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Finance

Nintendo claims hardware comeback despite 74% profits dip

Mon 31 Jan 2011 9:16am GMT / 4:16am EST / 1:16am PST
HardwareFinance

"Few people anticipated that Wii would regain its momentum" - Iwata

Nintendo president Satoru Iwata has defended the company's performance in the wake of a 74% year-on-year profits slump.

Observing that following a difficult nine months of hardware sales, he told investors that "Few people in the industry were able to anticipate that Wii would regain its momentum at the end of the year."

In Nintendo's home nation of Japan, "In the latter half of December, Wii sold twice as much as PS3". The US had seen similar resurgence, although sales had not returned to 2009's record-breaking levels: "Wii sold more than 2,350,000 units of hardware in December 2010, which was better than December 2008, when Wii was selling very well.

"As a result, Wii was able to establish another record in the U.S. home console market by selling more than seven million units in the U.S. in three consecutive years."

In Europe during October 2010, "Wii was in the lowest position among all the consoles, so when I told you that I believed Wii would make a comeback in the year-end sales season, it might have sounded like nothing but a mere dream.

"Wii sales rose sharply to the top in the 43rd week, which is when we released the red Wii hardware. The sales pace picked up even more speed during the year-end sales season, and Wii went back to holding the largest market share.

"I think that few people could have expected that in the peak week of the year-end sales season, Wii hardware would be selling almost twice that of other consoles." Across Europe's major territories during week 50 of last year, the Wii sold around 450,000 units, compared to around 300,000 for PS3 and 250,000 for 360.

The red Wii was repeatedly mentioned as contributing to the year-end resurgence. However, Iwata felt that the entire market was suffering. "Overall the home console market in 2010 could not create the excitement that the industry had experienced in the 2009 year-end sales season."

The handheld DS range had performed well in Japan, primarily due to combined sales of Pokemon Black & White becoming the highest-selling game of the year there, but Iwata admitted things were not so rosy in other territories.

"While the home console software market has been able to maintain a similar market size over the past two years, the handheld software failed to do the same in Europe. It's been said that the illegal copies of software have had significant impact in Europe.

"In addition, we analyze that another reason for the declining market size is the low active-use ratio of Nintendo DS hardware for the lack of new software titles selling very well.

"Although Nintendo DS has kept its high market share, we are far from satisfied with the current handheld software market." The 3DS would be part of "various efforts" to "revive" the handheld market.

For software, Iwata singled out certain titles as major contributors. Wii Party was revealed to have sold more than five million units worldwide, though as European sales were so far higher than in the US, "We believe that this software still has potential in the U.S., so we are planning to further promote it."

DS drawing title Art Academy was revealed to have sold more than 1.5 million units worldwide, while further sales data held that combined lifetime sales of Wii Sports and Wii Sports Resort had hit 102 million units. Around 22 million of these occurred during the last nine months of 2010.

The strongest worldwide performer of the year for Nintendo was Super Mario Galaxy 2, which shifted 6.15 million units across 2010. In total, 18 Nintendo titles passed one million worldwide sales between April and December last year.

13 Comments

Interesting. I think the profits will rise once the 3DS is released.

Posted:3 years ago

#1
Any mention of Donkey Kong? I think its been doing great, and Retro deserve lots of kudos on its development (when was the last time a western developed title almost broke 1m sales in Japan alone?).

Posted:3 years ago

#2

Aleksi Ranta Product Manager - Hardware

281 130 0.5
"I think the profits will rise once the 3DS is released."

Maybe so but a more likely scenario is that the 3DS will cannibalize the more profitable current DS lineup.
I suspect the profit margins on new hardware arent as good as on established product lines.

Posted:3 years ago

#3
You have a good point there Aleksi.

Posted:3 years ago

#4

Yiannis Koumoutzelis Founder & Creative Director, Neriad Games

363 207 0.6
They say the slump was primarily (but not exclusively) due to currency exchange rate issues.

The good thing is that 3DS can also play DS games. ;)

Posted:3 years ago

#5

Terence Gage Freelance writer

1,288 120 0.1
"while further sales data held that combined lifetime sales of Wii Sports and Wii Sports Resort had hit 102 million units. Around 22 million of these occurred during the last nine months of 2010."

Bloody hell... I knew Wii Sports was officially regarded as the biggest selling game of all time, but I had no idea the series sold these kind of numbers! Those figures are amazing.

Posted:3 years ago

#6

Rick Cody PBnGames-Board Member

144 14 0.1
I think Sony nailed the right idea by adding a PlayStation Store to Android phones. Nintendo is too stubborn to do it and I think they're going to lose out on even more money if they don't follow suit.

Posted:3 years ago

#7

Haven Tso Web-based Game Reviewer

255 8 0.0
I am surprised there is no mentioning of Donkey Kong Country Returns too. It was sold out during the Christmas everywhere in Sydney and the first shipment after the New Year sold out immediately again in some shops. They only had another shipment came in the week before last. So I thought with this kind of sales, there will be a lot more mentioning.

That said Ninty had a huge promotional campaign during the holidays with Wii Fit Plus (Helen Mirren), Donkey Kong Country Returns, Dragon Quest IX, Art Academy etc.

Posted:3 years ago

#8

Marc Enwright Studying Games Design, Train2Game

5 0 0.0
@ Richard Cody
I agree, Sony has made a good move in getting in on that. But remember Sony aren't only a games company, they make a load of tech, phones being one of them.
So in reality, they are really funding their own technology. Though i agree Nintendo may appear to be a little 'reserved' aobut the idea, you got to think, if they provide such a service, then they may as welol become publishers and go multi-platform. imagine playing nintendo exclusive titles on a non-nintendo device. That will be the ultimate cause of more loss in terms of revenue.

Posted:3 years ago

#9

Private Industry

1,176 182 0.2
Having one good month after 8 bad month does not equal a comeback and in Japan Christmas is not that big so having the double amount compared to the PS3 isn`t that much of a deal given that the PS3 was in front of the Wii for many many weeks this year in Japan.

6-12 of December Wii had this year only 79k units sold compared to last year 106k. They are not selling bad, but far from what they where used to for the last few years.

The Japanese numbers are interesting YTD until 12 of December PSP 2.451.060 vs NDS 2.432.283 and PS3 1.395.957 vs. Wii 1.365.689

As for the EU numbers, well they seem a bit low to me. 250k 360 consoles across Europe in the week leading up to Christmas? They must have only counted the major territories where they where in front of the others and left out the once where they where behind.

Seeing Wii Sports series "sell", it often comes with the console, more than 100 million makes me kind of sad. Of all the great games, that mini game collection comes in first.

Posted:3 years ago

#10

Haven Tso Web-based Game Reviewer

255 8 0.0
Just read that Donkey Kong Country Returns had sold 4.2 million units so far.

Posted:3 years ago

#11

Andrew Goodchild Studying development, Train2Game

1,254 421 0.3
Wii has obviously done well at the end of the year, and if sales were lower before that it is that everyone had one (except me, I only got one June last year), but I find it tragic that whilst Mario Galaxy 2 is lauded as one of the best games ever by many critics, what really sells new Nintendo hardware is releasing it in a new colour. Especially as I overheard one person who already had working white and black Wiis, planning to buy a third one in red. Maybe all Nintendo need to do is release a different colour every month.

Posted:3 years ago

#12

Jim Webb Executive Editor/Community Director, E-mpire Ltd. Co.

2,271 2,440 1.1
After a certain shelf life and market penetration, individual software loses a lot of its hardware impact. That's just the nature of the market regardless of the consoles.

Also note that the competition have both practically re-launched their respective consoles and Nintendo has only given 1 official price cut. We can expect a second price cut this year.

And finally, it needs be understood that Nintendo consoles have always been more dependent on the holidays than the competition. Even during the 6th generation when the PS2 would dominate the GC on an average monthly basis, the GC would put up comparatively respectful numbers against it over the holidays.

Posted:3 years ago

#13

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