Nintendo will be losing significantly more money than expected.
http://www.nintendoworldreport.com/news/29150
Nintendo predicts a net loss of 65 billion yen during the fiscal year ending in March 2012, according to their recent financial briefing.
Originally Nintendo had only anticipated a loss of 20 billion yen. However, in the first nine months of this fiscal year, Nintendo has already experienced a loss of 48.4 billion yen; this increase led to the drastic raising of their net losses.
Net sales for the company were down 31.2% in the last nine months. Nintendo attributed this decline in sales to the decrease of Nintendo DS and Wii hardware being sold. The Nintendo 3DS's price cut also affected sales numbers.
Nintendo did see some bright spots in their past nine months, including three of their titles becoming million unit sellers. Super Mario 3D Land, The Legend of Zelda: Skyward Sword, and Mario Kart 7 led Nintendo in a strong holiday season.
The Wii didn't have to die as soon as it did. Oh well though, its too late to worry about that now.
..., and a great console for me on which I have a huge backlog of games to play.
All is right with the world. 2011 for the Wii was an embarassment. It went from being the big success story of this generation to being irrelevent almost overnight. Turns out it was a fad afterall or at least Nintendo abandoning it made it look that way.
Nintendo should be negatively affected by what they did in 2011. They hung Wii owners out to dry for really no reason at all and got burned for that. That's good. I'm tired of Nintendo jerking us around and still making a big profit. They needed this and hopefully they'll learn from it.
I wonder how much of this is due to developing the Wii U...
Since the Wii U is Nintendo's first HD system, it's probably costing them a few billion to develop it and create all the new HD engines for all it's first party studio's to work with.
There's no doubt in my mind that a lot of the falloff for 1st party support for the Wii is due to a strong emphasis on Wii U r & d.
The Wii lasted longer than the GameCube, longer than the N64. Sales have slowed down, but this loss is hugely attributable to exchange rate problems: a couple of years ago Nintendo earned 110 yen for every US Dollar, now it's more like 75 yen. I can't help but view the Wii as a good move from Nintendo, and a great console for me on which I have a huge backlog of games to play.
The Wii was great for Nintendo because it printed money for 4-5 years before tanking. But sales rate exchange had little to do with the loss. It's a convenient excuse. If you read the financial report, they actually expected the rate to drop further than it did. They had major drops in price because sales were off. They expected to sale more and keep the price higher. Unfortunately, you need to release games to keep people interested in a product.
Also, I think it's curious that Nintendo localized the weird chibi robo and custom robo titles for the gc, but aren't keen on doing the same with the rainfall titles for Wii.
This period is very challenging for Nintendo because their new handheld is underperforming, meaning they don't have the cushion that the GBA gave the GC launch, and the DS gave the Wii launch.
Nintendo isn't selling 3DS at a loss.
Nintendo isn't selling 3DS at a loss.
On the other hand, a drastic markdown like this, before the mass-production effect can take place for the hardware, will naturally generate red ink on the hardware sales. As a result, a significant minus effect is expected on the profitability of the current fiscal year. Even though we understand this, for us to elevate Nintendo 3DS to be the platform that can sustain our business, we have concluded that we need to take the best possible measure we can take now, even at the cost of short-term profitability.
It is clear that, however, in the next fiscal year, the sales of Nintendo 3DS hardware will not give us much profit even if we will be able to cease selling it below cost. It means that we need to make it with the software sales. There are two methods to gain profits from software: one is to sell as many units of a product as possible with fixed development and marketing costs; the other is to get as much money from a product as possible, or to increase the ARPU you mentioned.
