Nintendo Looking To "Harvest" 3DS Success To Avoid An "Unacceptable" Fourth Year Of Losses
Posted by Damien McFerran
"We would like to retrieve 'Nintendo-like' profits as soon as possible"
In its recently-posted investor's briefing, Nintendo has revealed its plans for the near future and how it aims to turn around three years of consecutive operating losses. We've already heard about the proposed Nintendo Figurine Platform, but the company has much more in store as it attempts to move back into profit.
Managing Director Tatsumi Kimishima directly addresses the losses experienced over the past few years, and stated that a fourth year of losses would be "unacceptable":
Please let me comment on the operating losses for three consecutive years. Two and three fiscal years ago, the extremely strong yen and transition between our video game platforms mainly put our revenue and expenses off balance. For the last fiscal year, under the improved foreign currency exchange situation, we made various efforts to retrieve “Nintendo-like” profits. We, however, could not achieve these results as the sales of our main hardware and software products ended up being well below our forecasts, and we incurred temporary one-off expenses from the purchase of technology that we did not expect at the beginning of the fiscal year. I feel deeply responsible for this and I need to fulfill my responsibility by recovering the momentum of our business.
We would like to retrieve “Nintendo-like” profits as soon as possible. However, the success of a video game platform business depends greatly on its momentum, and it inevitably takes time to rebuild the business once the platform has lost its momentum.
Posting an operating loss for the fourth fiscal year running is something unacceptable. We see this fiscal year as a time to prioritize restoration of the balance of revenue and expenses.
Given the rather dismal position of the Wii U, it's perhaps unsurprising that Nintendo President Satoru Iwata is looking to the 3DS to turn things around for the firm. The popular handheld continues to post impressive results and Iwata feels that the strong installed base achieved thus far will provide the ideal platform for financial success:
The installed base of Nintendo 3DS has already surpassed 43 million units, which is large enough to develop this platform business. By leveraging upon its large installed base, we are aiming to make this fiscal year a significant harvest year.
Nintendo 3DS already has a quality software lineup available now, many of these titles have been selling rather steadily even weeks or months after their respective release dates. Notable year-on-year sales growth has been observed especially in the Nintendo 3DS software sales overseas. The growth rate varies from country to country, but the software sales have grown by approximately 20 to 40 percent. By converting sales potential into actual sales, and by releasing strong titles periodically, we are aiming to sustain the momentum of the Nintendo 3DS business.
To do this, Nintendo is making sure that the console is blessed with as much quality third-party software as possible:
Out of approximately 34.22 million units of third-party software sold through in 2013 (excluding the ones from the three video game hardware manufacturers and Pokémon games), the platform on which those games sold the most was Nintendo 3DS, which captured 38 percent of the total sales units. In addition to the titles shown here, I hear there are many more titles under development, including unannounced ones. They have already taken advantage of the quickly expanding Nintendo 3DS installed base abroad for some of these titles. Nintendo has worked closely with these publishers and an increasing number of third-party Nintendo 3DS titles have shown results in the U.S. and Europe, including the Professor Layton series, Inazuma Eleven series and “BRAVELY DEFAULT.” By accelerating this trend, we would like to further grow the Nintendo 3DS business.
It's clear that the 3DS is a vital system in Nintendo's plans this year; with the Wii U failing to sell in the expected volumes, the Japanese veteran will be relying on its popular handheld more than ever. Titles like Tomodachi Life and Pokémon Omega Ruby & Alpha Sapphire will help, but can the 3DS maintain its momentum through 2014 and beyond? Let us know what you think — and your reaction to the comments issued by Nintendo so far — by posting your own opinion below.