News Article

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.

[via nintendo.co.jp]

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User Comments (32)

erv

#1

erv said:

Not that strange, selling a wiiU console at a loss - surprised they cut back their losses that much that quickly, especially since most of the consoles are already made and paid for on nintendo's part. I remember not too long ago they were almost farming money, so not too worried there.

It is strange, however, how a console like the 3ds can sell as much as the old ds, but be considered failing. It just isn't captivating a market as that one has grown substantially.

If this continues to fail to some degree, software distribution should become digital so much of the cost involved will become a better profit margin in the end. Oh well, we'll see within half a decade, I guess.

Now ship my wiiU please :)

Bliquid

#2

Bliquid said:

As long long as they delay strong titles for 3DS in the west, as well as not announcing many others, this is not surprising at all.
If someone bought the console but doesn't care about Mario titles, what's left, this year?

baba_944

#3

baba_944 said:

They need sales for New Super Mario Bros. U, Paper Mario Sticker Star and the Wii U.

Chunky_Droid

#4

Chunky_Droid said:

Are Nintendo selling the Wii U at a loss when it comes out? They don't normally do that with consoles (not counting handhelds), so it'll be interesting to see what it's like at the end of the year.

I doubt any company can keep going like this, but I don't know a hell of a lot about accounting so I'll let people that know more than me make comments on this :)

ThomasBW84Admin

#5

ThomasBW84 said:

@ChunkyDroid I don't know whether it's public knowledge with the Wii U costs, I haven't seen anything yet. I imagine it's close to the bone, but I reckon Nintendo wouldn't want to sell it at a loss. It tried to sell 3DS at a profit, but had to back-pedal later on, so hopefully we won't see a repeat of that scenario.

SirSmugleaf

#6

SirSmugleaf said:

Well at least the stats are showing signs of improvement...

I'm sure Nintendo'll be out of deficit in no time...

WiiLovePeace

#7

WiiLovePeace said:

They would've sold more 3DS XLs if they had've let more people know they even existed :P At least I haven't seen any advertisement for it at all in my area.

XCWarrior

#8

XCWarrior said:

Delaying Luigi's Mansion 2 didn't help, or Fire Emblem to next year. And Monster Hunter will help a bit. I have a feeling 3DS will see a big sales bump for Christmas when parents have to buy it as a replacement for when they can't find a Wii U.

I sure hope I can find a Wii U this holiday...

Burning_Spear

#9

Burning_Spear said:

Companies miss revenue projections all the time. The only important thing is that it's reversed promptly.

Salnax

#10

Salnax said:

@Bliquid There's Layton and a bunch of 3rd party titles like Zero Escape, Sylanders, Adventure Time, and Epic Mickey. But yeah, Holiday 2012 is not going to be remembered very fondly for 3DS owners.

Ducutzu

#11

Ducutzu said:

When it comes to handheld devices, the trend is that, at some point, one or two titles "click" with the public in a special way... and, from then on, everybody starts buying the device and all games released for it.

So most complaints about the 3DS (no games, don't like the design, blah blah blah) are not really relevant. What has yet to happen in Europe is that special "click" with the public consciousness. Until that happens, the vast majority of potential buyers will not care one bit about the device.

In Japan, the "click" seems to have happened with "Monster Hunter". So now many releases (like "Bravely Default" and so on) enjoy great reviews and excellent sales. It's like an "on/off" switch has been activated in the mind of the public.

But it's obvious that this has not yet happened in Europe. Not even with Mario Kart 7 and New Super Mario Bros 2.

It's funny that not even Nintendo can tell what will click. They were surprised at the success of "Nintendogs" and "Art Academy" for the DS.

Who knows what will ignite the public this time... "Animal Crossing", maybe?

I dare to guess that it will be some game with a lot of content, rather than something like your average mobile phone game.

AyeHaley

#12

AyeHaley said:

3DS already doubled NGC's lifetime sales in far less time. Wii U and AC 3DS wil get things back on track I guess/hope.

feelingkettle

#14

feelingkettle said:

Not surprising that this is all going on...the Wii is dead and I'm sure isn't making them much money any more. Their next console has yet to launch. The 3ds is doing great in Japan, but that's because they have all the great games! I'm enjoying my 3ds, but I know I'm waiting for great stuff to come out early next year, as in Etrian Odyssey and Monster Hunter. Third party support in Japan is great (or so it seems), so once that starts happening in the West, I'm sure it'll do better.

Spoony_Tech

#15

Spoony_Tech said:

I still see the problem with the 3ds is game sales. 3-1. Where as the other two are about 6-1 and 9-1 respectively. We still need a flood of good games for the 3ds. I have like 12 3ds games so that means 4 people have only one. Not good for the system i love!

ajcismo

#16

ajcismo said:

Nintendo would see more sales if they didn't stuff all of their big releases, outside of Japan, only during the Christmas season. Spread out the software over the course of the year. What have we had this year beside NSMB2 at the end of summer? (I don't count the Pokemon B&W2 games since that was designed for squeezing on last bit of profit out of the DSi) eShop games are great, but they don't sell systems. The public in NA and Europe wants games for their 3DS! Nintendo, I am willing to trade you money for software all year around if you would please send some my way.

Cengoku

#17

Cengoku said:

Personally (besides mk7), i don't care anymore the mario games. they're all the same. A new game comes, they do just a minor update of the previous mario game.
Where are: Fire Emblem, DQ games, Layton went on first day of the 3ds jap release, Beyond the labyrinth, Inazuma Eleven, Rune factory 4, Etrian Odyssey 4, The Layton vs PW will be released on 2014-2015 here in Europe. Calciobit, Gundam game? One Piece?
Here in the west for Nintendo, we are nothing but garbage which can give a little more money.
The Q2/2013 release of Fire Emblem is a scandale for me.
Why Animal Crossing doesn't have a worldwide release? Always the japanese the first... And Luigi Mansion 2, after 3 years of wait, I don't care anymore of this game. 2012 was a crappy 3ds year.

gefflt

#18

gefflt said:

Could we get these numbers in American dollars by any chance?

For a website that's being visited by people from all over the world, it would only make sense to use the US dollar as a reference (since that's what most international organizations are using anyway - such as the United Nations).

Sorry - don't mean to rant - you guys usually do a good job with this.
Thanks! :)

Nin-freak

#19

Nin-freak said:

Why do they take all their earnings from America and EU and exchange them into Yen? Why not keep that money in a bank and use it to pay the employees there, buy advertising there, etc. I don't really know how all that works, I'm just curious.

Aviator

#20

Aviator said:

They probably use Yen because Nintendo is a Japanese company.

It would be a hassle if they talked about their company performance using multiple currencies.

Vehemont

#21

Vehemont said:

Not surprised in the least seeing as there isn't much for the 3DS coming out at the end of the year except Paper Mario and Professor Layton. Nintendo is going to be relying on older games like Mario Kart 7, NSMB2, and SM3DL to bolster 3DS sales for the holidays. Its sad how the Wii has died the way it has and also plays a factor in it as well. Nintendo had better hope the Wii U flies of the shelves and not end up like the 3DS did at its start.......

Devil_Surivior

#24

Devil_Surivior said:

@Mahe Please don't reference Kotaku, they are so full of nonsense, just look their track record with the pro controller and the Wii U voice chat.

Nintenjoe64

#27

Nintenjoe64 said:

I'm sure they and their investors are not worried. They are about to effectively print money for at least a year without a serious direct competitor for their product (PS3/Vita will only count if they start porting things like Zombiu to it).

I remember thinking I should invest in Nintendo shares just prior to the wii because they had been at a low and I reckon the same applies for now.

Ernest_The_Crab

#28

Ernest_The_Crab said:

@Aviator That's about right. Generally when you do accounting for an international corporation you create your home country's financial statements first, which would need to be recorded in Yen in this case.

Actually, Nintendo's losses would be dramatically lower without that exchange aspect. Unfortunately, not being native to North America or Europe (or any other country than Japan for that matter) means they have to convert the currency back.

28 billion yen loss - 23.2 billion yen loss from exchange = 4.8 billion yen loss
or $12,500,000 US, $12,607,500 Can, or 7,932,738 Pounds or 9,804,853 Euros.

Well, Christmas season hasn't arrived yet and that's generally part of Nintendo's strongest quarter (also year isn't over yet since Nintendo's fiscal year starts in April and ends in March)

MysticX

#30

MysticX said:

I blame the lack of non-Mario "killer apps" for the 3DS's woes, the recession going on doesn't help much either of course, but how many games that make people go "Shut up and take my money!" have come out over the past year?

Lots of people still stick with the DS (Whichever variant of it they have), the most recent big-name game for a Nintendo console was "Pokémon Black/white 2", which doesn't do much extra for 3DS over the regular ol' DS, the two tie-in Eshop titles aside...

FonistofCruxis

#31

FonistofCruxis said:

@Cengoku We may not have been getting as many great games as Japan but calling 2012 a crap year for 3DS seems a bit harsh. We've had Resident evil: Revelations, Metal gear solid: Snake eater 3D, Kid Icarus: Uprising, Kingdom hearts: Dream drop distance, Theatrhythm Final fantasy and there's still Professor Layton and the Miracle mask, Virtue's last reward, Paper Mario: Sticker star and Shin megami tensei: Devil survivor overclocked to come out.

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