Nintendo Cuts Profit Projections After Half-Year Results
Posted by Thomas Whitehead
Losses continue to fall despite weaker than expected 3DS sales
Despite all of the hype and excitement currently around Nintendo and the upcoming launch of Wii U, in addition to its efforts to improve its download platforms and more, the company's been working against a backdrop of difficult financial results. Earlier this year Nintendo had to report its first annual loss in 30 years, putting the setback at 43 billion Yen ($529m or £327m). In the first quarter of this year Nintendo made more losses, just over 17 billion Yen, but was optimistic of a turnaround with Wii U on the way and the 3DS hardware being sold at a profit for the first time.
Today the company has confirmed its results for the first six months of this financial year, up to 30th September. The overall results show a loss of 28 billion Yen (£220m/$350.7m/€270.2m), which is higher than the 20 billion Yen loss that had been projected. It must be said that Nintendo is still successfully cutting back its deficit, with the figure for the same period last year actually being a loss of 70.2 billion Yen, which shows how much the situation has been salvaged. The bottom line in terms of Nintendo's outlook for the year is that it's dropped projected profits of 20 billion Yen to just six billion Yen.
So why has Nintendo missed its targets this time around? One big reason out-with Nintendo's control is exchange rates unfavourable to the Yen, with an eye-watering 23.2bn Yen (£182m/$290m/€224m) lost as a result. Beyond that some blame rests, once again, on below-par 3DS sales outside of Japan. While the system has been doing exceptionally well in Japan, results elsewhere have failed to match that success, even with the bump in sales with the release of the XL model. In the three months since the last update at the end of June, 3DS sales increased by almost 3.2 million units, with 2.1 million of those being the newer model. Those aren't bad results at all — taking lifetime sales to 22.19 million — but are still below the figures that Nintendo wants to see.
With Wii U on the horizon and losses slowly decreasing, Nintendo will no doubt be hoping to share happier news at the end of the year. This new update shows that progress is bring made, but that a lot of hard work and big sales are still needed.