Profit is one of many keywords in the recently translated investor Q & A, in which Nintendo's President fielded a number of questions from investors. Naturally, considering the audience, the issue of returning to the sizeable profits of past years was raised in a variety of ways.
It was highlighted that the current momentum of the Wii U would make profits difficult, with the questioner enquiring whether further steps can be taken — by which they meant cost-cutting — to deliver profits despite sales being down. While the move towards engaging with users on smart devices was cited as a means of being more economical in marketing costs, Iwata-san acknowledged that the balance hadn't been found in sustaining a variety of costs with the level of sales. Nevertheless, the Nintendo President talked up the role of the 3DS in driving profits in the coming financial year, while emphasizing that based on a "premise" of no further Wii U price cuts in the coming year, the home console can have less of a negative impact on the performance of the business.
Regarding Nintendo 3DS, we did not sell as much as we expected in the last year-end sales season. Since we expected the sales volume of Nintendo 3DS to increase rapidly in the year-end sales season and saw signs that it would happen at the end of October last year, I mentioned at the second quarter Financial Results Briefing that we would aspire to deliver great results in the year-end sales season, but we are now reflecting on the fact that we could not achieve it. On the other hand, since Nintendo 3DS has an installed base of more than 40 million units globally as I mentioned earlier, we are now getting to the point where it is impossible not to turn a profit with our software business. We have many key titles to be released in this calendar year and we will strive to drive profits from these titles. Seen in this light, I believe the key profit-driver for the next fiscal year will be Nintendo 3DS. Regarding Wii U, it is not easy to make a significant profit with the current units sold. The price reduction of the hardware in the overseas markets represents a large amount of our total expenditure for this fiscal year, but based on the premise that we will not make such a reduction in the next fiscal year, I think our business can operate without such a negative effect on our profitability.
Also, in this calendar year, we will release “Mario Kart 8” and “Super Smash Bros.” which are kinds of games that Nintendo has been particularly strong with in encouraging players to invite each other to play. Therefore, with these two titles as our main drivers, we would like to make sure that the markets will thoroughly acknowledge the value of Wii U, including the titles that we have released to date. Also, we will try to turn around Wii U and enrich the value of the GamePad, a point I mentioned earlier in my presentation. With regard to Wii U, it is not realistic to hope that it will sell 100 million units in the same product cycle as Wii. On the other hand, I believe it is never too late and it is possible to achieve a certain level of sales volume and a certain level of results with Wii U depending on how we write its scenario. Therefore, we would like to come up with a realistic scenario and turn Wii U into a platform that generates as much profit as possible.
It's no surprise that, once again, the 3DS will likely be a major driver for Nintendo's potential profits, yet this is another clear indication that Nintendo's not currently plotting an additional wholesale price cut on the Wii U. With major releases such as Mario Kart 8 and Super Smash Bros. one the way, along with plans to boost the image and desirability of the GamePad, the company seems keen at this stage to back its product; there's also acknowledgement, not that it was needed, that the goals of the Wii U aren't to match up with the Wii's success, but to target levels that sustain it through a solid lifespan.
Are you confident that the Wii U will begin its bounce back this year, even without a further price cut, and that the 3DS will enjoy another bumper year to boost Nintendo's coffers? Let us know your thoughts in the comments below.
[source nintendo.co.jp]
Comments 52
The Wii U is just charging up right now. Soon, it shall take off, and pierce the heavens, cause that gamepad sure is amazing
Both of those two games are only fair if everybody has the same controls.
(Hopefully they make Mario Kart more like its Arcade version. Or All Stars Racing or F-Zero the basic game is great the AI ruins it though)
Interesting point Savino. And the Smash Bros controls thing isn't really an issue in my opinion. One of the top Brawl players plays with Wiimote and Nunchuk
There's no doubt Wii U would have epic 1st Party games and that MK8 and Smash 4 are aiming to be the best entries on their respective fields. The problem (to me) are the huge gaps of time between those games, 3 or sometimes 4 months between 1st party games and literally nothing to play in between -meaning- 3rd Party games... Let's not forget indie games of course but If they manage to bring a couple of 3rd Party games each month, mixed with their 1st party each 3, 4 months and indie games-Virtual Console, Wii U could easily make a great return to being relevant to the masses, but that only depends if Nintendo can suceed this time in properly communicate the value of Wii U, a value that it truly has because it's such a great console.
They need to release a luigis mansion wii u. The gamepad makes the perfect flashlight.
i cant wait to play the games coming out for it this year but its sad that nintendo is in this situation. Unfortunatly, they cant just kill the wii u and start over. i am sure iwata wishes he had a time macheine right now.
@Kindread you're telling truth indeed. Though of course the GCN Controller seems to fit perfectly as of today, no matter the other scheme are functional if not better in a short end... Wiimote/Nunchuck kindly fun actually, and wiimote itself serve up the match (well I guess big hands might actually use it comfortably)... let see how it goes to the GPad and/or UProController...
As for MK8, Iwata-San mentioned they're starting WITH this game to shows off how the GamePad can "enriched" a game ;^) although I just hoping is not only for the quick start feature!!! O_o
Yes, I just want GAMES, GAMES, GAMES!
No point in lowering the price in Feb. I know DKCTF is supposed to be a good game but I don't see it as a system seller. But a price drop in May w/ MK8 would make sense. If I had waited this long I wouldnt buy 1 until the next price drop. You just know it's coming.
TBH... I just thinking right now, Wii U still does have more chance to do a big 'TURN AROUND' on its situation than the GCN; looking that the latter got more power than its competition, although nothing else keep it apart for stand above, in one the toughest console era ( hello media/online!)... however, the U still a power system with more online functionality than the Wii does, and, it got the GamePad... a input tool Nintendo still not shows off what is capable of; and too many ppl knows already (here too) that Sony/MS is just trying to get the same implementation with its resources... anything so far the Pad does can be copy easily,though; Nintendo surely will try to pull the advantage above them! E3 seems to be having a live presentation from the Big N this year, dont you think?
I find it very worrying that they havent pulled out a decent game using the gamepad. One of the best examples for the gamepad using a Nintendo IP for me would be Batallion Wars. Even EA put the effort into the ME3 port and showed the potential for gameplay and squad management on the pad...? Even a 2 player adventure using two screens should have been done by now.
I think a Nintendo Direct needs to happen soon. A basic outline of 2014. Let us know what is coming so we aren't, as consumers, wondering if and when we will have the games. I'm not saying I need exact release dates, or to know every piece of software, but a general guidline would be nice to help calm the nerves.
The only thing we're missing right now is a Nintendo Direct
While I don't believe they'll cut the price this year, remember that they said the exact same thing before cutting it last time. You really can't trust these kinds of statements.
I don't think it would be good to have more price cuts; the more price cuts Nintendo makes, the more price cuts people will expect, meaning fewer units sold until multiple price cuts happen. I don't like the thought of that.
"We will try to turn around Wii U and enrich the value of the GamePad"
Ha ha. Iwata says that while none of exclusive first party games have anything else but the off screen play to offer.
@AdanVC in the Wii U's defense, it had a pretty solid release and sales were pretty good going into 2013. There were enough 1st party (exclusives) games (NSMBU, ZombiU, NintendoLand) and ports of older 3rd party games (Arkham City, COD BO2, Fifa, Madden, AC3, ME3) to keep Wii U owners satisfied. I'm not saying that was overwhelming, but for the Nintendo fanboys (who primarily made up most of the initial sales tbh), finally getting to play these 3rd party games in HD on a Nintendo console was sufficient despite them being months old and oftentimes gimped.
So that brings us to 2013. And it's easy to see that Wii U owners might have played out the games they were interested in by the end of January. But great news, a 3rd party game loved and respected by pretty much all the gaming community, an exclusive, that once released solely on the Wii U, might have given some PS360 owners a legit reason to get a Wii U. And that game is Rayman Legends. Not only an exclusive but showed (via playing the character Murphy) a real legit use for the gamepad. Sweet right? Not only were Wii U owners clamoring for more games, but this is the dead season in gaming across all platforms. So it would have really had the spotlight on it and brought much needed attention to the Wii U instead of all the talk about no 3rd party games, no games period, only old ports, etc etc that were so damn prevalent during that time.
Let's pretend that did actually come out on Feb 26th like it was supposed to. That would have been a shot in the arm for the Wii U. Would have made Wii U owners happy, would have pushed a decent amount of console sales I'm sure, and shown a nice use for the gamepad. But that is just one game. What next? Well, in March we were given another two stellar exclusives (Lego City Undercover, and Monster Hunter Tri U) plus maybe the best 3rd party port to date from our 'friends' at EA, Need for Speed Most Wanted.
So armed with all these games, initial launch owners should have had enough games to tide them over until New Super Luigi U and Pikmin 3 hit mid summer. Yes there was a lull there but there is a lull for all consoles, it's just a very slow time in the gaming world. The Wii U owners that had come on board during the Rayman Legends release would have shown the gaming community that sales were continuing from the strong launch, that the Wii U was getting 3rd party support, and would have at least halved the amount of negative press the Wii U was getting (helped in large part by the fuel the non exclusivity and delay caused by Rayman Legends). I really think we are talking 500k to 1 million difference in Wii U sales were affected by Ubisoft's decision to screw Nintendo over.
The Wii U could have entered the 2013 Holiday season with 5 million consoles sold and by now be at 7-8 million. Certainly not super strong but a big difference from 5.86 million.
In summation, if Rayman Legends had come out as an exclusive in Feb, there would have been a very strong showing from both 1st and 3rd party going into the summer where Game and Wario, New Super Luigi U, PIkmin 3, and The Wonderful 101 came out for 1st party and Disney Infinity, Splinter Cell Blacklist, Ducktales Remastered. Then in the fall you got Wind Waker HD, Sonic Lost World and Wii Party U, Super Mario 3d World, Mario and Sonic at the Olympics for exclusives an old port Deus Ex and Arkham Origins, Lego Marvel, AC 4, Cod Ghosts for 3rd parties. So basically the Wii U has had pretty strong 3rd party titles interspersed with 1st party all along.
The one and only time it didn't was when Rayman Legends screwed them. If that doesn't happen, the sales might have jumped, the perception may have changed, the negative narrative might have gone away, and with all of that, maybe 3rd party software sales may have improved enough to get people off their backs.
I know Nintendo can't call out Ubisoft publicly but the ramifications for Ubi's decision has been grossly underscored. It was massive in the greater scheme of things. Maybe if the Wii U had sold 5 million by March instead of 3.9 million EA might have taken the time to deliver the 2014 Fifa and Madden and 2K might have made the NBA 2K14 game. That could have further pushed sales northward.
That is why I will not buy another Ubi game until it hit the bargain bin. I also won't buy any 3rd party game that doesn't come out at the same time as the other consoles and isn't gimped in some way (multiplayer, graphics, dlc). They just don't deserve your hard earned dollars. Save your money for the stellar games Nintendo makes. Since most of us have a 3ds or a PS360, there should be plenty of games to keep you busy until the Wii U can deliver on its promising exclusive offerings.
Sadly, I think 3rd party is all but gone. Watchdogs (if it even comes to the Wii U) might be the last one we see.
I'll take great games that ignore the gamepad over mediocre games that shoehorn it in any day. The gamepad is an option, not a requirement!
Start including a wii u pro controller as part of the bundle.
The Wii U supports multiple gamepads (at least a second one). Nintendo needs to implement the usage of a second gamepad in MK8, SSB4 and future first party games to enrich gameplay. This allows selling more gamepad as an additional accessory and generate additional revenue.
Game support sells consoles, not! Look at PS4 and Xbox One sold millions units with a promise of games in the near future and both lack of backward compatibility support. I blame marketing and branding for sluggish sales of Wii U.
@Nintendo: Quit being stubborn and cut the price on all your consoles Nintendo!
the 3DS XL should be $150 year round, not just on Black Friday, during the Christmas shopping holiday or peppered throughout the year like target has been doing the last 3 months.
The 3DS should also drop in price, if not be discontinued altogether in favor of the 3DS XL. If not discontinued, the price should be $130 and the 2DS would be more beneficial at $100 year round.
Walmart sold out in no time on them when they had it for $99 so I don't see why its not possible to make a profit selling it at $99-100 I have a 2DS and I can say there is nothing about it that says "I should cost $130"
Plus the browser is spotty, so if it helps you could just remove non-in game/Eshop net browsing to lower costs since no one is missing much there. I don't know of any sites that can display properly on the 2DS or even the 3DS. You guys released the Neutered version of the Wii called the Wii Mini which lacks online functionality. That knocks $40 off the price so I know you could knock at least $20 off the 2DS for removing the browser but allowing in game and E-shop net browsing only. Besides kids don't need a browser on a device they likely set up themselves. Kids get exposed to porn enough on the 3DS just buying it from GameStop and Walmarts
As for the Wii U, at least knock off $25. You've had one to many games canceled, I think I heard the new Hobbit or Lord of the Rings game will lack online multiplier for the Wii U...you guys are basically selling people an inferior product at a jacked up price with hit and miss games reaching it with hit and miss features.
One last order of business, the GamePad.
You need to 1) give the Wii U multi GamePad capability; 2) sell it by itself and finally 3) Make it more tablet like by making it less dependent on the Wii U to work. I think if you guys tried, you could easily retool it to be a second handheld console, not just a remote.
@AdanVC they could be filling those gaps with SNES, N64, Gamecube, Wii HD ports. Quick development turnover for strong 1st party highly desired software, that would make people forget they're waiting so log between big titles.
Why Nintendo don't have a team working on this is beyond me. 15 months since launch and were still only getting SNES and NES ports of games they've already done on Wii?????
honestly I do regret I got my wii U at launch with a full prized new launch console since the games I started to enjoy was until a year ahead and right now you can get a really cheap bundles with games like mario 3d and zelda.
You want online?! There!! You got online!
People complaining about "no online" - about the lack of in-depth online content. Well, rest assured. The Wii U is getting two of the most critically acclaimed, stellar titles with online out there, in full HD, not to mention polished to the nth degree. Kart and Smash are bound to get consoles moving and players playing and talking about Nintendo again.
"We will try to turn around Wii U and enrich the value of the GamePad" It starts with the advertaising!
The Wii U won't sell until it is priced below $200. the Wii U was the #1 most wanted item by children this past Christmas but their parents didn't buy it but bought tablets instead.
the Wii U at launch cost $189 for Nintendo to make it and it's probably even less now.. Nintendo continues to insist making a profit on it's console but what they fail to realize is that parents are looking for bargains. the Wii U isn't a bargain at $299 or even $249
a Wii U bundle at $199 with Zelda, Nintendo Land, NSMB U would be an unbeatable deal. I chose those 3 games because they didn't cost much to develop and Nintendo has already made their money back on them. a basic version at $149 would sell.
people bought the 3DS because they lowered the price and people bought the 2DS because it was cheap.
Nintendo doesn't know it's market and is trying to appeal to "gamers" and fanboys instead. "gamers" left Nintendo a long time ago and aren't coming back and fanboys will only take you so far. Nintendo needs to make the Wii U inexpensive
Insanity: Doing the same thing over and over and expecting different results.
So now after the 3D World wasn't exactly a system seller they're all-in on Mario Kart and Smash Bros. to sell their console for them? And it will work because they'll "encourage players to invite others"? Wow. Just, wow.
And their supposed focusing on the gamepad as a unique value proposition? Like they just discovered the gamepad or something? I mean, what we've seen so far is - or so I certainly hope - their best effort. How will the same clowns come up with new tricks when new tricks is precisely where they have failed consistently?
Iwata needs to go because his leadership is an epic failure. Miamoto needs to go because creatively they've been dead in the water all through the WiiU development and release and it certainly look like 2014 will be more of the same.
No really, it's hopeless with these guys.
Dear Nintendo. I think I have a solution to increase sales. Sell Mario Kart( physical copy) bundled with the WiiU for $279. Limited Edition red console. Make a commercial to advertise it. You're welcome.
@shigulicious If or more like when this happens, it will be my 3rd Wii U console in 18 months. I'd pre-order this system if announce in the next Nintendo Direct.
@GalacticMario28 "the more price cuts Nintendo makes, the more price cuts people will expect" True.
@XFsWorld: Yeah but so what. Build your install base, then expand on that with quality games. Right now they're trying to do both at the same time, all the while maintaining their huge profit margins, and achieving neither, meaning it's all just on paper.
no more price cuts please! As an 1st day wii u owner, I would really feel cheated out if that happen again.
The Wii U price isn't an issue. Shop around and pick it up for £200, Or £250-£270 for impressive bundle deals. I'm currently flogging collectable GBA games on ebay to help fund my Wii U purchase.
@xkaj0x That is normal though, especially if a system hasn't been selling well. You have to suck up the fact you payed full wack for the system. Nobody made you buy it on release.
I'm getting sick and tired of people demanding continuous price cuts. They fool themselves into thinking that it is what will soothe them or that it is what will help Nintendo, but it is a fact that it is not. Right now, the Wii U is already sold at a loss, a new experience for Nintendo since they have always sold their hardware with profit or at the very least breaking even. It will also do next to nothing to improve the installed base, since when these whiners would (supposedly) finally buy a Wii U, they would still have to buy games and of course these too are way too expensive so that will then be the next hurdle for price cuts. I also have a sinking feeling that lowering the price of the Wii U will not be enough for them, so they will want to see it being sold for even less because if they can get a price cut once, why not demand another? People, Nintendo is first and foremost a BUSINESS and for a business to stay alive, they NEED to make money, not lose it. They can't just give consoles away for free with a family pack of Oreo's.
Of course the value of the console is debatable right now, for lack of titles and third party support, but that is something that none of us can do anything about. It is up to Nintendo and from reading everything Iwata has said in the various articles, foundations towards the cure have FINALLY been laid, so I expect them to build upon that from this year onwards.
@DarkAngel_17 I think the joke might be on you, my friend. Increasing the value of the Game Pad is obviously NOT directed at software titles that are already present, so logically, the enrichment Iwata was talking about will more than likely be implemented with upcoming titles only. Unless they offer patches/additional content through digital download, but that is the only exception you could expect to think of.
@TheRealThanos
Damn straight, man. Further price cuts would be counter productive unless Nintendo manages to lower production costs.
I mean, $250-275 would be the sweet spot for the Wii U IMO, but they just can't afford it to sell it at that price right now. It would be suicidal in the mid-term.
@brucelebnd
Bud, Nintendo's losing money selling the Wii U at $300. Losing money. That means the console does not cost less than $200 to make. Never did. Sure, a $200 Wii U WOULD be a great deal. So would a $300 PS4. But that's not gonna happen. The product is already being sold at a loss. They can't just mark the price down until it starts selling. That's not how you run a business. That kind of thinking would get you bankrupt REAL quick. Just because Wii U has had low 1st year sales, doesn't mean it's not worth the price. It just means they need to CONVEY WHY it's worth the price, with more games, better gamepad use, more advertising, etc.
The Wii U provides a solid gaming alternative to the competition. It's $100 cheaper, it comes with a gamepad, it comes with a game (or two in some cases), and it's backwards compatible. It's not a bad deal. It's just a matter of informing the public of what it is, and why they should want it. I know people think this little inner circle of hardcore gamers on fansites constitutes the hundreds of millions of consumers who buy consoles. In reality, the fansite gamers are but a small sliver, a small fraction. All the negativity in the gaming community will barely be a blip for them saleswise. We're living in a bubble. Most gaming customers will never even know Wii U had a slow sales year, nor will they even care.
If the right games come out for it, then hell yes i believe it can recover
@Sceptic
They don't need "tricks" to sell the Wii U. It's not "Oh we were banking on 3D World, but now we're banking on Mario Kart". They're not banking on ANY single game. Neither they nor anyone with any rational sense actually ever thought Super Mario 3D World would magically turn the Wii U into a commercial slam. But it's a step closer. It's another great game to attract people. Same for Mario Kart 8 and Smash Bros. These games will not single-handedly provide a 180 for the system> but they're each one more great game, compiled on top of the ones before it.
It's not about stacking your hopes on a single game. It's about doing what their business is all about- continuing to develop fun games. They didn't develop Mario Kart 8 to "turn the Wii U around". They developed it because that's what they do- they make games. Smash and Mario Kart are not their "response" to turn Wii U around. Those games were being made regardless. One can only hope that they will contribute to a more appealing library, which in the end, is the only thing that can sell a console.
There is no divine wisdom needed here. No grand, master strategy. All that is needed is for them to make an appealing product, and people will buy it. How do they make an appealing product? Well, the product is all about playing fun games, so, they just need to keep on what they're doing. Make fun games. Nothing more, nothing less. Fun games sell. If you have enough of them, people will take notice. So all they can do is keep making great games, and hope that critical mass for the appeal of the Wii U library is reached sooner than later. It's the exact same thing anyone else would be doing in Iwata's position.
They released Pokemon and many other 3DS games in 2013, yet STILL managed to incur a huge loss due to their failed WiiU. Wtf makes him think that this year, with almost no games coming to the 3DS (notable ones), that it will somehow drive profits for them this time?
I don't personally care if they drop the WiiU price, because i'm not interested. But Nintendo will be forced to anyway – sales will be completely dead outside the months of MK8 and Smash 4 (which will do about as much for the system as 3D World did).
They should be announcing plans to kill the damn thing off. Put it out of its misery.
I'm waiting for a price drop here in Australia before I jump back on the Wii U bandwagon. the premium bundle is still launch day price here ($428).
I have a perfect commercial in mind that would really help the Wii U. There's a mid twenties to late thirties gamer playing his generic shooter with a headset on. The lights are flashing, the guns are blasting, explosions are going off when all of a sudden his phone rings.. it's his friend or younger sibling inviting him to play some Super Smash or Mario Kart respectively. He says ok n turns on his Wii U by pressing the power button on the Pro controller which has been sitting in front of him the whole time. He quickly sends a message with the Gamepad through his Friends List and joins the game. In no time, he is bouncing off his couch at how much fun he's having (obviously more than on his HD twins). You can hear battle sounds in the background with a final, "GAME!" And the commercial ends with Mario challenging you to a fight, with the Wii U AND SSB logos at the bottom.
Nintendo, DO IT!
@SheldonRandoms Was that a gurren lagann quote? lol
That probably won't work unless they keep churning out 3DS games, the 3DS can't keep its momentum without new games to sell.
As for them saying they'll make games that take advantage of the Gamepad, it's about time they put their money where their mouth is, considering they've been running their mouths on this for the last year or so.
The Wii U's problem price-wise is that its stuck smack dab in-between the last gen consoles at $200 and the PS4 at $400. Its not cheap enough for a mainstream price but its not quite beefy enough to be touted as a fancy, premium device either.
Nintendo should do a price cut but not until at least sometime next year, but it definitely needs one before the PS4 has its first cut. In the meantime they need to offer as much bang for buck as possible so people feel like at least they're getting a lot for the price. Maybe a Mario Kart or Smash Bros. bundle since those are the biggest releases this year so far, perhaps with a limited edition color to go with it.
@Oh hey I didn't know that you were clairvoyant can you yell me tomorrow's lotto numbers or the exact date the next iPhone ' gonna launch? Oh wait you can't cause you don't have the gift of sight and only have baseless claims for your poor excuse of judgements there.
@Bolt_Strike @Doma 3DS already has the first half of 2014 lined up. Bravely Default, Professor Layton and the Azran Legacy, Yoshi's New Island, Disney Magical World, Conception II, Mario Golf World Tour, Kirby Triple Deluxe, and Professor Layton vs Phoenix Wright. That's 8 games lined up for North America. Japan also has Persona Q.
Second half of 2014 has Smash Bros, Monster Hunter 4G in Japan, some Pokemon game, and a possible North American release of Persona Q. That's just the stuff we know about. Pretty good lineup if you ask me.
@IceClimbers When was a Pokemon game confirmed for 2014? I mean, we're probably going to get one, but it's hard to say if it's going to be something good like RS remakes or a crappy spinoff. I don't think we can count it as a system seller until we actually know what's coming.
@Bolt_Strike There hasn't been one confirmed. I just figured it was safe to assume there'd be one. You're right though, it may just be a spinoff. Possibly that Pikachu Detective game. Or Pokemon Snap 3D?
@IceClimbers They said the detective game isn't coming until 2015.
Nintendo Nintendo Nintendo..
Putting Smash on the 3DS is a bad idea. Also, how are they going to try and reel people in with the gamepad when their development process, obviously, takes quite some time. If they're going to turn things around with it, it certainly won't be this year.
@brucelebnd Those prices that you gave are absolutely ridiculous...The 3DS XL costs more than $149 which is what you suggest for a Wii U basic model; Even your idea for the Wii U for $199 with three games is crazy... Ideas like that would run Nintendo into the ground eventually even though they have mass reserves of money
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