Topic: Nintendo Posts 43 Billion Yen Loss in Fiscal Year 2011

[lolmonade]

... and how does the overall profit compare during Iwata's run?  Or are we letting articles like these convince us money has a 12-month shelf life?

As much as people like to play up the "console wars," it's not like some monthly or yearly sport where every so often we need to see who "won."  The companies make the games, we play the games, and nothing has shown that changing any time soon, especially with this particular company.

We really should stop caring about sales figures as a proper predictor of the future too ... apparently Rayman Origins is getting a sequel and all I've heard about that game is how (despite its greatness) it bombed, bombed, bombed, bombed, failed, failed, bombed, failed ... more or less.

I miss the days when gaming media cared more about game content than financial reports.  Every year or so to check if anyone is SEGA-ing their way out of a certain segment? Fine.  Every week like we're monitoring life support?? No thanks.

 
While I understand your feelings about what seems like consistent talk about the video game industry's financial performance (especially considering most people discussing it on forums like this have no idea about business principles and concepts), it is news, especially considering how rare it is for Nintendo to experience such a loss (if any).
 
While not always the case, a company's financial performance can sway the way the business is handled in the future, affecting the games/systems you're yearning for.  The news about Iwata stating the Wii U will have a rich launch lineup?  That's definitely at least partly thanks to how poorly the 3DS launch was handled, and how a lack of compelling software at its launch impacted their initial sales prior to the price drop. 
 
 
Quick side note:
 
Are you the official Nintendo cheerleader here or something?  Regardless of what news article pops up, your comments always seem to be overly upbeat and optimistic about Nintendo's decisions.

[Ian Sane]

What is really noteworthy about these two consecutive losses is that Nintendo traditionally has cared very much about short term profit.  They have never been the company to take a loss in the present to make profit in the future.  They will make decisions that will affect the next five years based on the current fiscal year.  Sometimes to ridiculous extremes like when they didn't support online gaming or HDTVs based on how they were not profitable at that specfic time, only for them to be way behind the rest of the industry less than two years later.

Sony and MS will do risky stuff where they EXPECT to take a loss to achieve some grander goal in the future (or in Sony's case to push Blu Ray).  Nintendo doesn't do that.  This is an accident, a **** up.  Being consistently profitable every single year is Nintendo's whole way of doing business.

[broodwars]

As for the comment about "well, are Sony and Microsoft's gaming divisions EVER profitable," frankly we don't know because the only numbers released are for the companies as a whole.  I believe that Sony's gaming division is their most successful one right now, which is why their new President Kaz Hirai has said he wants to focus on it going forward.  Their other electronic divisions are the ones really suffering right now (TVs, etc.).  I don't know about Microsoft.

[Luigi Dude]

Once again the main reason for this loss was the terrible sales of the 3DS last year until the price drop which also caused them to sell the system at a loss so they're not making money off the hardware like they did on all previous systems.  Considering sales for the 3DS have been great since last Fall and the hardware will be profitable around the time NSMB 2 is released which will cause a huge boast in 3DS sales, this makes Nintendo's loss not that big a deal since they've already fixed the main reason for said loss.

Now if Nintendo repeats the same mistakes as the 3DS and makes the Wii U too expensive at launch with a lack of games, then they'll be looking at another loss which would be bad.  But based on everything that's been said, Nintendo's going to make the Wii U's launch much better then the 3DS and Nintendo won't get too crazy with the price this time.

[oohhboy]

Nintendo in the past has never be for long or short term profit. They had been for sustainable profit. In the past if they were looking for short term profit they would make yearly Mario/Zelda/Mario Kart games, pushing them out the door ready or not. There is no long term past 5 years, it resets. Their past behaviour has been one of self control.

Some of their recent woes have been out of their control with the world going through a depression, youth/graduate unemployment, stagnate wages, falling disposable income, increased cost of living, generally unstable roller coaster economy.

What is directly attributable to Nintendo is their handling of the 3DS launch when they did not adjust for real world economic conditions and had a price sample size of one at E3 full of people where price for most part was no object. They chased short term profit by releasing the 3DS early trying to boost the last fiscal year only for it to backfire. Nintendo was running with a short term profit agenda until the 3DS was about to die. They are now trending back towards more sustainable profits, but the transition back is going to take time and will be painful.

As for the appreciating Yen, the writing was on the wall years ago when it became the US government's policy to ease the debt burden by devaluing the hell out of the US dollar instead of your know, fixing the underlying economic problems. Nintendo response should have been to grow other undeveloped markets like China and South America who are chronically under/unserved. They also needed to stop subsidising the US. This would have buffered them with other currencies and allow them to grow through the pain. They haven't done this at all, they barely serve South Korea who just got the 3DS last week!. Europe collectively can match the US, but Nintendo's decades long indifference to the territory has created a market that is indifferent to it. It's slowly getting better, but again it's going to take time and a consistant effort. Then there is AUS/NZ that have been outright abused and treated like third world countries with prices extremely out of line with the rest of the world.

The last fives years I have to say Nintendo has been marked by the lack of self understanding, flexibility, conservatism, fear and uncontrolled greed. It took them a 2x4 to the head to finally start turning around.

[TJ Spyke]

Not just 3DS, but declining Wii and DS sales are at fault too. Nintendo even says in their financial report that Wii U and 3DS sales will not be enough to offset expected declines in Wii and DS sales (especially since Wii U will only be out for about 4 months of the next fiscal year).

Also, Nintendo is not subsidizing the US at all. If you are talking about game prices, they are not cheap here. They are even more expensive in places like Europe, but a big part of that is taxes in those countries are outrageously high.

[Ceric]

When you really stop and think about it all games are subsidized.  They are longer, cost more to make, and hold more content, but there prices have not kept up with inflation.

[Luigi Dude]

Not just 3DS, but declining Wii and DS sales are at fault too. Nintendo even says in their financial report that Wii U and 3DS sales will not be enough to offset expected declines in Wii and DS sales (especially since Wii U will only be out for about 4 months of the next fiscal year).

Yes but the main reason by far for this loss is the 3DS terrible performance in the months before the price drop.  Had the 3DS actually taken off after launch and not required them to do a huge price-cut, they would have made a profit even with the lower Wii and DS sales.  This is why even with declining Wii and DS sales in the next fiscal year they're actually expecting to make a profit because the 3DS is selling better now and has huge titles like NSMB 2 and Animal Crossing on the way along with the Wii U being launched which they've said they won't repeat the 3DS mistakes with.

[oohhboy]

When you really stop and think about it all games are subsidized.  They are longer, cost more to make, and hold more content, but there prices have not kept up with inflation.

It only holds true if the overall market hasn't grown in the last 20 years. No one would buy 100 dollar games, so you sell more games at a lower price or for some companies, obfuscate the price with dishonest DLC. You also haven't factored in improved tools and increased amount of shared knowledge that has an immeasurable effect on the economy.

You also don't know what subsidized means. If they are all subsidized, nothing is subsidized.

[GoldenPhoenix]

When you really stop and think about it all games are subsidized.  They are longer, cost more to make, and hold more content, but there prices have not kept up with inflation.

Couldn't that also be partially attributed to the fact that disk based media became cheaper to produce then the old cartridge based games from back in the NES/Genesis/SNES/N64 days? So in a way, while game prices remained the same, companies were able to make a bit more on each game sold when they switched to CDs/DVD. Since the switch, game prices have risen $10 from $50, which is a 20% increase in price, which is nothing to sneeze at

[Ceric]

When you really stop and think about it all games are subsidized.  They are longer, cost more to make, and hold more content, but there prices have not kept up with inflation.

Couldn't that also be partially attributed to the fact that disk based media became cheaper to produce then the old cartridge based games from back in the NES/Genesis/SNES/N64 days? So in a way, while game prices remained the same, companies were able to make a bit more on each game sold when they switched to CDs/DVD. Since the switch, game prices have risen $10 from $50, which is a 20% increase in price, which is nothing to sneeze at

At one point I think so. 

In the 1980's while growing up I really don't remember games only being $10.  $20 for cheaper ones on average if memory serves.  That being said according to the Inflation calculator, something worth $59.99 today should be priced $28.14 in 1985 (Year NES came Stateside).

I just think with the current manpower costs to develope a $59.99 game compared to then outweighs the media switch saving. 

[GoldenPhoenix]

When you really stop and think about it all games are subsidized.  They are longer, cost more to make, and hold more content, but there prices have not kept up with inflation.

Couldn't that also be partially attributed to the fact that disk based media became cheaper to produce then the old cartridge based games from back in the NES/Genesis/SNES/N64 days? So in a way, while game prices remained the same, companies were able to make a bit more on each game sold when they switched to CDs/DVD. Since the switch, game prices have risen $10 from $50, which is a 20% increase in price, which is nothing to sneeze at

At one point I think so. 

In the 1980's while growing up I really don't remember games only being $10.  $20 for cheaper ones on average if memory serves.  That being said according to the Inflation calculator, something worth $59.99 today should be priced $28.14 in 1985 (Year NES came Stateside).

I just think with the current manpower costs to develope a $59.99 game compared to then outweighs the media switch saving. 

To clarify I said prices have risen $10 from $50 (Handheld games have risen $10 as well on average) , not that games were $10 at one time.

[Ceric]

When you really stop and think about it all games are subsidized.  They are longer, cost more to make, and hold more content, but there prices have not kept up with inflation.

Couldn't that also be partially attributed to the fact that disk based media became cheaper to produce then the old cartridge based games from back in the NES/Genesis/SNES/N64 days? So in a way, while game prices remained the same, companies were able to make a bit more on each game sold when they switched to CDs/DVD. Since the switch, game prices have risen $10 from $50 (Handheld games have risen $10 as well on average), which is a 20% increase in price, which is nothing to sneeze at

At one point I think so. 

In the 1980's while growing up I really don't remember games only being $10.  $20 for cheaper ones on average if memory serves.  That being said according to the Inflation calculator, something worth $59.99 today should be priced $28.14 in 1985 (Year NES came Stateside).

I just think with the current manpower costs to develope a $59.99 game compared to then outweighs the media switch saving. 

To clarify I said prices have risen $10 from $50, not that games were $10 at one time.

I read it both ways so I went with the words that would get me a clarification.  Plus allowing me to state my rough price rememberance for the comparison since I couldn't find a chart of average game prices over time on the Internet.  The Cats of the Internet have failed me.  I do not know what to believe.

[Ian Sane]

For Canadians, games have actually never been cheaper.  A typical new PS3 game cost $60.  So what?  Well I often paid around $70 for new Gamecube games.  I remember Conker's Bad Fur Day cost $80!  For most of my life Canadian prices have been much higher than American ones.  I remember a store selling Super Mario Bros 3 for $99.99 back when it first came out.  100 bucks for a videogame!

Of course the reason for it was that the Canadian dollar was worth like 65 cents compared to the US dollar.  However since the economic crisis the two dollars have been at par.  Now I have found that the prices of most things have not really changed (which I think is mostly companies realizing that Canadians are used to paying more so why lower the price if you don't have to?) but videogames have.  So when prices went up to $60 this gen, for Canadians they went down to $60.  This gen has been the golden age for affordability for the Canadian gamer.

[Chozo Ghost]

Once again the main reason for this loss was the terrible sales of the 3DS last year until the price drop which also caused them to sell the system at a loss so they're not making money off the hardware like they did on all previous systems.  Considering sales for the 3DS have been great since last Fall and the hardware will be profitable around the time NSMB 2 is released which will cause a huge boast in 3DS sales, this makes Nintendo's loss not that big a deal since they've already fixed the main reason for said loss.

Now if Nintendo repeats the same mistakes as the 3DS and makes the Wii U too expensive at launch with a lack of games, then they'll be looking at another loss which would be bad.  But based on everything that's been said, Nintendo's going to make the Wii U's launch much better then the 3DS and Nintendo won't get too crazy with the price this time.

I think the problem with the 3DS wasn't just the price or lack of games, but also the name and the fact it was so similar in appearance to the DS made it so people just thought it was a revision rather than a full blown new system. Nintendo is largely responsible for this confusion by releasing the stop gap DSi which was something inbetween a revision and a new system just a few years earlier.

The Wii U risks causing the same market confusion both by retaining the Wii name and by being similar in appearance to the Wii. Changing the name and altering the design of the system, or at least giving a different default color besides white would go a long ways I think. Also, Nintendo's marketing when it does hit stores needs to really drive home the fact that its a new console and light years ahead of the Wii, as opposed to just being some modest revision.

[Chocobo_Rider]

@lolmonade

1. I like your style.  You didn't 100% agree with me and you might even think my "upbeat" attitude is crazy but you were very reasonable and respectful voicing both ideas.  Thanks!

2. If we only had to endure financial reports and Chicken Little reactions, say, once a year when annual numbers came out? That'd be fine.  If we only tried to read tea leaves when Nintendo posted record losses? Fine too.  But every piece of Nintendo financial data instantly goes viral and instantly leads people to either go "Nintendo sold it's soul for casual money" or "Nintendo is DOOOOOOOMED."

If you scroll through GoNintendo's updates sometimes, you'd think you were reading a financial blog!!  No offense to GN.

3. All I can say is I calls 'em like I sees 'em.  What's sad is that on a dedicated site, for an entertainment medium, I stick out for being overly content!! Where did we go wrong, gamers!?

A lot of folks assume that because Nintendo is my current favorite game company and because I have no penchant for melodrama that I must be some coo-coo """fanboy""" who wears a Mario hat to sleep at night.  The truth is, before the Wii, the last Nintendo console I owned was the NES.  Let that sink in for a bit!

Gameboy > NES > Genesis > 32X (yea! 3 games!) > PS1 > PS2 > * > Wii > DS > Saturn > PSP > 3DS
*moved in with girlfriend/wife, acquired SNES, N64, GC

Now does that look like the platform history of a raving Nintendo fanboy?

I know you didn't call me that, but it's just so silly how much I apparently stick out around here.  Though, let me just say, I put out an APB on my site last week for team members for the NWR Kid Icarus tournament. Yea. Someone PMed me and said they didn't want to join because of the community here.  Just sayin'.

I think there are a lot more happy gamers out there but my guess is they encountered the negative vocal minority on the internet and said "know what? **** this. I got games to play."  I'm just not smart enough to do that yet. 

Though after a few people telling me I should just take my ball and go home, I did find one other community (NegativeWorld.org) that I do enjoy very, very, very much.  So, I do post here less ..... mission accomplished? 

4. Again, thanks for the level-headed, respectful post.  I like your style, screenname and avatar. 

[oohhboy]

There has been some movement in the price disparities faced in Australia. A parliamentary probe is underway questioning why Australians have to pay so much more for what is the same software. While this is an Australian development, this will no doubt have some flow on effect in NZ which will hopefully see prices drop dramatically and how tech companies including Nintendo do business here.