Nintendo Confirms Yearly Net Profits, But Higher Than Expected Operating Losses

Wii U sells 3.45 million units, missing four million target

To start with, Nintendo's financial results for 2012/2013 aren't as bad as predicted yesterday by Bloomberg; in fact, if you're just interested in the balance sheet Nintendo's affairs are in the black — the net income when all is said and done is a profit of 7,099 million Yen, which equates to around $71 million. This is a fair bit lower than the net profit of 14,000 million Yen projected in Nintendo's Q3 results at the end of January.

When you drill down into the results that really matter, those of operational profits and product sales, the outcome is generally worse than projected by Nintendo in Q3. The operating income — which reflects how Nintendo's core business is performing — brought a loss of 36,410 million Yen, which equates to roughly $366 million; this is significantly worse than the estimated 20,000 million Yen loss of January and almost reaches the same level of operating losses as in 2011/2012. In that respect the net profit, as opposed to another punishing loss like last year, is attributable to factors such as the weakening Yen currency and mainly external factors; the business of selling consoles and games has again been a weak point.

To get away from these numbers to more familiar themes, how are Nintendo's systems doing? The financial report states that while the 3DS is the leading platform in Japan, overseas momentum is still insufficient; in total 13.95 million 3DS systems were sold worldwide, with over half being XL models. Most sales were in Japan (5.69 million), with North America (4.27 million) and other territories (4 million) lagging behind; overall 3DS hardware sales are now standing at 31.09 million units. Nintendo is projecting 18 million 3DS hardware sales in the coming year, with a large stated focus on the eShop download platform. The transition from DS continues, with the older hardware clocking just 2.35 million sales — 2.11 million of which were in North America.

The big weakness has been Wii U, with sales falling well below the initial projection of 5.5 million units and even the adjusted estimate of four million. As of 31st March the Wii U sold 3.45 million units worldwide — 920,000 in Japan, 1.52 million in North America and 1.01 million in other territories. They're undoubtedly disappointing figures — missing two consecutive targets — and Nintendo is giving itself the goal of selling nine million systems in this financial year. Sales of Wii, meanwhile, were well below the previous year at 3.98 million units, outselling Wii U courtesy of having roughly eight extra months on the market for the reporting period.

In terms of top selling software, worldwide, Nintendo Land and New Super Mario Bros. U sold 2.6 and 2.15 million units respectively for Wii U — Nintendo Land was bundled with premium models. On 3DS the top performers are Super Mario 3D Land and Mario Kart 7, both with over eight million lifetime sales. New Super Mario Bros. 2 was the best seller released in the last financial year, hitting 6.42 million sales.

In terms of what's next, Nintendo's brief statement mentioned Miiverse on more than one occasion as a significant means of promoting Wii U — perhaps adding to rumours that the network will be available on other devices such as smartphones and PCs sooner rather later. In terms of its headline projection for the coming year, Nintendo is sticking with its previously stated goal of producing a 100 billion Yen operational profit for 2013/2014, a target that Satoru Iwata previously gave as a personal commitment.

We expect more details to emerge — from Nintendo's perspective — in a company presentation later today, while investor briefings will follow. We'll also drill down into the details of hardware and software figures and trends for a feature article in the coming hours.

So, what are your thoughts on these results? Sound off in the comments below.

[via nintendo.co.jp]