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Talking Point: A Big Year for Nintendo

Posted by Thomas Whitehead

Time for a transition

Today Nintendo announced its annual financial results, and the big headline is that it made a loss of 43 billion Yen, roughly $529m USD or £327m GBP. While we don't need to fear for the future of the company at this stage due to its significant stockpiles of cash and assets, it’s nevertheless a blow for the big N. The loss was smaller than Nintendo predicted in January, but we can’t dance around the fact that any annual loss at those levels is bad news indeed. We knew it was going to happen, but seeing it formally announced brings the reality home.

Today’s announcement wasn’t just about confirming losses, but also outlining the performance of 3DS and Wii, as well as setting out projections and targets for the upcoming Wii U. Let’s take the headline announcements and consider the implications, both now and for the coming year.

Aiming low with Wii U

When Nintendo launched 3DS, it didn’t mess around when it came to sales predictions, with a bold statement — 16m worldwide sales in one year — that has only become realistic, in hindsight, at a much lower price point. It seems with Wii U the opposite is true, as Nintendo is projecting a combined 10.5 million sales for Wii U and Wii in the coming financial year. If we assume that Wii U sales in that equation will be over a period of four to five months – if it arrives in November – then it’s a modest undertaking. It’s certainly a conservative, steady approach from Nintendo.

The reasons for this, from a Wii U perspective, could be varied. On one hand it could be for logistical reasons, as Nintendo will need to manufacture and distribute the consoles for launch, and perhaps it only anticipates a modest number of units being shipped over the launch period. It’s certainly possible, and who can forget that when Wii launched it was notoriously difficult to get hold of as Nintendo dealt with demand. Another reason for that projection could be an acceptance that the economy and game market has changed, and perhaps the days of selling nearly 100 million home consoles are long gone. There’s more competition from non-traditional platforms such as iOS and Android tablets, and on a broader scale the world economy is at a low ebb. The least attractive reason, from our perspective, is that Nintendo will release the Wii U at a reasonably high price to avoid a loss on each unit sold: contrary to rumours and speculation of a $250-300 price range. If Wii U does come in at a high price point, there’s a danger that Wii owners will be turned off from an upgrade. At the moment pricing is, of course, unconfirmed.

If Nintendo does sell a combined 10.5 million Wii U and Wii consoles it will no doubt be pleased to hit its targets. It’s notable, however, that presenting this combined figure – without providing individual numbers for each console — suggests an exceptionally bad year for Wii. Wii still sold 9.84 million consoles last year, with a limited game release schedule and the announcement of Wii U hindering sales. A drop this year is expected, of course, but to predict that Wii and its successor together will only just surpass last year’s total doesn’t show a great deal of confidence in either. It seems to suggest a relatively quiet Wii U launch period and a struggling Wii in 2012.

3DS may finally print money

When it comes to the financial year sales targets for 3DS, it narrowly missed out. Nintendo had updated its goal to 14 million sales, and it’s been confirmed that 13.52m was the final result. As mentioned earlier, even getting close to that target has taken a lot of effort from Nintendo: a major price cut, popular title releases and improved functionality through system updates, to name a few areas. Getting to that stage also led to uncomfortable times for Satoru Iwata and others, with management staff taking severe pay-cuts last year for what was, ultimately, a poor system launch. There’s light at the end of the tunnel, however, with big franchise titles on the way this year and beyond, along with a growing user base.

Most importantly for Nintendo, it’s anticipated that each 3DS unit will become profitable by September this year, as manufacturing processes and part costs improve, meaning the company will no longer lose money on each and every handheld it sells. To get to that stage at the lower retail price point will come as a relief, and projected sales this year of 18.5 million consoles also suggests confidence that the upcoming release schedule, especially New Super Mario Bros. 2, will move plenty of units.

Those are positives, but one area of concern for Nintendo to address is the performance of 3DS outside of Japan. In its homeland, the handheld is outselling all rival consoles combined on a weekly basis, as well as dominating the software charts: elsewhere, that’s not the case. In the most recent quarter 1.19 million systems were sold in Japan, compared to 520,000 in the Americas and 380,000 elsewhere. Although not disastrous, it’s clear that Nintendo’s regional teams have work to do to boost sales around the world, and it’s undoubtedly an area that will be targeted.

Time for Nintendo to hold its nerve

To reiterate an earlier point, this financial loss wasn’t a surprise, with Nintendo preparing the ground for its arrival for a number of months. There aren’t bold statements for the coming year’s results either, with a project profit of 20 billion Yen: not bad, by any means, but lower than the norm for Nintendo’s shareholders. We’re also anticipating more detail on the results in the coming days, as transcripts of Satoru Iwata’s shareholder Q&A sessions are released. It’s clear, though, that after enjoying a period of outstanding success Nintendo is being forced to shift gear and, in a sense, make a fresh start.

The most recent results, and the projections for the year to come, show that Nintendo is truly in a transitional period. The 3DS is developing a user base, moving towards profitability and hoping for a strong year, while Wii U will be the company’s second major launch in as many years. Technology, gamers and the economy have all changed, and Nintendo is being forced to adjust accordingly. At times Satoru Iwata and his team have got it wrong, particularly with the 3DS launch, but a modest set of projections suggest that Nintendo as a whole is learning lessons and preparing for the long-term with its latest consoles.

What do you think? Are you concerned about Nintendo’s losses, or do you believe it’s a one-off? What do you think of the conservative Wii U/Wii projections, and will the 3DS pick up steam this year? Let us know in the comments below.

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User Comments (57)

SuperUberBear

#1

SuperUberBear said:

I just want to know how much the Wii U will be at launch in GBP. It will be my make or break decision about day 1 purchase.

ScreamoPichu

#2

ScreamoPichu said:

With 3DS actually becoming profitable later in this year, it'd make up some losses. The one thing with Wii U is the price point. If it's priced bad, it's done. I don't think Nintendo could afford two launch fails in a row. Especially, with them being major launches. Good games at launch, so far seems promising, a good price and the Wii U will do fine, maybe even a huge success.

Geonjaha

#3

Geonjaha said:

I hope the 3DS will pick up steam this year, but with 3DS VC being seemingly abandoned for so long, and no release period specified for some of their major games (AC, LM2, MH3G, MH4) it doesnt look like they're holding their momentum. That said, 3DSWare has had a lot of titles announced recently, so thats a plus. :3

Knux

#4

Knux said:

Like I said, I'm not buying the Wii U if it's over $300. Nintendo is going to have to learn to cater to us gamers if they want my money. If they don't play their cards right, then they'll be dominated by the awesomeness of Sony.

Shiryu

#7

Shiryu said:

I love transition periods. They always turn out the best e3s. Even if does turn out to priced slightly higher then €300, I will probably buy the Wii U day one. I skipped all home consoles this generation except the Wii which sees daily usage from day one. It will be my first HD system. But it will not replace the Wii off the shelve. I got way too many GameCube games I still play all the time.

Malic

#9

Malic said:

So its fine to spend um I dunno $600 or $700 on a Sony console but no more than $300 on a nintendo one?

DeMoN-13ruce

#10

DeMoN-13ruce said:

the next sony console will not be so much more powerfull then ps3 .....lookat the vita it has olny soldlike 1m units now due such a high price and sony learned from ps3 price lol

BenAV

#12

BenAV said:

I'm already planning to pick up a Wii U at launch regardless of price.
However, I'm still hoping that it won't be overly expensive so that I'll have more money for games.
$400 AU would be the best case scenario, but I'm prepared for anything up to $600 AU.

Luffymcduck

#13

Luffymcduck said:

@Knux
I agree.

I really would like to buy PS3 since it has great exclusive titles but I also want WiiU. Can´t wait for E3 and what Nintendo has in store for us. If possible... F-Zero.

Malic

#15

Malic said:

The main reason the vita isn't selling well is the lack of games and yeah ports don't count. If you think that Sony will release the their next console just a little more powerful than the ps3 your crazy.

k8sMum

#16

k8sMum said:

the biggest influence is the world-wide recession that is currently going on.

stealth

#17

stealth said:

Alot of the 3ds numbers you posted are taken out of context..........

remember the 3ds is doing better than any other nintendo potable EVER right now.......

the 3ds sold 17 million in its first fiscal year while the ds only sold something like 14...........

I dont think those regional numbers are accurate

Ernest_The_Crab

#18

Ernest_The_Crab said:

@Malic Not necessarily crazy. Sony is in considerably more financial trouble than Nintendo and at this point it's essentially known fact that it's mostly their gaming division and licensing fees keeping them afloat. They can't afford to sell an extremely high end console at a loss again, they've already had an encounter with the red tape (which is MUCH worse than just a loss of profits). If anything they would be crazy to repeat the same mistakes they had with the PS3, especially with the current losses from the Vita and so close to their presumed release date for their next home console.

Wheels2050

#20

Wheels2050 said:

It will be interesting to see how the Wii and DS will finish off. I'm not upgrading to either a 3DS or Wii U, so I'll be able to finish off my collections for the current consoles.

With games still being announced for the Wii and DS (Kirby Collection, Pokemon B&W2) there's still life in the older systems yet but I don't see a rush of releases any time soon. However, there are occasionally some real gems that get released at the end of a console's life, so I'll have to keep my eye out.

As for Nintendo's finances, it would be interesting to see what would have happened if Nintendo had decided to engage a bit more with their audience. From my perspective, at least, them holding their cards so close to their chest does damage. No word of upcoming games makes people lose interest, which can lead them to jump ship. Some more timely translations may have helped them out (but then again they may not have).

MarioFan1985

#21

MarioFan1985 said:

I think that the reason why Nintendo had a huge loss in revenue is because the competition with Sony and Microsoft is much more intense, and the Wii didn't feature any of the more popular games that feature online gaming (something I find technically problematic) and it's not just the consoles either, the handheld competition is also more intense as the 3-DS now has to face the PS Vita, Microsoft might even get itself into the handheld competition someday. Now isn't the time for Nintendo to press the panic button, they just have to hope that the Wii U can feature some of the features (if not all of them) that Sony and Microsfot's new generation conoles are going to feature as well as have the popular games to be available for the Wii U, have it be for hardcore gamers as well as be family friendly.

Malic

#22

Malic said:

@TheSolarKnight I see your point but im thinking if Sony next console is just a little more powerful than ps3 and about the same as lets say wii u. Why would anyone buy it? Because of their first party games? I guess what im gettin at is if its priced cheap like win u I think nintendo will kill it also leaving Microsoft alone

Nin-freak

#25

Nin-freak said:

I think the sales numbers reflect the gaming industry as a whole. People have much more things to buy these days with their money. Their starting to choose what they want the most and their going without the things they want that they don't like quite as much. Nintendo just needs to keep the price down to around $300, maybe $329, and make the console as powerful as they can at that price without making a loss. That's all they need to do, and I think they will come out on top when it's all over. They always do anyway, they did it with Wii and their doing it with the 3DS. The market is changing, but Nintendo is far enough behind that they can go with the tide. Sony and M$ are too far into it now, they can't go cheap nor can they change their audience of consumers. Their the companies that need to start worrying.

Malic

#26

Malic said:

@DeMoN-13ruce Lol i know what you mean my phone is acting stupid. Kinda cut out on my last post. I think the ps4 will have to keep up with the next xbox

Pgonzo95

#28

Pgonzo95 said:

Even if the price is higher than expected, my siblings and I have already rasied $600 for a worst case senario. Nothing is stopping us from buying the Wii U

DF2506

#29

DF2506 said:

I'm still not sure about the Wii U. Don't get me wrong: I want Nintendo to sell a TON of the Wii U at launch. I hope it does great. But as for myself, I doubt I'll get one at launch. There's really only two games that WOULD 100% get me to want one at launch, neither one will happen: Animal Crossing or Earthbound. AC3DS is coming out soon, so there won't be one for Wii U at launch. And Earthbound, lol, doesn't seem like we'll ever see a new one of those...

So its very unlikely that I'll buy one at launch. Unless, of course, they show it off at E3 and really WOW me with the system. And you know, I really hope they do. I'd love to be Wowed by Nintendo again. It would be awesome. I do, really, want to see it at E3 and go " Ok, I gotta pre-order me one of those" and then as soon as they have it for pre-order, put some money down on one and keep paying on it.

I'd love that. But I don't know if that'll happen.

Still, sooner or later, I'll get a Wii U. Just cause I'm sure they'll do an Animal Crossing Wii U. Ya, it'll be awhile, but it'll happen. Well, unless the Wii U does amazingly bad and...sigh Not going to even say it. Hoping for the best!

C-Olimar

#30

C-Olimar said:

@Pgonzo95 Be prepared to have a great deal to spend on launch titles! :P

Such as Pikmin 3. Everyone in the world should buy Pikmin 3.

thefabfour64

#31

thefabfour64 said:

E3 will be key for Nintendo. I already plan on getting a Wii U around launch, but I want a big blowout at E3 as in the total opposite of last year. For the price I'm thinking either $299 or $349. I think it's pretty obvious at this point Super Mario Bros. 4/New Super Mario Bros. Mii and Pikmin 3 will be launch titles. I feel as though they need that 3rd big first-party title. I have a feeling it's whatever Retro's been working on. I'm concerned about third-party support, but then again Nintendo hasn't had "great" third-party support since the SNES days. Whatever Nintendo has planned, I'm sure it will be will be great nonetheless.

Imagine23

#33

Imagine23 said:

Nintendo knows what they're doing. They're always prepared to fix their errors. They've always made their next console better after seeing what the previous one failed to do.

Haxonberik

#34

Haxonberik said:

The only things I ask for launch is 500$ max (though in hoping for 300-400) and Pikmin 3 and Im buying it for Christmas.

Gilius

#35

Gilius said:

Once everyone found out that the games on 3DS were great and the fact the 3D actually worked, everyone was saying its a must buy.

Sir_Deadly

#36

Sir_Deadly said:

Hmm, i think a $250 to $300 is a reasonable price. it not like they have a billion yen in the bank!!!! Point being I dnt think it would effect them if they sell it at a cheaper price seeing they have all that money in the bank!!!

Onett

#37

Onett said:

@warnerdan

I couldn't have put it better myself. The only thing I'm worried about is certain titles like Mario getting over used or other big titles getting rushed out as a result of the poor Wii U sales to try and boost sales during the holidays. We all know how that would jeopardize their products.

scrubbyscum999

#38

scrubbyscum999 said:

I am not saying they should overprice it but $350 US would be good, maybe even $400. The last thing they need is a system that is not in the ballpark of it's competitors in terms of power. Sony and Microsoft's next systems probably won't be as big of a jump as last time, but they are still going to try and cram enough power to be ahead of Nintendo if they can.

pastasauce

#40

pastasauce said:

I feel like some of the same people that thought the psp would dominate and the wii would get crushed (I was one of them) think the wii u will do poorly. Let's face it, none of us know how well a console will do but I put my faith with Nintendo.

AltDotNerd

#41

AltDotNerd said:

Nintendo really should have different colored WiiU's at launch. Different colors gives buyers the notion that their unit is unique rather than just like everyone else's.

DarkKirby

#43

DarkKirby said:

What everyone is waiting for is if the Wii U is another Wii that targeted mainly casuals and non gamers or of the Wii U is made with enough power to target gamers and non gamers alike. Nintendo has so far claimed they will not be focusing on making the Wii U powerful, I can only hope this is a move to throw off Microsoft and Sony so they won't design their system to be too much more powerful.

Crystalking18

#44

Crystalking18 said:

Im a bit hesitant about getting a Wii U. As of now, I don't really have a job, except for a summer job that should provide for y gaming enpenses for the year, so I only buy the things that I truly want to play. From Nintendo's last financial year, I've only bought Super Mario 3D land, Skyward Sword, Kirby Mass Attack, Professor Layton and the Last Spector, Devil Summoner 2, and Kid Icarus Uprising (also Xenoblade, but it doesn't count in the financial year). So I had a ncie supply of games that I wanted to play.

While Im not concenered about the 3DS picking up steam and possibly "printing money" because of games like Kingdom Hearts (which might sell the system because the Kingdom Hearts fans I know will buy the system just for the game), Animal Crossing, Paper Mario, NSMB2, and Luigi's Mansion 2, and that's not even including the games that they'll inevitably announce at E3. The Wii U though.... Well Pikmin 3 and Super Smash Bros 4, but that's all we really know at the moment. There are going to be ports of games, but they're from other systems.

Nintendo really needs to hve a strong launch lineup if they want to survive. Price is not that big of a deal for me because it's probably going to be released somewhere around Black Friday, it'll sell a lot of consoles regardless because it's the hot new Nintendo console that Mom and Dad play, but the biggest concern is will those people stay? Will there be good games for the first few months or even first few years to make the system justifiable, or not profitable. There needs to be strong software to keep the console alive, or else this could legitimatly be Nintendo's undoing.

lanabanana

#47

lanabanana said:

Well, what would really boost Nintendo 3DS' sales would be:
Luigi's Mansion 2
Flipnote Memo
Super Smash Bros.
Resident Evil 6?
Animal Crossing
Paper Mario
... and many more awesome games I can't think of right now!!!!! :D

Ernest_The_Crab

#48

Ernest_The_Crab said:

Are you guys going to make New Super Mario Bros 2 article about it going digital? Apparently, it's going to have both a retail and digital release. It appears to have surfaced from an official announcement from the company.

I'm curious about how their pricing will be like. The only other known game that will do this is Unchained Blades and I don't believe they announced a price for it yet.

Kagamine

#50

Kagamine said:

I can tell many of you know this, but i see a lot that may not understand what the "loss" means. The "loss" simply means they didn't make as much money as last year, they didn't actually lose money, just not making as much.

kdognumba1

#51

kdognumba1 said:

I'm not concerned about Nintendo's losses after seeing the sales they made after they dropped the price, worked in better online features, and got some quality games out. With the strong push they appear to be making for online, I think there sales will be just fine for both 3DS and Wii U. I don't see them reaching the numbers that either DS or Wii made but they won't be far off and the money they make will probably be better because of stronger online.

I'd really like to know more on what they intend to do 3D wise for those who like the 3D features of the 3DS. Would love to see 3D netflix content. I'd also like to see more about there online set up and Nintendo Network. I'm really looking forward to seeing what they can pull off in the future.

ChosenOne25

#52

ChosenOne25 said:

Everyone please support the Wii U! I'm gonna get it if the price point is 300 Euros or less, I can't afford more as I'm still a Uni student. 350 would really push it, but maybe I would still get it but at a later stage.

kyuubikid213

#54

kyuubikid213 said:

I think the Wii U needs to do ONE thing and ONE thing only. It needs to come out at less than $500. I'm willing to pay at least up to $600, but a lot of people (even on nintendolife) aren't willing to pay for a console that expensive unless it is a Sony console. I don't care WHO made it, $600 is a LOT of money for some people (actually for anyone).

JimLad

#55

JimLad said:

I dunno, this E3 will be the maker or breaker for me.
The WiiU needs some truely original software to wow me like the Wii did when it launched. Something that makes the controller worth while, not just gimmicky touch screen crap tacked on to the same old games.
I won't buy it for traditional games because my Xbox will do that much better with it's traditional controller.

James

#56

James said:

@stealth Taken from Nintendo's own statistics — checked them myself, they are correct. And you're right, DS had a slow start and didn't really take off until DS Lite, but crucially Nintendo made money on every DS sold.

NintyMan

#57

NintyMan said:

The loss doesn't bother me one bit. It was a stumble and nothing more, and whether you like the game or not, New Super Mario Bros. 2 is going to make Nintendo big bucks that will contiue to allow Nintendo to rise above from early last year.

They must be playing safe with the Wii U because they don't want to get too cocky, and sometimes being cautious isn't a bad idea. As long as a Mario game and other popular games release on the launch date or soon afterward, the Wii U should sell well. With NSMB2 to back it up, the 3DS will contiue to do well this fall and winter. Don't forget that games like Luigi's Mansion 2 that we haven't heard about in a while will likely release later this year too.

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