Nintendo records first annual loss: $531m in the red

But results are still better than predictions, thanks to strong 3DS

Nintendo has released its full year financial report for the period ending March 31, 2012, recording a ¥43 billion (£328.7m/$531.1m) net loss despite ¥647 (£4.925bn/$7.976bn) billion in sales. Sales were down 36.2 per cent from the year prior.

Last year, the company posted sales of ¥1.01 trillion and a profit of ¥77.6 billion, with those figures already representing respective drops of 29.3 and 66.1 per cent from the full year before that.

Over the course of the year, 13.53 million 3DS units were sold worldwide, with over 5 million units in Japan. However, a weaker than expected Christmas for software sales meant that there was no time for recovery from the poor performance which marked the first months of the 3DS' schedule. 36 Million units of 3DS software were sold worldwide, with unspecified third party titles being identified as strong sellers alongside the perennial favourites of Mario Kart and Mario Land.

The Wii may be in fast decline, but the year leading up to March 31 was hardly a dry period for the platform. 9.84 Million hardware units were sold worldwide, backed up by 102.37 million software units.

Nintendo continues to pursue its basic strategy of "Gaming Population Expansion" by offering compelling products that anyone can enjoy, regardless of age, gender or gaming experience.

Nintendo financial report, year ending March 31, 2012.

As with Sony, Nintendo suffered greatly from the exchange rates imposed by a strong Yen and a largely foreign market. ¥27.7 billion was said to lost to exchange rates, with 77.1 per cent of the company's business taking place outside Japan. Depsite that, a higher percentage of sales took place on Japanese soil than in the year previous, likely reflecting the territories stronger 3DS sales.

22.9 per cent of revenues came from Japan in the last 12 months, compared to 16.6 per cent in the year before. The US represented a smaller slice with 38.8 per cent as opposed to 45.5 per cent, whilst Europe remained largely stable at 33.6 per cent from 32.5.

Despite the disappointing figures, representing the first full-year loss in the company's history, Nintendo was confident that the next year will show a return to profit, foreseeing a 26 per cent increase in sales to ¥820 billion and a profit of ¥20 billion. Part of that upturn should come from improvements in the efficiency of 3DS production, with Nintendo predicting that it should be able to sell each unit at profit within six months.

In the software stable, New Super Mario Bros. 2 is expected to be a top performer, along with Animal Crossing and a new Brain Age title.

Of course, the next results will also include the first three months or so of Wii U sales, which Nintendo says will be released in the US, EU and Japan at the end of this calendar year

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Latest comments (7)

Keldon Alleyne Strategic Keyboard Basher, Avasopht Development10 years ago
Reasons for variances: Yen was depreciated beyond our exchange rate assumptions in terms of the rates at the end of the fiscal year, and assets in foreign currencies evaluated by the exchange rates at the end of the fiscal year generated valuation profit (reversal of evaluation loss). Therefore, ordinary loss and net loss became smaller than we had assumed.

Edited 1 times. Last edit by Keldon Alleyne on 26th April 2012 9:27am

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Daniel Hughes Studying PhD Literary Modernism, Bangor University10 years ago
"In the software stable, New Super Mario Bros. 2 is expected to be a top performer, along with Animal Crossing and a new Brain Age title."

If these are all released worldwide by the end of next March, particularly if they come out before this December, I'd fully expect 3DS to exceed the hardware shipment forecast. Those are three huge system selling titles, not to mention Mario Tennis and Professor Layton in the West. Add to that the variety of smaller titles, and I think Nintendo could be being a little too cautious on 3DS shipments. Given their 3DS software shipments don't remain that impressive, I'd like to see Nintendo to lower and diversify their pricing models for 3DS retail and digital software. Selling all boxed products at 30 to 40 just doesn't work for a handheld system. They need to be prepared to sell titles across a 20 to 35 range, reserving the 35 bracket for top releases. I think that's what they need to increase software sales. Right now they run the danger of replicating the Wii's software ecosystem: a great, diverse catalog dominated by a handful of titles, as opposed to the DS's broad and deep catalog that has many successful titles. If they lowered eShop prices too, they'd generate a lot more sales there. Sure, they don't want to encourage the devaluation of software or a race to the bottom, but as the prices are, too many games (particularly Virtual Console titles, of which I am a huge fan) lie outside the impulse buy range. And while we're on Virtual Console, why not create one VC account per user? I've 20 odd Wii VC games I can't take with me on my 3DS. They really need to fix that issue soon. Maybe we'll hear something at E3.

If they're losing money on 3DS per unit for (up to) the next 6 months, it'll be interesting to see if they are prepared to sell Wii U at a loss to drive market share. They need to sell more 3DS software to make up for their hardware losses, and I honestly think that to do that, they need a more flexible pricing strategy across retail and digital. The results aren't as bad as people feared, and with currency issues perhaps beginning to iron out a little (are they?), and with a greater proportion of sales coming from Japan thanks to 3DS's success, Nintendo should definitely return to healthy profits within the next twelve months. They need to nail the Wii U's launch now.

(edited typos)

Edited 2 times. Last edit by Daniel Hughes on 26th April 2012 10:43am

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Bruce Everiss Marketing Consultant 10 years ago
Whilst Apple report amazing profits.
The tide comprehensively turned some time ago. Now we see the results.
I see that Vitas are already being discounted as well.
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Terence Gage Freelance writer 10 years ago
Oh hey look - it's Bruce, talking about Apple in a portable console news article. How unexpected!
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Daniel Hughes Studying PhD Literary Modernism, Bangor University10 years ago
Bruce, amassing an install base of somewhere between 15-17 million units in a little over 12 months is practically unmatched in the traditional market. It's especially impressive given 3DS was written off 10 or 12 months ago, and that it's the system's first year on the market. There's no indisputable evidence as yet that the traditional market won't be able to survive and even grow in the new market dynamics. We're in a transitional period from one set of machines to the others; that's particularly true for Nintendo, who are moving from Wii/DS to Wii U/3DS. Declining sales for the older systems are expected; with them selling 3DS at a loss, and the currency issues that have plagued every Japanese company over the last 12 months, the results aren't that terrible at all, especially when you consider they're sitting on $14 billion of cash. That's very impressive for a company that has 3 hardware products on the market and around 4500 employees.

I'd honestly expect more insightful commentary than "Apple have amazing profits, Nintendo are posting losses, that's it" ;-) The truth of the situation is much more complicated.
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Terence Gage Freelance writer 10 years ago
Alas, we've had this discussion many times before and what it basically amounts to in Bruce's opinion is that Apple (and Zynga) are making huge amounts of cash therefore pretty much every traditional developer, publisher and hardware manufacturer is finished if they don't follow their lead - whether they're directly in the same market space or not.

Edited 1 times. Last edit by Terence Gage on 26th April 2012 1:54pm

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Robert Douglas Studying B.A in Game Art and Design, Art Institute of Pittsburgh10 years ago
Once more we run into the area where people will post anything that benefits their respective business sector (i.e., I work in the "smartphone" sector, so I must constantly justify my sector whist berating my competitors, and ignoring the whole picture). Stating that Apple is the dominant handheld market leader undermines the diverse portable sector that currently Nintendo and Apple are a part of. Nintendo is just now stating they will see profits on the 3DS in the coming months, not to mention the 3DS is just now starting to really gain momentum. Couple that with Nintendo preparing for the Wii U and I would say this is somewhat surprising from Nintendo, but not unexpected if it were from any other company say Sony or Microsoft. I think with Nintendo's proven business record and having $14 billion for these very situations is enough to debunk that "the tide has comprehensively turned" for them.
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