Topic: Nintendo Profits, Sales Down for Q3 2009

[NWR_Lindy]

Third-quarter earnings report shows robust sales, but a decline in profits.
 http://www.nintendoworldreport.com/newsArt.cfm?artid=20863

 Nintendo recently released their financial results for the first three quarters of fiscal year 2009, and along with revealing lifetime sales data for some of their key titles, also detailed a drop in profits year-on-year.    

In a statement addressing their financial results for the three quarters ending Dec. 31, 2009, Nintendo stated that their "net sales, operating income, ordinary income, and net income represented the third best corresponding performances in company history, but they all saw a decline from the results of the prior year."  Their rationale for the decrease was "year-on-year decreases in Wii hardware and Nintendo DS software sales, a price cut for Wii hardware, and the significant impact of a stronger yen."    

Nintendo's net sales declined year-on-year, dropping 23.1 percent to Â¥1,182.1 billion ($13.09 billion). Nintendo also reported profits of Â¥192.6 billion ($2.1 billion), a 9.4 percent drop year-on-year.  However, the company maintained their fiscal year forecast, predicting a net profit of Â¥230 billion ($2.55 billion).  This would be its first year-on-year profit decline since the introduction of the Wii console in 2006.    

NINTENDO ANNOUNCES FINANCIAL RESULTS FOR THE NINE-MONTHS ENDING DEC. 31, 2009    

January 27, 2010 - On January 28, 2009 (Japan time), Nintendo Co., Ltd. reported financial results for the first three fiscal quarters and earnings for the period ending Dec. 31, 2009, and left unchanged prior forecasts for full year global sales and profits.    

The nine month figures for net sales, operating income, ordinary income, and net income represented the third best corresponding performances in company history, but they all saw a decline from the results of the prior year. The net sales and operating income declines in comparison to the record-breaking previous year primarily stem from year-on-year decreases in Wii hardware and Nintendo DS software sales, a price cut for Wii hardware, and the significant impact of a stronger yen.    

The company also updated life-to-date worldwide unit shipments for its two category-leading brands. Cumulative shipments of Wii hardware now exceed 67 million, along with nearly 510 million software units. For the Nintendo DS franchise that includes Nintendo DS, Nintendo DS Lite, and Nintendo DSi, the corresponding lifetime totals now stand at over 125 million portable hardware systems, and over 688 million software units.    

Consolidated financial results for April-December 2009 in millions of yen:    

Net Sales * Operating Income * Ordinary Income * Net Income
   

Apr-Dec, 2009 1,182,177 * 296,656 * 314,511 * 192,601
 Apr-Dec, 2008 1,536,348 * 501,330 * 352,488 * 212,524
 % Change -23.1% * -40.8% * -10.8% * -9.4%
   

Unit sales in millions:
   

Apr-Dec 08 * Apr-Dec 09 * LTD * Forecast Apr 09-Mar 10
   

Nintendo DS
   

Total Hardware 25.62 * 23.35 * 125.13 * 30
   

Japan 3.29 * 3.52 * 29.92
 The Americas 9.54 * 10.53 * 44.99
 Other 12.79 * 9.30 * 50.23
   

Total Software 163.78 * 121.38 * 688.29 * 150
   

Japan 27.11 * 25.04 * 171.99
 The Americas 64.55 * 56.95 * 261.90
 Other 72.11 * 39.38 * 254.41
   

Wii
   

Total Hardware 20.52 * 17.05 * 67.45 * 20
   

Japan 1.89 * 1.76 * 9.72
 The Americas 9.80 * 8.48 * 32.02
 Other 8.83 * 6.81 * 25.71
   

Total Software 163.78 * 156.64 * 509.66 * 192*
   

Japan 11.04 * 12.48 * 46.57
 The Americas 90.29 * 82.84 * 275.84
 Other 62.46 * 61.32 * 187.24

[BlackNMild2k1]

The format for your data is very hard to understand.
Maybe you should use a similar format to the one in the Sales thread?

[NWR_Lindy]

I simply didn't want to spend an hour formatting the table when I knew the information was available elsewhere.

[Ymeegod]

No big deal.  Profits are still 2 BILLION for one freaking quarter.  Yeah, I'm sure Big N is in tears about this--mostly because they are laughing so hard it's making their sides ache.

[KDR_11k]

No big deal.  Profits are still 2 BILLION for one freaking quarter.  Yeah, I'm sure Big N is in tears about this--mostly because they are laughing so hard it's making their sides ache.

Expect the gaming news to act like this is worse than MS's performance.

[Chozo Ghost]

NINTENDO IZ TEH D00MEDZ!!!!11 THEY ONLY MADE 2.1 BILLION DOLLARS IN PROFIT WHICH MEANS THEY ARE GOING TO GO 3RD PARTY LIKE SEGA!!!!!!!!!1111111

[NWR_Lindy]

It is notable that sales for both Wii and DS have fallen year-on-year.  It shows that they have finally peaked, and that we can seriously begin to talk about successors to both devices (since you know Nintendo is).

[KDR_11k]

The overall sales of the Wii have fallen for the year because of the weak early year, it suddenly started breaking records when New Super Mario Bros Wii came around.

[NWR_insanolord]

I don't understand how you can argue that sales have peaked when Nintendo had the best month in the history of the medium last month.

[BlackNMild2k1]

I don't understand how you can argue that sales have peaked when Nintendo had the best month in the history of the medium last month.

Thats the point. literally, it rose to heaven and now it has to come back down to earth.
It hit it's peak and there is no where to go but down.

[NWR_insanolord]

I don't understand how you can argue that sales have peaked when Nintendo had the best month in the history of the medium last month.

Thats the point. literally, it rose to heaven and now it has to come back down to earth.
It hit it's peak and there is no where to go but down.

Yeah, but didn't they say that last year when they sold 3 million DSs and 2 million Wiis?

[BlackNMild2k1]

possibly, bit last xmas was the middle point of the cycle too. 3 years. and the 3rd year is when a console usually sells the most. If Nintendo happens to outsell itself again this year, then they are truly breaking trends and defying the cycle.

With the lineup Nintendo has this year, it possible that it could happen, but who would be expecting that?

[broodwars]

I don't understand how you can argue that sales have peaked when Nintendo had the best month in the history of the medium last month.

It's a Holiday Bounce, one helped greatly by the release of a new Mario game.  I suspect we'll see one when Zelda releases as well (especially if there's another Wii price cut as there was for NSMBW).  Hell, we could even see a spike when Epic Mickey releases, though you have to figure at this point that target audience already has the system.  You take away the holiday season, though, and Wii sales were falling all year.

Besides the falling Wii sales, you have to suspect that part of this loss of profits is R&D on Galaxy 2; Zelda Wii; and Metroid Other M, as well as whatever projects we still don't know about.  It's nothing to be terribly concerned about, but hopefully this spurs Nintendo to be more proactive about letting us know sooner what awesome Wii projects are in the pipeline.

[KDR_11k]

I don't understand how you can argue that sales have peaked when Nintendo had the best month in the history of the medium last month.

Thats the point. literally, it rose to heaven and now it has to come back down to earth.
It hit it's peak and there is no where to go but down.

It hit the peak of 2009 (obviously you aren't going to maintain Christmas sales in January), nothing says they cannot go higher in 2010.

It's a Holiday Bounce

You mean Christmas sales? That's why it sold more than in, say, October but not why it sold more than any other system ever.

[NWR_Lindy]

Both systems still have a lot of momentum in Japan and North America, but look at the rest of the world.  While sales of the DS actually went up year-on-year in Japan and NA, they went down by 3.49 million units (27%) everywhere else.  Wii sales dropped across the board, but especially outside of Japan and NA where they were down by 2.02 million units (23%).

Nintendo is by no means struggling, but the worldwide growth of both systems is finally slowing down.

[Chozo Ghost]

Sales may be declining in Europa, Australia, and elsewhere because these regions don't get as much love in terms of games being localized for those markets. Japan gets the lions share of the games, and NA also gets a large percentage... everywhere else gets the scraps.

[Ian Sane]

A typical console lasts five years before it's replaced with a successor.  The Wii peaking at this point would be normal and expected.  It's not a problem.  The Wii is a successful console and now Nintendo has to follow it up.  How long did you expect the Wii to last?  Anything longer than six years sounds INSANE to me.  It's due for a follow-up.

Nintendo gets all uppity about everyone already owning a DS and thus hardware sales dropping.  That's a GOOD thing.  It's the best case scenario.  If everyone who would ever want a Wii already owns one then mission accomplished.  Now bust out the Super Wii and try to do it again.

[Chozo Ghost]

A typical console lasts five years before it's replaced with a successor.  The Wii peaking at this point would be normal and expected.  It's not a problem.  The Wii is a successful console and now Nintendo has to follow it up.  How long did you expect the Wii to last?  Anything longer than six years sounds INSANE to me.  It's due for a follow-up.

I'm sure Nintendo is hard at work on a successor. As a matter of fact, its a fact confirmed by quotes that Nintendo immediately begins work on the successor system the moment they complete work on the current system. Nintendo owns a hardware division, and just like its software developers Nintendo doesn't pay them to just sit around and do nothing. When they finish one thing, they instantly begin work on the next.

So we can say with reasonable certainty that the Wii's successor has been in the works since late 2006, and arguably even well before that... like whenever the Wii hardware went gold.

As for how far along they are, who knows? It might only exist as scribbles on a drawing board at this point, or it may even be into the prototype stage with software mockups being created. Who knows? But we won't hear anything about it this year, and probably not next year either. I predict it will either be a late 2011 release or a 2012 release.

Nintendo would have an edge if they released it for holiday 2011 I think, because then they would have a system which leapfrogs the PS3 in terms of horsepower and would have a chance of wiping the floor with the PS3 before it has a chance to really build up momentum. Just like Sony has said, the PS3 probably will be a 10 year lifespan console, and there's really no reason why that shouldn't be true, because what could Sony create that could justify another console in the near future? 2D gaming is nearing the upper limit of what can be achieved in video gaming. At some point (probably not in the near future) we will need to make another leap to bring about 3D gaming, but before that can even happen 3D televisions would have to start taking off in a big way, and that won't be for awhile.

So the next Console Nintendo creates is one they can probably sit on for a long while and if it is still in direct competition with the PS3 and 360 then it will be the most powerful one of all of them.

[KDR_11k]

3D display gaming isn't all that hard (doesn't take much processing power, movies have more trouble because they are stored in 2D but games are already full of 3D data so all you need is a minor rendering tweak), it's been available on the PC pretty much since 3D graphics exist. It never took off though. What will be more of a problem for Nintendo is finding a reason for people to buy a new console. Just making it have HD console graphics won't make it an automatic seller as Sony and Microsoft already found out the hard way this generation. Iwata has been expressing that the whole time but it looks like the press prefers to listen to dimwit Pachter instead of the people who are actually in charge. Making the Wii better was already done with Motion Plus and there are more ways to improve the Wii with addons, a new console would have to offer something that couldn't be done on the Wii at all AND makes people actually want it. The Gamecube route of "better graphics, same old ****" doesn't fly and would make Nintendo the #3 in the console market again.

[Ian Sane]

What will be more of a problem for Nintendo is finding a reason for people to buy a new console. Just making it have HD console graphics won't make it an automatic seller as Sony and Microsoft already found out the hard way this generation.

I think the sheer fact that the PS3 and X360 exist and crush the Wii in graphics capabilities is enough justification for a new Wii.  The Wii doesn't support HDTVs and that makes it out-of-date.  Just keeping up-to-date is a pretty good reason to upgrade.  A lot of people own HDTVs now and I'm sure a lot of them would like to be able to play Wii Sports 3 in HD.
 
And Motion+ demonstrates the ability for the remote to go further so at the very least we'll get a better controller.  And I figure since new hardware would allow for easy porting between all three consoles the third party support would greatly improve.  So maybe people just noticing the Wii 2 having more games than the Wii ever did would be sufficient enough.
 
The Wii is also trendy technology and the same idiots who update their iPod and cellphone every year would probably also be all over the idea of upgrading their Wii.  It isn't about what it does for them, it's the status of having the newest trendy gadget.  The Wii has the world's attention now so a new Wii will grab their interest.  Hell Nintendo has just introduced the DSi and what the HELL does that really do to justify a purchase?  Doesn't matter.  The DS is trendy so they just have to make a minor change and people will fork over the dough to have the latest model.
 
And when you come down to it the Wii sold because it had that game everyone wanted in Wii Sports.  So they just need a new game that has that sort of appeal.
 
Plus, you know, you just STOP MAKING REGULAR WII games and force everyone to upgrade if they want to play new games.  It's how the whole console model works.  If the Wii audience wants to continue playing videogames they'll buy the next Wii.  And if that audience doesn't want to continue playing videogames then the whole thing was just a fad and Nintendo failed.  The Wii userbase should want to continue playing videogames and thus jump through the hoops required to keep doing so.

[Kairon]

A typical console lasts five years before it's replaced with a successor.  The Wii peaking at this point would be normal and expected.  It's not a problem.  The Wii is a successful console and now Nintendo has to follow it up.  How long did you expect the Wii to last?  Anything longer than six years sounds INSANE to me.  It's due for a follow-up.

Nintendo gets all uppity about everyone already owning a DS and thus hardware sales dropping.  That's a GOOD thing.  It's the best case scenario.  If everyone who would ever want a Wii already owns one then mission accomplished.  Now bust out the Super Wii and try to do it again.

Ian Sane: Voice of Reason.

...wow, never thought I'd type that out.

[TJ Spyke]

The Wii just had the best selling month in the history of video games and some people think Nintendo should be stupid and replace it already?

Ian, less than half of households own a HDTV, so not being HD is no big deal. Even if they did release its successor and stopped supporting it (which would be insane), it sells so well that third parties would continue to support it. The Wii is the only system this gen that actually could last 10 years.

[BlackNMild2k1]

Less than half of household own a HDTV.
probably half of those don't have anything HD hooked up to it, and it they do, they are likely watching SD contend through HD connections.

Most HDTV's are bought for size, not resolution, since most consumers probably either don't really notice the difference or just didn't care all that much.

That being said, I really don't expect another update to Wii (besides color*) till Xmas 2011 at the earliest.


*where is my black Wii

[Chozo Ghost]

I think we got it all wrong about their being a "Wii 2". There probably won't be such a system per se, and what we might have instead is incremental hardware revisions that bump the Wii up by tiny bits at a time on an evolutionary scale rather than a revolutionary one.

What we've seen with the DS --> DSi is probably a good blueprint for what Nintendo will do with the Wii as well. For one thing, its the same company so why not? Furthermore, this is a strategy that seems to work. The DSi beefed up the hardware capabilities of the DS a fair bit, added in music, a camera, internet, etc. But is the DSi a new system? No, not really. It is a DS 1.5 rather than a DS 2. Or actually perhaps merely a DS 1.3 or 1.2 really..

So why wouldn't this work with the Wii as well?

Instead of Nintendo pushing out a Wii 2.0, we might get a Wii 1.5 which beefs up the processor speed, RAM, internal storage, and also adds in HD without actually being a new system or breaking compatibility or anything of that sort.

Granted, a Wii 1.5 probably still won't be as powerful as a PS3 or 360, but that doesn't matter because it would be CLOSE ENOUGH. Then a couple more years down the road when Wii 1.5 starts to show its age, Nintendo can pop out Wii 2.0 which would be another incremental advancement over 1.5 but not really anything revolutionary or anything.

[broodwars]

I don't know about that.  For one thing, something you have with the Wii that the DS did not have is internal memory.  If I'm going to buy a Wii 1.5, I sure as hell want to transfer all my old Wii data over to it.  Right now, that data's locked to the Wii that downloaded it, and I'm not sure that profit-focused Nintendo will just let us bring it over easily.  Of course, given that Wii 1.5 probably won't have GameCube support, I'm not sure I'd upgrade anyway.  Also, has there been a single substantive DSi game so far since the system launched?  Companies seem hesitant to actually take advantage of that extra power of the DSi, because they want the bigger pot of the DS standard audience.  3rd parties already have trouble selling Wii software, so why would they want to shift to the even niche-er audience of the Wii 1.5 if Nintendo's still going to be supporting the original Wii?

I think it's a pipe-dream that the Wii will last a 10 year life cycle as the dominant Nintendo console, not when HD TV adoption rate continues to increase and companies really start showing what the PS3 and 360 can do (now with motion control as well).  It took both a price cut and the release of a new 2D Mario game to get the Wii selling consoles in record numbers again, and I'm not sure how many more holiday seasons Nintendo can keep the sales surging like that.  The Wii probably has 1-2 more years of good sales left in it, and then it'll be time to move on.  That's nothing against the Wii, just the nature of hardware life cycles and the Wii has plenty of technical room to grow where the PS3 and 360 cannot.  Nintendo will panic whenever hardware sales start to dip again.