Nintendo has described their strategy as "putting smiles on many people's faces." As their recent earnings report shows, this makes for great business.
With the currently poor state of the global economy, it's rare enough to find beacons of growth and optimism. Even in the videogame industry, generally considered "recession-proof," there have been reports of belt-tightening and layoffs. Nintendo, though, has a long history of rebelling against convention.
The Japanese gaming company recently presented their fiscal year results for the year ending March 31, 2009, and despite all the economic issues that have arisen in the last 6 months, they reported record sales and profits. All in all, Nintendo reported sales of 1.838 trillion yen (about US $18.5 billion) compared to 1.672 trillion yen a year ago. They reported a net income of about 279 billion yen (about US $2.813 billion), compared to 257 billion yen a year ago.
Nintendo's steady good fortune comes amidst more than just general global economic worries. The devaluation of the US Dollar has also affected Nintendo's bottom line, since overseas income gets converted to a relatively strong yen. Nintendo does a significant amount of its business in both Europe and the Americas, so dramatic changes in currency evaluation can affect the company's earnings significantly. Unfavorable currency exchange rates are believed to be a major reason behind Nintendo reporting a nearly unheard-of mid-year loss in 2003.
However, those dark days of being relegated to third place seem so long ago compared with Nintendo's current position at the top of the gaming industry. Nintendo reports that 50.39 million Wii consoles have been sold as of March 31, 2009, and that they expect another 26 million to sell over the next twelve months. Even more impressive, Nintendo's handheld DS platform sits at 101.78 million units sold, and is still rapidly selling with 30 million more projected sales by March 2010.
Nintendo's obviously enjoyed a lot of success, and their strategy continues to hinge on championing tenets of fun and accessibility. In a section on "Medium and Long-Term Management Strategy and Challenges" Nintendo describes the Wii as "a machine that puts smiles on surrounding people's faces", and expressed their aim to encourage communication amongst household families. With the DS, Nintendo's goal is to upgrade the machine’s reputation from "must-have for every family" to "must-have for everyone."
Nintendo's claims of aiming to expand the gaming population to new consumers "regardless of age, gender, or gaming experience" isn't really a new message for the company, but their continued success in the face of critics suggests that there just might be something to the "smiles" that Nintendo keeps trying to put on their consumer's faces.