It's been a busy couple of weeks for Nintendo, though primarily in talking about what the future will bring. In its Q2 financial reports it's had to focus on the nitty gritty of money made in the past six months, and the outcome isn't particularly encouraging; the declining interest in Wii U and (it seems) amiibo haven't helped.
To begin with the key financial figures — covering 1st April 2016 to 30th September 2016 — we have net sales of 136,812 million Yen (approximately $1313.6 million), which is down a hefty 33% on the equivalent period last year. The limited and low impact of releases since 1st April is also seen in the fact Nintendo is reporting an operating loss, which demonstrates (in essence) how effectively the company is making and selling products - that loss was 5,974 million Yen (about $57.4 million) after making a profit in the equivalent six months last year. Foreign exchange losses are also cited as a notable factor.
Despite this, Nintendo recorded a sizeable overall profit of 38,299 million Yen (around $367.7 million). This can largely be attributed to the sale of a significant stake in the Seattle Mariners, attributed as $661 million, and also a 12 billion Yen ($115.2 million) share of profit from The Pokemon Company; the latter comes no doubt from boosted sales of Pokemon games on Nintendo hardware, in addition to the significant impact of Pokémon GO.
In summary it's a mixed tale. Nintendo's revenues and sales are worryingly low so far this year, with the company admitting that a lack of hit releases are part of the issue, yet even with those declines and foreign exchange losses there's an overall profit courtesy of notable revenues from sold assets and shared profits.
The financial report highlights Kirby: Planet Robobot as one of the few big hits of the year so far, with 3DS sales up slightly while amiibo and Wii U are down.
During the six months ended September 30, 2016, we saw strong trends for the global release of Kirby: Planet Robobot. On the hardware side, Nintendo 2DS saw sales growth. The release of the smart device application Pokémon GO led to increased sales of software in the Pokémon series released in the past and drove the Nintendo 3DS family hardware sales growth, particularly outside of Japan. The sales volume for hardware this period was 2.71 million units (19% increase on a year- on-year basis) , while software held steady with the previous year at 19.23 million units sold.
For the Wii U console, we have decided to ship 0.8 million units this fiscal year, based on our forecasts of comprehensive demand for Nintendo hardware. Activity has conformed to our expectations from the start of the fiscal year, with hardware sales volume of 0.56 million units (53% decrease on a year-on-year basis). There were no hit titles this period to compare with Splatoon and Super Mario Maker last year, so the software sales were 8.3 million units (33% decrease on a year-on-year basis).
As there were few new software titles offering amiibo functionality, amiibo sales were reduced to 3.8 million units for figure-type and 1.7 million units for card-type. In addition, there were relatively fewer offerings of downloadable content during this period, so download sales were down on the same period last year.
No significant new information was shared on what's to come, but below is the relevant section:
For the Nintendo 3DS system, we are planning global release of the latest titles in the Pokémon series, Pokémon Sun/Moon, in November, as well as the Nintendo 3DS version of last year's major hit for Wii U, Super Mario Maker for Nintendo 3DS, in December. We also have a range of strong third-party titles expected during this year.
We have also revealed that our new-concept gaming system, previously referred to using the development codename NX, will be released under the official name of Nintendo Switch. Nintendo Switch offers a wholly new concept as a home gaming system that can switch between different styles of play.
We are planning to release it worldwide in March 2017. We are also bringing back the NES home consoles that were popular in the 1980s in a palm-sized version. Nintendo Entertainment System: NES Classic Edition will launch with 30 well-loved pre-installed titles worldwide in November.
On the smart device front, Super Mario Run, a new action game featuring Mario optimized for smart devices, is set to launch globally in December. Fire Emblem and Animal Crossing applications will follow the release of Super Mario Run in series.
Nintendo has adjusted its projections to largely reflect the trends seen in this report, with revenue and operating profit going down but, thanks to earnings declared from elsewhere, a slight increase in the overall net profit expected. The net sales projection is down 6.8% to 470,000 million Yen ($4512.7 million), operating profit is now expected to be down 8.8% at 37,000 million Yen ($355.2 million), but net profit is expected to finish at around 50,000 million Yen ($480.1 million), up 202.9% on previous projections.
Moving on to hardware and software sales, the numbers remain modest, as they were after Q1. With the 3DS there's an ambition to boost its fortunes through Pokemon and growing key audiences, but the Wii U is still expected to ship under one million units this year.
Hardware Sales (Q1 + Q2) — 560,000 units
Hardware Sales (life to date) — 13.36 million units
Hardware Sales Projection (2016 to 2017) — 800,000 units
Software Sales (Q1 + Q2) — 8.3 million units
Software Sales Projection (2016 to 2017) — 14 million units
Hardware Sales (Q1 + Q2) — 2.71 million units
Hardware Sales (life to date) — 61.57 million units
Hardware Sales Projection (2016 to 2017) — 6 million units
Software Sales (Q1 + Q2) — 19.23 million units
Software Sales Projection (2016 to 2017) — 55 million units
There have been two adjustments in these predicted sales for Wii U and 3DS, since the Q1 report - Wii U software has been dropped one million units, while an extra one million hardware sales are now expected for 3DS. Overall the story is the same - the 3DS is still a viable product while the Wii U is being largely phased out.
So there you have it, a mixed bag of results. Dropping sales and revenues, but sizeable income from a sold share in the Seattle Mariners and from revenues via The Pokemon Company. It all means that Nintendo is still making money, but not much of it from selling its own products; long term it'll want to change that with the Switch and future mobile releases, among other products.
Let us know what you think, as always, in the comments.