Nintendo Profits Nosedive

[Andy Chalk]

Nintendo Profits Nosedive

Nintendo [http://www.nintendo.com] has cut its Wii and DS sales forecasts in the wake of major slumps in revenue and profit, making a successful launch of the new 3DS handheld even more vital to the company's fortunes.

After years of dominating the console market, it looks like Nintendo might finally be feeling the squeeze. Net income for the nine month period ending December 31 dropped 74 percent year-over-year to ¥49.6 billion ($597 milllion). Revenues over the same period slipped 32 percent to ¥808 billion ($9.7 billion) while operating profit was down 47 percent to ¥158.8 billion ($1.9 billion). Nintendo cut its sales forecast for the Wii by 8.6 percent and the DS by 4.3 percent, and is now predicting its lowest annual profit in six years.

"The results today are much worse than expected, casting doubts on the company's full-year outlook," said Tokai Tokyo Securities analyst Yusuke Tsunoda. "This puts even more pressure on Nintendo to make the 3DS debut a success."

Nintendo managed to put out 13.7 million Wii systems over the nine month span, down 20 percent from the previous year, and 15.7 million DS handhelds, a drop of 33 percent. The company also reaffirmed its plan to ship four million 3DS systems in the first month of launch to avoid the shortages that plagued the early years of the Wii.

Source: Bloomberg [http://www.bloomberg.com/news/2011-01-27/nintendo-says-nine-month-profit-declines-to-603-million-from-year-earlier.html]


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[Negatempest]

Not really surprised. Not that I think the Wii is a bad system, but that it has practically saturated the marked with LOTS of Wii's. So now it has to do something different if it want's to continue to make a profit.

 

[are.you.the.god.its.me.vader]

Maybe people are just saving for the 3DS? Why would I buy a DSi when I'll just be outdated in a few months.

 

[DeadlyYellow]

Not really surprised. Not that I think the Wii is a bad system, but that it has practically saturated the marked with LOTS of Wii's. So now it has to do something different if it want's to continue to make a profit.

It would be a better system if Nintendo allowed their products to enter the same price deterioration as a PS3 or 360. Super Mario Galaxy will still cost you the same price new now that it did when it was released over three years ago.

 

[Delusibeta]

Not really surprised. Not that I think the Wii is a bad system, but that it has practically saturated the marked with LOTS of Wii's. So now it has to do something different if it want's to continue to make a profit.

Yep, saturation would be my guess as well. I'll expect them to still top 100k sold by end of 2012 at the very latest.

 

[temporalcrux]

Not really surprised. Not that I think the Wii is a bad system, but that it has practically saturated the marked with LOTS of Wii's. So now it has to do something different if it want's to continue to make a profit.

It would be a better system if Nintendo allowed their products to enter the same price deterioration as a PS3 or 360. Super Mario Galaxy will still cost you the same price new now that it did when it was released over three years ago.

Yeah, this is one of the reasons I hate Nintendo. They maintain maximum profits by never declining their initial value, though the sell-back price slips more by the week. You buy a game new, sell it back the same week, and you already lost 60% of the value. The week of release. You buy it new and sell it back the same week, 3 years after first release, and you're lucky to make 10% of the money back

 

[Atmos Duality]

Not really surprised. Not that I think the Wii is a bad system, but that it has practically saturated the marked with LOTS of Wii's. So now it has to do something different if it want's to continue to make a profit.

Yep, saturation would be my guess as well.

4 years of powerful sales for both consoles.
If it isn't saturation, I'll eat my hat.

 

[The_root_of_all_evil]

Maybe they should add achievements? *snirk*

 

[Gahars]

It's looking like everyone who wants a Wii/DS has one at this point, so this isn't too surprising.

I'm interested to see how much the 3DS changes thing. Can lightning strike thrice?

 

[Lord Beautiful]

Perhaps if they had adequate software, they wouldn't be having this problem. I'd imagine this:

Not really surprised. Not that I think the Wii is a bad system, but that it has practically saturated the marked with LOTS of Wii's. So now it has to do something different if it want's to continue to make a profit.

It would be a better system if Nintendo allowed their products to enter the same price deterioration as a PS3 or 360. Super Mario Galaxy will still cost you the same price new now that it did when it was released over three years ago.

Yeah, this is one of the reasons I hate Nintendo. They maintain maximum profits by never declining their initial value, though the sell-back price slips more by the week. You buy a game new, sell it back the same week, and you already lost 60% of the value. The week of release. You buy it new and sell it back the same week, 3 years after first release, and you're lucky to make 10% of the money back

also has something to do with it. And this:

Not really surprised. Not that I think the Wii is a bad system, but that it has practically saturated the marked with LOTS of Wii's. So now it has to do something different if it want's to continue to make a profit.

Maybe people are just saving for the 3DS? Why would I buy a DSi when I'll just be outdated in a few months.

Pretty much the reason why right there folks.

By targetting a crowd that doesn't normally care about games, they've received just that: a crowd that doesn't normally care about games. Toy companies don't focus on distributing the same two or three toys alone for six years. By treating their product like a toy, it sells like one, for better and worse.

 

[Corpse XxX]

I've always had the feeling that Nintendo consoles, the handheld and Wii, is something that one would get tired of quite quick.. Mostly for casual gamers who's attention span for gaming don't really last..

And now that Sony and Microsoft also have motion sensors, the appeal for Nintendo products has fallen drastically i believe..

 

[8bitmaster]

I know exactly why this happened. Nintendo's 3rd party support. They give licensing to everything, no matter how much it sells or doesn't. So people who bought nintendo consoles see nothing good coming out, or people who were planning on buying them for games down the road decided against it and borrowed from a friend, or just went the route of the consoles for true gamers (ps3 360 pc) and have been straying from nintendo's "family friendly" outlook for an actual game experience.

edit: I have both a wii and a ds. I haven't touched my ds since spirit tracks a long time back, and haven't touched the wii for a few months now. Nothing good has come out, and Steam sales where calling to me at the time.

 

[tahrey]

I'm voting the same way. Pretty much anyone who wants a Wii or DS has one by now. They're cheaper and more accessible than their competitors so the monetary/age/ability/interest barrier to ownership is far lower, and AFAIK they don't break down as much

They're definitely the most popular out of people I know who own any kind of console.
I'm probably the only person I can think of who'd be in the market for something like that but doesn't have one, and that's only because I know I'd spend ALL my spare time on it. Basically, they've made it TOO attractive.

Time to try diversifying, or at least bringing out something new. Fresh versions have always rolled along in the gameboy arena and done fairly well, so the 3DS could be a much needed boost. The Wii's gone from underpowered to downright primitive-looking in that same timescale too... wanna bet they DON'T have a new "main" console brewing, just waiting for 3D connection standards and the like to settle down?

Still, hopefully those rampant sales mean they've got a fair old bit of cash piled up to see them through and to use on R&D.

 

[Reed Spacer]

That's mostly because everyone has one.

 

[MB202]

Oh geez... I've been hearing people say they won't buy the 3DS, or at least not right away, so things look bad for Nintendo...

 

[PureChaos]

that's a lot lower than i thought it would be, % wise. still, i'm sure when the 3DS comes out things will rocket again

 

[Iron Mal]

By targetting a crowd that doesn't normally care about games, they've received just that: a crowd that doesn't normally care about games. Toy companies don't focus on distributing the same two or three toys alone for six years. By treating their product like a toy, it sells like one, for better and worse.

This pretty much hits the nail on the head I believe, pandering to a non-gaming crowd was fine while it was new and popular but it would appear that the initial rush of success has now given way to the fact that this was never going to be a long term or sustainable thing.

Odds are on that there are a large number of people who bought their Wii's, played them regularly with their friends for a while and then...lost interest (either moved onto other stuff or wanted a new console, either way, the Wii would be either gathering dust or getting traded in).

It's also got to be taken into account that the Wii's only unique feature was the fact that it had motion controls, now that everyone has them you could argue that there's no point getting a Wii anymore since you can now get the Wii experience in a PS3 or 360 but you can't get the Xbox/PS3 experience on a Wii (to a certain extent the Wii has become slightly obsolete).

 

[Irridium]

That's mostly because everyone has one.

What he said.

At this point, anyone who wants a DS/Wii owns one. Or knows somebody who owns one.

 

[Xanthious]

Let's look at this shall we. Is it any surprise now that the xbox 360 and PS3 have motion controls anyone really wants the "Gamecube Motion Control Package" errrrr I mean the Wii. Well they milked the Gamecube for a good decade almost although they did have to repackage/rename it halfway through and add a shitty motion controller to get it to really take off . . . .

 

[Eri]

By targetting a crowd that doesn't normally care about games, they've received just that: a crowd that doesn't normally care about games.

Boom! Right there!