News Article

Nintendo's Profits Show a Significant Drop, This Year Should Improve

Posted by Trevor Chan

Decreases in sales explained, and Nintendo's forecast for this fiscal year

Although Nintendo has claim to notable achievements with its hardware ― the DS has proved to be the best-selling handheld ever and global Wii sales have surpassed the 86 million mark, the company's profit numbers for the fiscal year ending 31st March 2011 show a significant drop.

Net sales totaled 1,014.3 billion yen, down 29.3% from the previous year; gross profit came in at 287.9 billion yen, down 32.6%; and net profit was 77.6 billion yen, a decrease of 66.1% compared to the previous year.

Aside from pointing out that the decrease in gross profit was likely due to the fact that hardware saw several price reductions, Nintendo does offer an explanation as to why sales of Wii and DS hardware and software were down:

The decrease in unit sales was mainly due to a lack of appealing software titles which encourage consumers to buy. Other reasons were the stronger yen against the US dollar and the Euro for this fiscal year, which caused a decrease in net sales by about 86 billion yen year-on-year and price reductions for "Wii" and "Nintendo DS" series hardware from the last fiscal year to this fiscal year.

For the fiscal year ending 31st March 2012, Nintendo predicts net sales will reach 1,100 billion yen, an increase of 8.4% compared to the previous year; and a net profit of 110 billion yen, a jump of 41.7% from the previous year.

Although the 3DS has had a strong start selling 3.6 million units worldwide, Nintendo fell short of selling the entire shipment by about 400,000. Still, the company has a relatively high expectation to sell another 16 million units by the end of this current fiscal year. Forecasts for Wii and DS sales total 13 million and 11 million, respectively.

Software sales for the Wii, DS and 3DS are predicted to reach 120 million, 67 million and 62 million, respectively. There's certainly a title or two that can help Nintendo reach those figures.

[via nintendo.co.jp]

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User Comments (26)

Hadouken-Man

#2

Hadouken-Man said:

Another reason why the sales went down could be
the graphic performance of the Wii and DS.
I have been to alot of websites where people are complaining
that the graphics aren't good enough. I mean sure good graphics are nice and better the experience, but the graphics don't make the
game. A game should be defined by the gameplay, and overall
fun and enjoyment of it.

KaiserGX

#3

KaiserGX said:

LOL @1, that would be hilarious.

Are Research and Development team says, sales are down... but why?
Did we count the cash we used to pay the R&D?
Sakurai: :Laughs:

Bankai

#6

Bankai said:

No, R & D doesn't count towards a "drop in profits" - that's actually a fairly standard cost in business.

As the article states - it's the strengthening Yen and other external factors.

kurtasbestos

#7

kurtasbestos said:

I'm moving to Japan in a few months and will very happily accept 1,014.3 billion yen. I won't even release disappointing statistics about it that cause fans of my competitors to gloat. I'll take that in cash, please and thank you.

Victoria

#8

Victoria said:

Could this be because EVERYONE already owns a Wii and/or a DS and no-one is buying a new one?

TeeJay

#10

TeeJay said:

@ Victoria
That explaination is so logical and makes such perfect sense that it makes me feel stupid for not thinking of it.

Kirk

#12

Kirk said:

I promise you this; the 3DS will not be anywhere near as successful as DS because I believe right now we are in the middle of a paradigm shift where the vast majority of casuals who might have considered buying a device like the 3DS in the past are simply going to go the far cheaper route of buying the likes of an iPhone, Android phone or tablet etc to satiate their gaming fix, as well as do so many other things beyond gaming into the bargain.

There simply isn't going to be enough people who are daft enough to spend a couple hundred pound on a console and then £30 or more for every game after that when they can get the likes of iPhone for a similar base price but around 20 games for the same price as a single 3DS game.

Consider; you could buy Zelda 3DS for around £30 or you could buy all these games on iPhone for roughly the same price: Dead Space, Angry Birds, Cut the Rope, Lane Splitter, Tiny Wings, Doodle Jump, Fruit Ninja, Real Racing, Infinity Blade, Bejeweled 2, Plants Vs Zombies, Game Dev Story, Tetris, Battlefield Bad Company 2, World of Goo, and more...

I predict the time of expensive dedicated gaming hardware, and especially the software, is coming to it's end very soon, and at the hand of lifestyle devices like the iPhone and iPad etc.

Spoony_Tech

#14

Spoony_Tech said:

@12 Unfortunately I have to agree with a lot of your points. One of my employees just informed me sprint is coming out with a 3d android phone here in a couple of months. I figured it would happen eventually but not this soon. Depending on how good it will look and what game will eventually come out on it Nintendo and even Sony could be in big trouble. I (just like all the hardcore games) will always be waiting for the next big Nintendo release but most of the other games will be available for some type of new phone coming out in the next few years. Trust me if capcom thinks they can make tons of money porting over one of its resident evil game to a phone and make more money we could see the downfall or another video games system crash like in the 80s. To many people with phone and easy access to cheap games. Gone are the casual gamers from Nintend handhelds.

sketchturner

#15

sketchturner said:

Forecasts for Wii... sales total 13 million....
Software sales for the Wii... are predicted to reach 120 million.

Holy cow! That really makes me wonder what games Nintendo still plans to release on Wii! Those are some big numbers for a system that is in the process of being replaced. Clearly, Zelda alone is not going to rack up anywhere near those numbers.

antoniorsh

#16

antoniorsh said:

No matter how 'bad' are these numbers, they are f*cking good. Why are they worried because just sold 86 millions of Wii's? Sh*t...

motang

#18

motang said:

Well to be fair they did launch a new console this year, and the Wii has been in th decline. It should be better once 3DS has more games for it.

Token_Girl

#19

Token_Girl said:

I think the games released this fiscal year were pretty big sellers: Mario Galaxy 2, DKCR, Kirby's Epic Yarn, Pokemon B/W, and Pokemon SS mid-March at the very end of last fiscal year. The DS lineup hasn't been the strongest this year though when it comes to big system sellers.

Really, between hardware price drops and market saturation. This makes sense. We're also on the cusp of a new hardware cycle, so people are probably biding their time on buying old hardware. That being said, while I'm sure the 3DS will do very well and the Wii 2 will turn a profit (can't really say more since I don't know much about it), I can't see lightning striking twice for Nintendo like it did this gen. with all the new competition.

BulbasaurusRex

#20

BulbasaurusRex said:

He has a point about the lack of new, quality games between January and March this year, but 2010 was the best year of new game releases the Wii has ever had! I bet software sales didn't go down (which the article doesn't address). He can't blame the hardware sales drops on a lack of new, quality games.

rjejr

#21

rjejr said:

Lots of good comments on here. Victoria is right, everybody already owns a Wii or DS. I still think having a $129, $149 and $179 console sitting in the same case as a $249 console is going to hurt the $249 consoles sales number, too much in house competition. And Kirk is right about the "i" competition. I've been looking into the $229 iPod, does everything except the phone. And mostly on sale for $200. No, it ins't a DS, but it does stuff. And the PSP is $129 (the Go is dead, this week literally and figuratively).
In conclusion, even with all that, I don't see Nintendo declaring bancrupcty anytime soon. Cafe and HD Zelda will make them money next year. (Ugh, just dawned on me, all the Cafe titles - Mario Kart HD, SSBB HD, Super Mario HD...)

Mandoble

#22

Mandoble said:

Looking at the sales numbers of 2011, the only console selling worse than the Wii is the PSP, and the winner is the PS3 followed by the DS.

Highwinter

#25

Highwinter said:

@starfox219
I think you're ignoring the issue. There may be some people out there that only care about how good games look, but when it comes down to it, people aren't going to play a bad game.

One of the reasons I think the Wii has suffered is because of its dated tech.. Not because the games look bad, but that they're prevented from doing games on a larger scale. Things like Grand Theft Auto or the Elder Scrolls series, which rely on huge open worlds that you're free to explore, are next to impossible on the Wii because of its limitations. They could scale things back and do these games on a much smaller scale but then they wouldn't be as fun because of this.

This is why many serious gamers have felt somewhat betrayed by Nintendo's latest efforts, they seem content with releasing rehashed games on gimmicky systems instead of actually improving or advancing gameplay. That's not to say I hate the Wii but I'm not happy with the direction they went with it.. Hopefully the new system gets things at least a bit more back on track.

Mandoble

#26

Mandoble said:

@Highwinter, fully agree with you. Add the fact that the typical Wii mini-casual game type is more and more present in the smart phones, and way cheaper than for the Wii. Add Microsoft assaulting the fortress of family games and also including the last "wow" factor with the Kinect. Sony with the PSMove surpasing by far the accuracy of WM+. 3DS launch with a set of few and pretty poorly rated games and with sales levels not even close to Nintendo expectations, announced Nintendo 3DS games that are mostly remakes or direct ports from old consoles.

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