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.