Half-year losses of ¥70 billion for Nintendo
Company misses targets and loses ¥52.4 bn on exchange rates
Nintendo has announced a massive ¥70 billion loss for the sixth month period ending September 30, 2011.
The losses fall short of yesterday's predictions in the Nikkei of a recurring ¥100 billion loss, but nevertheless exceed the internally predicted loss of ¥35 billion - thanks to slowing sales of Wii and DS, and the impact of a very strong Yen compared to shrinking currencies worldwide.
In fact, the impact of those uneven currency markets was even greater than expected, accounting for ¥52.4 billion of the company's losses.
Because Japanese companies do large amounts of business in areas with shrinking economies or cheapening currencies, revenues in Yen terms from those areas are rapidly falling.
Net sales for the period were also slightly under target at ¥215.7 billion instead of the predicted ¥240 billion, whilst predictions for yearly net income have been dropped by ¥40 billion from ¥20 billion profit to a ¥20 billion loss.
Hardware sales for the 3DS for the period were 3.07 million units, with 8.13 million units of software shifted for the device. The 3DS port of The Ocarina of Time became a million seller worldwide during that period.
The DS family, excluding the 3DS, sold 2.58 million hardware units and 28.99 million software units worldwide. 3.35 million Wiis were sold worldwide, alongside 36.45 million software units.
Without the exchange loss, they'd be posting a $500 million profit.
On the software side, over the next two months Nintendo has Mario Kart and Mario on 3DS and Zelda on Wii. Any one of those games will make more in revenue than Angry Birds has in its entire lifetime. Yes, I'm serious about that. Rovio makes tons of money, but most of their income now is from licensed toys and t-shirts, not the actual game sales. which have yielded only $200 million or so in revenue over their entire two year existence across multiple platforms and iterations.
To put it simply: Nintendo will literally make more net income on software in the next three months than Rovio as a company has on software in two years. These exchange rate losses hurt, but the mobile software industry has such a low price point that even the most successful companies aren't making as much money lifetime as successful SINGLE GAMES are on dedicated consoles. It's a low risk and low-reward environment, where you don't need much money to make games, but you also aren't going to pull away with anything like the tens billions of dollars Nintendo has made over the last 5 years. It certainly wouldn't do anything to sustain Nintendo through these exchange rate woes, and they won't waste their time on it.
It's time to open a real corporation in the United States. It would have the opposite effect with the exchange rate...
keep up Nintendo !!
Anyway, Nintendo are definitely in a transition period now: the next qrt is critical for them, with the release of most of their "mega-sellers". WiiU coming next year, building a new headquarters in Japan, transitioning to the "HD" era ... and with Pokemon, Dragon Quest & Monster Hunter(s) all releasing next year
@Nicholas - Thanks for the insight.
By comparison, the original DS sales didn't get going until Mario and MarioKart came out for that system either. The real questions is, where is the new Wii Sports of Brain Training?