Topic: Nintendo Posts Largest Net Loss in History

[Crimm]

For the first time in its history as a publicly traded company, Nintendo is forecasting an annual loss.

http://www.nintendoworldreport.com/news/28241

Nintendo's latest financial report shows that the company is forecasting an annual loss for the first time since they started making video games.

For the six-month period ended on September 30, Nintendo's net loss was over 70 billion yen, compared to last year's loss of only 2 billion yen. Nintendo had previously forecasted a loss of just over 35 billion yen for that same period. Sales for the Nintendo DS and 3DS hardware being lower than expected and yen appreciation relative to foreign currencies were offered as the primary reasons for the missed estimates. These losses, while significant, are substantially less than had been rumored.

In July, Nintendo had predicted exchange rates of 77 yen to the U.S. dollar and 115 yen to the euro. However, the actual exchange rate ended up being 80 yen to the dollar and 106 yen to the euro. 79.2% of Nintendo's total sales were conducted outside of Japan, and the net effect of converting local currency to yen resulted in 52.4 billion yen in exchange losses (about 75% of their total loss).

Nintendo had forecasted sales of 240 billion yen for the six month period, however softer than expected sales meant the actual number was only 215.7 billion yen—10.1% below estimates. Beyond the low hardware sales, Nintendo also explained that the 3DS does not yet have "many hit titles" and a lower number of new titles were released for Wii. Additionally, the price drop of the 3DS has lead to "improving" hardware sales. Nintendo is expecting the release of titles such as Mario Kart 7 and Super Mario 3D Land to help the 3DS hardware sales to continue to improve.

As for the end of the fiscal year (March 31, 2012), Nintendo is projecting a net loss of 20 billion yen, harshly contrasted against their previous forecast, a profit of 20 billion yen. This is the first time in Nintendo's history that they've posted a loss annually.

Finally, in regards to their end-year sales, the estimates are currently set at 790 billion yen, down from the earlier estimate, 900 billion.

[Enner]

From what I've been lead to believe in how much money Nintendo has, this news is more significant as a blow to pride and confidence. That, and nasty exchange rate conversions.

Nintendo had forecasted sales of 240 million yen for the six month period, however softer than expected sales meant the actual number was only 215.7 billion yen—10.1% below estimates.

Is "billion" a typo?

[Ceric]

From what I've been lead to believe in how much money Nintendo has, this news is more significant as a blow to pride and confidence. That, and nasty exchange rate conversions.

Nintendo had forecasted sales of 240 million yen for the six month period, however softer than expected sales meant the actual number was only 215.7 billion yen—10.1% below estimates.

Is "billion" a typo?

I'm fairly sure million is the Typo.  Personally the easiest way for me is think of a yen like a penny.

[BlackNMild2k1]

Can someone break that down into $$$ so that it makes ¢¢¢?

[Ceric]

Can someone break that down into $$$ so that it makes ¢¢¢?

Net Loss	|Â¥70,000,000,000.00	|$921,200,000.00
Last Year	|Â¥2,000,000,000.00	|$26,320,000.00
Forecast	|Â¥35,000,000,000.00	|$460,600,000.00
Exchange Loss	|Â¥52,400,000,000.00	|$689,584,000.00
Forecast Sales	|Â¥240,000,000,000.00	|$3,158,400,000.00
Actual Sales	|Â¥215,700,000,000.00	|$2,838,612,000.00
Current Forecast	|(Â¥20,000,000,000.00)	|($263,200,000.00)
Previous Forecast	|Â¥20,000,000,000.00	|$263,200,000.00
End Year Sales New Estimate	|Â¥790,000,000,000.00	|$10,396,400,000.00
End Year Sales Old Estimate	|Â¥900,000,000,000.00	|$11,844,000,000.00

This is using the current Exchange rate of 1 Japanese Yen = 0.01316 US Dollar.

[Mop it up]

I can see a flood of "Nintendo is doomed!" articles forthcoming from various outlets, but I think the only ones who should be concerned with this are shareholders.

[Chozo Ghost]

Can someone break that down into $$$ so that it makes ¢¢¢?

No offense, but your avatar makes no ¢ :

I can see a flood of "Nintendo is doomed!" articles forthcoming from various outlets, but I think the only ones who should be concerned with this are shareholders.

No matter how you look at it this is significant, because the article says its their first loss since they started making video games, so that's the first time this has happened in over 30 years or so. This NEVER happened even in the darkest days of the Gamecube, yet it is happening now with the Wii which is Nintendo's best selling console of all time. This is really weird.

[BlackNMild2k1]

World Wide Economic Depression.

We all feel it.

[broodwars]

World Wide Economic Depression.

That's really giving Nintendo the easy way out for some spectacularly bad decisions over the past year, though (most notably their handling of the 3DS and the near-abandonment of the Wii in NA).  The economy's played its part in this, but Nintendo needs to start taking responsibility for its hardware.

[BlackNMild2k1]

I'm not trying to say the economy is the only reason, but he said it was weird that it happened now out of any time it could have happened.

With the economy the way it is, and with the decisions Nintendo has made leading up to this over the past few years, it's all just really bad timing when you put them together.

[Chozo Ghost]

Actually, with the economy being bad shouldn't Nintendo be doing better relative to the competition? The Wii is the budget system and it has been that way since day one in 2006 when it first launched. That was the key to the Wii's success then and now.

So what I want to know is if things are bad for Nintendo, what are they like for Sony and Microsoft? I think Sony in particular should be hurting bad, especially because of that PSN business a few months back.

[broodwars]

So what I want to know is if things are bad for Nintendo, what are they like for Sony and Microsoft? I think Sony in particular should be hurting bad, especially because of that PSN business a few months back.

Last I heard, Microsoft was doing pretty well with the 360 because of Kinect, and Sony recently reported that PSN sales were up 14% in the months following the PSN hack (and Sony's had a good retail software year).  So it looks like Nintendo's the only company of the Big Three particularly hurting right now.

[NWR_Lindy]

Nintendo's kind of in a weird spot with the 3DS.  Smartphones have it beat in terms of practical functionality, and Vita has it beat in terms of extra features that might appeal to the smartphone market.  It has all of them beat in price (generally, unless you buy an older phone), but I'm not so sure that's what customers are looking at first and foremost these days.

Let me ask this: would any of you 3DS owners give the system to a 7-year-old, or is it too fragile?  There's no way in hell I would have given the PSP to a kid, but the DS was unbreakable.

[Chozo Ghost]

The economy may be bad right now, but hasn't the economy been bad before? I was probably too young to remember or care, but it seems like during the Clinton administration things were bad. Actually, that's probably around the time of the N64 which was a bad time for Nintendo, but even so they still didn't have a net loss. So the economy being bad is no excuse because its been bad before, but this is the only time they've had a net loss.

What is different now is that Nintendo has been hijacked by the villainous duo of Reggie and Iwata. A lot of people like to say bad things about how Yamauchi ran things with an iron fist, but he always kept the company profitable no matter how the economy was doing. So I don't know, but maybe there should be a change in Nintendo's leadership.

[NWR_insanolord]

Since a large chunk of this is due to exchange rates, the recession is certainly a major part of it. The current state of the 3DS is a lot of it as well, and that's not something that could have easily been avoided: either there's a drought or there are no sales at all because they waited to release it, and neither way helps the bottom line. I don't know that enough of it can really be linked to the lackluster Wii lineup for Nintendo to change their behavior because of it.

[BlackNMild2k1]

Actually Clinton Admin was a time of economic rise. Those were good times.

I don't think there has been a world wide money crisis of this scale since I've been alive.

Wii has saturated a lot of the market and without compelling new software, the hype train has moved on. No new games... or atleast long gaps inbetween compelling software and BIG releases from competing hardware makes for hard times ahead for Nintendo.

3DS was too expensive for perceived value and a lack of games killed that HYPE train almost before it started.

With the rise of Smart Phones and iPads/Tablets, a majority of the casual market has had their attention divided by those kinds of all-in-one portable devices and also have their pockets nickel and dimed by cheap throw away software and f2p online/social games.

Apparently Nintendo has been too distracted by counting all it's money to notice until recently though, and they are still reluctant to dive head in and steal their audience back with openly functional hardware with affordably cheap software (I'm looking at you 25 year old $5 NES VC games). So maybe a big loss like this will make them finally pay attention to whats going on outside of their little bubble, even though I am usually more than happy with the results of them living in their own little fantasy land.

[Shaymin]

This should help next year's financials, at least:

At nintendo results meeting, materials confirm kid icarus will be released in japan in jan-mar, new pokenon spring, both not listed intl

http://twitter.com/gibbogame

[Kytim89]

I apologize for this in earnest...
 
NINTENDO IS SITTING ATLEAST A HALF OF A DOZEN WII GAMES THAT THEY REFUSE TO RELEASE EITHER OUTSIDE JAPAN OR IN NORTH AMERICA. WHY THE **** ARE THEY NOT GEARING UP TO PUT THESE TITLES INTO THE HANDS OF THEIR LOYAL FANS AND EARN WHATEVER MONEY THAT IS STILL LEFT FOR THEM TO PILFER ON THEIR DYING CASUAL CONSOLE? THEY COULD ALWAYS SELL THESE DAMN GAMES ON THEIR WEBSITE AND MAKE UP SOME LOST CASH. I MEAN IT IS NOT GOING TO SOLVE THE ISSUE OF CURRENCY FLUCUATIONS, BUT IT WOULD HELP THEM FINANCIALLY AND SAVE FACE ON A COMPANY THAT HAS A BAD REPUTATION OF BEING COY WITH ITS FANS.

[NWR_insanolord]

I apologize for this in earnest...
 
NINTENDO IS SITTING ATLEAST A HALF OF A DOZEN WII GAMES THAT THEY REFUSE TO RELEASE EITHER OUTSIDE JAPAN OR IN NORTH AMERICA. WHY THE **** ARE THEY NOT GEARING UP TO PUT THESE TITLES INTO THE HANDS OF THEIR LOYAL FANS AND EARN WHATEVER MONEY THAT IS STILL LEFT FOR THEM TO PILFER ON THEIR DYING CASUAL CONSOLE? THEY COULD ALWAYS SELL THESE DAMN GAMES ON THEIR WEBSITE AND MAKE UP SOME LOST CASH. I MEAN IT IS NOT GOING TO SOLVE THE ISSUE OF CURRENCY FLUCUATIONS, BUT IT WOULD HELP THEM FINANCIALLY AND SAVE FACE ON A COMPANY THAT HAS A BAD REPUTATION OF BEING COY WITH ITS FANS.

You don't get to apologize and then still be obnoxious, especially when you're going to be obnoxious by repeating the same argument you've been whining about for months. We get it: you think Nintendo should release those games. So do a lot of people. But they've made their decision, and you're not going to change their mind with all-caps posts on this forum, so give it a rest.

[Ymeegod]

"3DS was too expensive for perceived value and a lack of games killed that HYPE train almost before it started"

Nintendo selling it at a loss and their annual income proves this yet Black you still think otherwise? 

A few other notes is alot of money was spent on re-amping the 3DS--Nintendo spent another 300 million on new commericals/ads whatnot and that alone makes up the loss for the year.

It's not really going make much difference to them anyhow.  45+ Billion nest egg.

[Luigi Dude]

I apologize for this in earnest...
 
 NINTENDO IS SITTING ATLEAST A HALF OF A DOZEN WII GAMES THAT THEY REFUSE TO RELEASE EITHER OUTSIDE JAPAN OR IN NORTH AMERICA. WHY THE **** ARE THEY NOT GEARING UP TO PUT THESE TITLES INTO THE HANDS OF THEIR LOYAL FANS AND EARN WHATEVER MONEY THAT IS STILL LEFT FOR THEM TO PILFER ON THEIR DYING CASUAL CONSOLE? THEY COULD ALWAYS SELL THESE DAMN GAMES ON THEIR WEBSITE AND MAKE UP SOME LOST CASH. I MEAN IT IS NOT GOING TO SOLVE THE ISSUE OF CURRENCY FLUCUATIONS, BUT IT WOULD HELP THEM FINANCIALLY AND SAVE FACE ON A COMPANY THAT HAS A BAD REPUTATION OF BEING COY WITH ITS FANS.
 

Games like Xenoblade and The Last Story wouldn't make any difference for this kind of loss.  They're losing a lot of their money because of the exchange rate.  If Xenoblade and The Last Story were to come to America, because of the poor exchange rate, they'd have to be bigger hits now in order to make any meaningful profit.  A few years ago, both games might have only needed to do around 100k in North America in order to make a good profit, but now because of the crappy exchange rate, they might have to sell 200k in order to make the same kind of profit.  This is how a poor exchange rate can really f*ck over a company like Nintendo who makes most of their money from foreign countries, because it's something they have no control over.

This is probably the real reason why NOA in the last several years has mostly brought over guaranteed sellers.  Because of the weak US dollar, games need to sell more in America in order to make NCL the same kind of profit they would have made in the past.  Since the Euro is stronger then the dollar, games in Europe don't need to sell as much as they would in America in order to make profit, which would explain why NOE has had no problem releasing more games during this same time.

This would finally explain why NOA had Xenoblade on their release list under the name Monado until Spring 2011 and then it finally vanished, in which NOE suddenly announced it was coming to Europe.  NOA probably intended on actually releasing the game in North America all along, but because of how the dollar has kept falling, worried it wouldn't be able to sell enough, so that's why they're watching how it sells in Europe now before making a final decision.

[NWR_insanolord]

The poor exchange rate is definitely the best explanation I've heard for Europe getting the games and NA not getting them.

[ThePerm]

The first time Nintendo experienced a quarterly loss was right before they released Wii and experienced accelerated growth. Every Japanese company is doing worse than they should be doing because the Yen is too strong. Japan is an export country and relies on making money on exports. However, I have to say Nintendo really should beef up its American operations, they don't do much autonomously and they should. If NOA can start releasing games focused towards western audiences than they might be able to make up for balances lost in NCL Its been a couple of years since they had some support like Rare, Retro, and Silicon Knights were helping out. Now there is only Retro.

[xcwarrior]

Give Americans some games to play. Might help for the future.

I heard about these 3 Wii RPGs that might sell around here. Just a thought.

[Ymeegod]

Actually the publisher gets about the same amount from the Europeans, why is there a difference in price? Markup + taxes are different.  In europe most countries have an import tax that is already added to the price of the games which is like 20% and then you have the higher markup's (retailers share).   In the states the markup is 20%-30% which in Europe the markup is 40% and Aussies is like 80%+.  Meaning the only ones making the profits is the retail stores themselves.

Good ole USA still doesn't have an import tax on gaming :0.  Just an sales tax which is 8-9% and it's added after the costs.

In Japan I guess it's due to the Japanese government and it's distribution system.  Complex mess with alot of handoffs which each take a cut.  In the US it's straight forward--Factory--wholesaler--retailer--consumer.