business in public.

 

[Don't taze me bro]

The rise in the value of the Aussie dollar, as it got closer to being a 1:1 with the American dollar meant that I stopped buying all my games locally. Why pay $70 Aus for a DS game, when I can import it, with postage for around $40. It is the same with my PS3 games. I have bought around 8 games this year, again none of them locally. $120 Aus for a game locally, or get it for $70 shipped and with postage included.

I recently also bought BF:BC2 online, got emailed the CD key and downloaded it from EA's download manager. I paid $27 Australian. It sells for $90 to buy it from a store in Australia.

 

[Rect Pola]

Fair enough. As one nation's money loses worth, Nintendo's "actual" sales takes a hit even it they are doing their job in the market.

The only odd thing is that prices take their sweet time balancing out to this value. Years ago, things cost more in Canada than in the US, but it far less than the US dollar. Now, the money is nearly equal but the prices are still higher to compensate a difference that isn't there anymore.

 

[akmarksman]

"Our billions of Wiis sold and shit-tonnes of crapware for the wii" and they are worried about money?

Shit with the kind of pull they have on the "casual" market,they can PRINT money..any currency.