Nintendo Financial Results Reveal Troubling Information
We knew that Nintendo has been in rough shape since the launch of their current-gen Wii U console was a catastrophic flop. Between not having any killer apps on launch to an apparent massive marketing problem getting the message out that the Wii U is a new console and not a controller, the last year-and-a-half hasn’t been pretty for the granddaddy of game companies.
Yesterday’s quarterly earnings call showed how bad the situation is for Nintendo. The company announced a big loss for the fiscal year, noted poor Wii U sales for the first nine months of the fiscal year and lowered expectations for 3DS sales for the year.
Nintendo announced a year-to-date operating loss of ¥1.58 billion or about $15.5 million USD. While it’s an improvement over prior year numbers (last year had a nine month loss of ¥5.88 billion), Nintendo’s current fiscal year projections see things getting much worse. After initially projecting an operating profit of ¥100 billion, earlier this month, Nintendo issued a revised projection warning of a loss of up to ¥35 billion ($342 million USD).
Things aren’t better when you get to retail. Nintendo is projecting Wii U sales of only 2.8 million consoles for the 2014 fiscal year (from April 1, 2013, to March 31, 2014). For comparison, during the less than two month window from console launch to CES, the Xbox One sold a reported 3 million units and Sony sold 4.2 million PS4s. That doesn’t bode well for Nintendo in the battle for living rooms.
The handheld market isn’t doing as well as Nintendo was hoping either. They’ve sold 11.65 million 3DS units for the first nine months of fiscal 2014 which sounds good at first. However, Nintendo has still had to reduce units sold projections from 18 million to 13.5 million units for the year. Still, considering that analyst Michael Pachter says that the PS Vita is going to die a death (according to his “model” that he’s annoyingly, though justifiably, opaque in explaining), the 3DS is doing reasonably well for itself.
Nintendo execs are doing a bit to make amends for results. President Satoru Iwata says that he will halve his salary over the next five months and board members will take a 20 to 30 percent pay cut.
Iwata says that Nintendo will be discussing a possible move into the mobile sector tomorrow. It’s been rumoured that they’ll have some mobile game offerings coming soon. Recently, it has been speculated that minigames tying into big Nintendo games are the current plan rather than full games on mobile devices. If they really wanted to make a splash, offer old games on mobile platforms. That Virtual Console idea of their’s just might get a ton of traction with gamers on the go.