Nintendo posts biggest Q1 loss in five years

Nintendo made a net loss of ‎¥24.5 billion ($232m/£177.3m/€211m) in the first quarter of the fiscal year, its largest Q1 loss since 2011.

The company made a ‎¥8.3 billion ($78.7m/£60m/€73m) profit in the same quarter last year, but collapsing sales revenue from its current hardware and software - and, it's reasonable to assume, rising costs associated with its forthcoming NX console - drove a swing in a negative direction. Nintendo earned ‎¥61.7 billion ($585 million) in revenue during the quarter, down 31% from the previous year.

Revenue from hardware sales almost halved, falling from ‎¥44.6 billion to ‎¥25.1 billion ($238m/£182m/€216m). For the most part that was down to the Wii U, which sold only 220,000 units in Q1 - versus 470,000 sold in the same quarter last year. That was still enough to push the system just beyond 13 million units sold life-to-date. The 3DS was more consistent, selling 940,000 units in Q1, compared to 1.01 million units the year before.

Software unit sales were up across both platforms year-on-year, from 7.9 million to 8.5 million on 3DS, and 4.6 million to 4.7 million on Wii U. Nevertheless, software revenue declined overall, from ‎¥44.4 billion to ‎¥34.9 billion ($331m/£253m/€301m) this year.

Miitomo, the first release under Miitomo's nascent mobile strategy, certainly boosted revenue in the "Smart devices and IP related income" segment, but perhaps not as much as expected. Revenue for the segment was ‎¥1.6 billion ($15m/£11.6m/€13.8m), up from ¥932 million the prior year, despite Miitomo being released on March 17, and therefore available for the entire three-month accounting period.

One can only assume that we'll see a more significant increase in smart device and IP revenue in Q2, which will be the first to register income from Pokémon Go. Nintendo received a huge boost to its market value in the wake of its release, with almost $17 billion added to its market cap at the peak of the hysteria.

However, a statement released last week reminded shareholders that the game was developed and released by Niantic Inc. and The Pokémon Company, in which Nintendo owns only a 32% stake. The company's share price dropped by 18% almost immediately, and has stayed in roughly that position since then.

Nintendo's revenue forecast for the fiscal year, which it has stated includes projected revenue for Pokémon Go, is ¥500 billion ($4.7b/£3.6b/€4.3b). That is only a 1% increase over the prior year, indicating that Nintendo's cut of that Pokémon money will do little more than offset the decline elsewhere in its business, and that we're unlikely to see an NX launch until after March 31, 2017.