In consecutive years Nintendo predicted a return to good times, struggled to deliver and reported financial losses; with that in mind the recent annual results were a major positive. Nintendo reported a decent profit and showed enough positive intent that shareholders were happy, with the company's value continuing to increase to this day. Much of that is based on the potential of smart devices and a planned Universal theme park partnership, but Nintendo's clever business practices will have helped.
A net profit of $350 million / £230 million / €308 million for the last financial year was particularly impressive considering the fact that, in raw sales, Nintendo missed its targets. Rather technical factors like a depreciating Yen played their part, yes, but Nintendo simply squeezed and economised to make each sale count for more. Revenues and unit sale targets were missed, yet a lot of money was still made.
Though targets were missed their levels did tell us much about Nintendo's expectations for each system, even if they were lowered in Q3 results. Last Spring, for example, Nintendo had targeted 12 million 3DS unit sales for the past year - which was lowered to 9 million - and that original figure had us scratching our heads. Hindsight is a wonderful thing, though, and that bold projection - defying all trends - was clearly made with the New Nintendo 3DS in mind. In fact, we can't help but wonder whether the original plan was to roll the new system out globally before the Holiday season; the fact it arrived in February in Europe and North America didn't help sales of the 3DS 'family' in those territories for the Holidays.
Yet the projections this year have no such surprise figures; in fact, Wii U levels are planned to hold steady (which is still low in the overall context of the market) while a further falling away is expected for the 3DS. The numbers for the previous financial year and expectations for this year are below.
Hardware Sales (financial year) — 3.38 million units
Hardware Sales (life to date) — 9.54 million units
Hardware Sales Projection (2014 to 2015) — 3.4 million units
Hardware Sales (financial year) — 8.73 million units
Hardware Sales (life to date) — 52.06 million units
Hardware Sales Projection (2014 to 2015) — 7.6 million units
Those numbers suggest that there's no New Nintendo 3DS-style shock coming this year. In fact, the modest 3DS prediction is unsurprising considering the fairly limited current release slate for the 3DS - perhaps E3 will bring a couple of key projects for later in the year, while we still wait to see what's next in the mainline Pokémon series, if anything.
So, do these numbers point to a quiet year on the Wii U and 3DS front, with profits expected from the one smart device game due in 2015? Not quite, and Satoru Iwata did at least hint at plans to shake things up this year when addressing investors in a Q & A. When considering the 3DS, it was made clear that conservative low-ball figures had been given to control expectations.
As for the overseas markets, from the market potential point of view, the number of Nintendo 3DS units distributed is still small. In addition, in the overseas video game markets, consumer attention tends to focus on home consoles and we have not yet been able to overcome this hurdle. By observing the market reactions after the launch of New Nintendo 3DS, we started to see that with good software and hardware offerings we will almost be able to overcome that hurdle. This year, we intend to open that door. On the other hand, if we were to set forecasts assuming that this door is open, we could provide more aggressive figures, but Nintendo has not been able to meet its earnings forecasts a number of times during the past three periods that resulted in operating losses. Therefore, releasing a forecast resembling a target effort was not in my mind. Based on figures collected by sales teams from each sales region on "attainable targets," the forecasts we prepared are realistic targets for which we should aim. Therefore, please consider our sales units forecast to be based on not what we believe is the maximum market potential but rather sufficiently attainable targets.
What about the Wii U? While its target of 3.4 million units is typically low, further establishing its fate as a system that seems destined to finish as Nintendo's lowest-selling home console, it's a projection that brings hope of big things on the horizon. Let's consider the fact that the prediction for last year accounted for a period that included both Mario Kart 8 and Super Smash Bros. for Wii U, we can reasonably hope that Nintendo has tricks up its sleeve to at least maintain current improved momentum. Elsewhere in that same Q & A Iwata-san stated that - in the dedicated game business - "we are preparing for upcoming initiatives and preparing to make changes to some of the elements that are currently not working so well".
As we've argued previously, the delay of The Legend of Zelda for Wii U into 2016 does leave a gap for Nintendo to fill, a Holiday hit to convert more fans and gamers on the fence. Titles like Mario Maker and Splatoon have important parts to play, but we remain convinced - at this stage - that there's a backup surprise to truly excite fans at E3. We mean beyond Star Fox for Wii U, another ace to bring more positivity to the Wii U.
This year could give Nintendo an opportunity to cut the Wii U's price again, for one thing, luring in those that want a Wii-style budget price to pitch in and enjoy the growing back catalogue on the console. Whether this could be done with a GamePad-free SKU - it's increasingly possible to use the Wii U fully with other controllers, with a few additional tweaks to the UI needed - or through passing on manufacturing savings to customers, that could be a big part of Nintendo's Holiday. With the current planned 2015 line-up, a surprise delight and a price-cut, Wii U could match its performance of last year by relying on momentum. The loss of The Legend of Zelda as a surefire festive hit need not be too fatal.
Overall, Nintendo's publicly announced targets for the coming year lack the sexiness of last year, with no eye-popping projections to point to sudden new hardware; there's enough leeway there for some optimism though. The Wii U's sales may be frustratingly poor, but Nintendo still expects to match last year; considering the great games that 2014 brought, that's positive news.
There's reason to be excited, then, though 2016 will be a year that'll truly define Nintendo. By the end of next year we'll know all about NX, Quality of Life (QoL) and Nintendo's smart device games.
Until then we'll have to settle for some quality gaming time.