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Retail

Nintendo records $220m loss as DS, Wii sales fall in Q1

Nintendo records $220m loss as DS, Wii sales fall in Q1

Wed 25 Jul 2012 7:43am GMT / 3:43am EDT / 12:43am PDT
RetailHardwareFinancial

Update: 3DS sales up year-on-year, console no longer sold at below cost as of today

Nintendo has recorded a net loss of 17.2 billion ($220.4m / 142m) for the first quarter ended June 30, an improvement on a loss of 25.5 billion for the same period last year.

Net sales for the period were down from 93.9 billion last year to 84.8 billion ($1.08bn / 698m).

During the three month period Nintendo sold 1.86 million 3DS units and 7.39 million software units. Although it noted sales of the 3DS console were up, the company was still making a loss on hardware during the period. "The profitability of the Nintendo 3DS hardware is improving, but the hardware has been in negative margin," said the company.

For the same period last year Nintendo sold 710,000 3DS units.

1

Hardware and software sales to June 30, 2012.

Wii sales were 710,000 consoles (down from 1.56m last year) and 8.47 million software units, and DS consoles topped 540,000 units (down from 1.44m) and 2.45 million games.

For the full fiscal year to next March Nintendo expects to sell 18.5 million 3DS consoles, 10.5 Wii consoles and 2.5 million DS units.

As of June 30 2012, Nintendo has sold 19 million 3DS consoles and 52.81 million games for the system.

The rest of the DS family has sold 152.05 million units and 908.79 million games, while the Wii has sold 96.56 million consoles and 826.93 million games.

The Wii U, the latest console from Nintendo is still on track for launch before the end of the year.

UPDATE: Nintendo has confirmed that as of July 25, 2012, the 3DS will no longer be sold below cost price.

10 Comments

Bruce Everiss
Marketing Consultant

1,692 594 0.4
Let's hope it is all in the cycle and that the U can repeat the performance of the original Wii.
But perhaps the market fundamentals have changed. Which would still leave Nintendo with by far the finest catalogue of IP in the whole gaming industry. So any disaster would be recoverable by the right management.

Posted:2 years ago

#1
Just updated with this message from Nintendo's PR, released an hour after and not included in the financial results: "The company announced that as of July 25, 2012, it was no longer selling Nintendo 3DS hardware below manufacturing costs"

Posted:2 years ago

#2

Patrick Frost
QA Project Monitor

388 180 0.5
Fantastic news. I'm a big fan of the 3DS ecosystem and really enjoy it as a handheld. Whilst many see the 3D as a lame duck, it's a testament to Nintendo's business that they can use the classic console selling model as a back up if things get a little hairy.

As a user I'm looking forward to the next wave of games. I think the potential for Animal Crossing to be a digital purchase is absolutely huge.

Posted:2 years ago

#3
I was initially surprised by the loss - until I read the figures for the reduced sales of both the Wii & DS units (both very profitable). If Nintendo can sell 18.5m 3DS units in the next FY, they will be doing pretty well.

Still - I don't want to see any more (short term) losses from Ninty. Its very unlike them - more Sony/EA/THQ-ish.

Posted:2 years ago

#4

Nicholas Pantazis
Senior Editor

1,011 1,408 1.4
@ Michael Sure, but recovery from the deep discount on the 3DS takes time. The XL (which is sold at a healthy profit) will help a lot though, as will a huge holiday software lineup and the Wii U (which will also be sold at a profit).

Posted:2 years ago

#5

Francisco Javier
QA Manager

26 14 0.5
But how it's that they're making loses? I don't get it at all. They're having pretty solid sales, not booming but absolutely steady. How is it possible? :S

Posted:2 years ago

#6

Art C. Jones
Writer / Blogger

58 78 1.3
I think the concerning number is software sales for the 3DS. Currently it's a 2.5 attach rate. Those always go up over time, but if it includes digital it's a concerning number. (does anyone know if it does include digital?)

I've got 7 cartridges for my 3DS, so clearly I'm an outlier.
(...but I'm an outlier having a lot of fun!)

Posted:2 years ago

#7

Steve Peterson
West Coast Editor

107 72 0.7
Nintendo's been losing money because they were selling every 3DS at a loss, and not selling enough software to make up for those losses. At least now they won't be losing money on each 3DS, though I doubt they are making much at all on each sale at this point. The software is still the key to profitability for them.

The Wii U presents Nintendo with a difficult choice: charge enough to make money on each one and risk poor sales, or lose money on each unit sold and hope for strong software sales and third-party support to make up for the losses.

Posted:2 years ago

#8

Jim Webb
Executive Editor/Community Director

2,232 2,161 1.0
Fransisco, to go along with what Steve Peterson just said, the foreign exchange rate also plays a huge role in the profits and losses for Nintendo. Right now the Yen is trading incredibly high against the US Dollar so that takes huge chunk of profit right there.

Russell, those are retail software sales only. Also to note that handheld attach rates are always lower than home console attach rates. The GB had an attach ratio of 4.22, the GBA was 4.63, the DS at 5.01 (retail only) and the PSP at 3.69 (retail only). Vita is currently at just 1.74 (retail only). Time will boost the 3DS and Vita closer to historical levels. We also know that Nintendo will publish download sales (in some manner at least) once the Nintendo Network is fully launched so that may help give us a better software attach picture than what we're seeing now.

Edited 1 times. Last edit by Jim Webb on 25th July 2012 5:58pm

Posted:2 years ago

#9

Nicholas Pantazis
Senior Editor

1,011 1,408 1.4
@ Steve That's really only a decision if the Wii U isn't profitable at $250... something none of us are sure on. If it is, then Nintendo prices it at $250, and gets the best of both worlds. If not, I guarantee they'll go up to $300... but they won't go any higher.

Posted:2 years ago

#10

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