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Opinion

Nintendo Profits Down 66%

Maybe they should think about releasing a new console?

We are now into the period when companies around the world are reporting on how well they performed during the first three months of 2011. The three ‘platform holders’, the manufacturers of your beloved/hated (delete as appropriate) consoles, are among them.  Today it is Nintendo, Microsoft take their turn later this week and Sony will be in touch around the middle of next month, when they finally get the PSN working again [/joke].

We posted the superficially big news (or least least rumour confirmation) as soon as we recovered from the surprise of reading the note attached to the financial report.  For those of us with more than a passing interest in video gaming, one that extends to the health of the market and the companies behind it, there is much more interesting information to be had full report.

Unfortunately for Nintendo it can make for bleak reading.  While they have dominated this hardware generation with the Wii and DS family of handhelds their star is falling as the hardware reaches the end of its life and the global market contracts.  They will be hoping Mario is poised somewhere to catch it.

Nintendo’s net sales for the financial year ended March 31 2011 are down 29.3% compared to last year, ¥1.014 trillion vs. ¥1.434tn, while last year was already down 22% on 2009.  Inevitably their income figures reflect that fall too, but to an even greater extend.  Their operating income1 fell 52%, ¥171 billion vs. ¥356.5bn.

If you prefer simpler terms than the fancy ones accountants fling about with wanton abandon then you can think of the next figure, net income2, as what we normally consider simple profit.  Doing so does not ameliorate the bad news for Nintendo though.  Their profit is down 66% on last year, falling to ¥77.6bn (£572.5m/$964.4m3) from ¥228.6bn.

“Gaming Population Expansion”

In their analysis of their performance over the year Nintendo reiterate that they intend to continue the basic goal of  “gaming population expansion” by offering a range of products that appeal to the widest possible demographics; they do not want age, gender or experience to prevent anyone form being able to enjoy their systems.

They go on to highlight some of their products that have performed particularly well for them over the last twelve months.  The red Super Mario Bros. special edition versions of the Wii and DSi XL are singled out from among their hardware as having “contributed to strong sales”.

On the software front Pokémon Black/White get a predictable mention for its “robust” sales performance worldwide.  An equally predictable selection of titles from the Wii’s software library also make the list: Super Mario Galaxy 2, Wii Party, Donkey Kong Country Returns, New Super Mario Bros. Wii and Wii Fit Plus.

Perhaps tellingly, they give a fairly cool mention towards the initial sales performance of the 3DS, saying simply that it “had a smooth start in sales at its launch”.

The continuing comparative strength of the Yen compared to the other key global currencies is still doing the Japanese companies serving global markets no favours.  They single out that and “the price reduction of Nintendo DS series hardware” as being the key factors of the fall in the value of their net sales.

Perhaps the most interesting aspect of the few paragraphs they devote to their outlook for the financial year ending 31 March 2012 is the ongoing uncertainty they face from the impacts of the recent quake and tsunami:

The aftermath of the Great East Japan Earthquake is unpredictable.  Nintendo has not suffered any direct damage which will significantly affect our production; however, it can be predicted that there will be an indirect impact from individual consumption patterns or economic conditions in the future.

The hardware numbers you crave

Here is your reward for making it through (or simply scrolling past) the financial ‘stuff’.  During the year to 31 March 2011 we, the global gaming public, bought 17.52m Wiis, 15.08m DS’ and 3.61m 3DS’.  Software wise we bought 171.26m Wii games, 120.98m DS games and 9.43m 3DS titles.

Given the lack of many big-name franchises from the 3DS launch line-up it must be heartening to Nintendo that the ‘attach rate’ (number of games owned per console) is almost at 3 already; yes, I am calling 2.61 “almost 3″.

Nintendo alone among the ‘big three’ provide more detailed breakdowns of their hardware and software sales figures.  So we can tell you that of the 17.52m DS’ bought during the year 6.67m were of the DSi flavour while 7.99m were the ‘embiggened’ (sounds like a Pratchetty-type word) DSi XL.

The unit sales for the 3DS breakdown regionally like so: Japan bought 1.06m, Americanites bought 1.32m while here in The Old World we splashed our cash on 1.23m of the glasses-free 3D wonder devices.

The regional scores-on-the-doors for the Wii are: Japan 1.26m, America 7.78m and Europe 6.05m.

What is that you say, “What about the life-to-date sales?”.  Certainly, we can do that.  We will take a more detailed look once the new numbers are in from Microsoft and Sony, so for now you should be content to know that the DS family are up to 146.42m and the Wii has reached 86.01m (as you may have read elsewhere on TSA just after 8AM this morning).

In the coming year Nintendo expect to sell us 11m DS’, 13m Wiis and 16m 3DS’.  Check back with us in twelve months to see if they were right.

Notes:

  1. Operating Income: A simple and incomplete explanation is that this figure is derived from any revenues (sales) minus the cost of those sales, operational expenses, and R&D.
  2. Net Income: This is essentially the operating income plus any interest earned on cash (savers will know how little that is these days) minus non-sales taxes that had to be paid.
  3. Currency exchange rates used to convert from Yen: £1 = ¥135.575 and $1 = ¥82.015.  Sourced from BBC Market Data.

Disclaimer: I am not a lawyer accountant.

Source: Nintendo

25 Comments
  1. Samiro05
    Member
    Since: May 2010

    A profit’s a profit, let’s hope they can get lots more money in the next year though as they will need it to research and develop the next non-portable console to compete with the next gen consoles of supposedly 2014.

    Comment posted on 25/04/2011 at 15:10.
    • Watchful
      Team TSA: Writer
      Since: Oct 2008
      Comment posted on 25/04/2011 at 16:34.
      • Samiro05
        Member
        Since: May 2010

        Okay so they already have that covered :) I am so looking forward to E3, I hope you do another E3 bingo sort of thing this year. I was well off the mark for most things, mainly how you lot were harpin’ on about The Last Guardian :p

        Back to the article though, I think it’s right that Nintendo profits should be down because of all the new consoles they’re about to launch/have launched. They’ll be back up 166% by next year, [which is a bit more than the previous year].

        Comment posted on 25/04/2011 at 17:09.
  2. Foxhound_Solid
    Is a smart cookie.
    Since: Dec 2009

    Some serious numbers in there.

    Comment posted on 25/04/2011 at 15:13.
    • TSBonyman
      Member
      Since: Dec 2009

      Indeed – except for 2.61 game attach rate which would have just been plain silly, thankfully common-sense prevailed! ;)

      Comment posted on 25/04/2011 at 17:08.
  3. nemesisND1derboy
    Member
    Since: Apr 2010

    I feel so sorry for them. Only a £572.5 million profit… :P A man could do so much things with that ammount of momey… *sigh*

    Comment posted on 25/04/2011 at 15:18.
  4. colmshan1990
    Member
    Since: Apr 2009

    I only got my DS now.
    It makes a nice change, getting a console so late in it’s lifespan- the choice of games is stunning.
    As for the profits…
    I expect the 3DS will boost those numbers, and a successor to the Wii should drive levels back above the insanity level again.

    Comment posted on 25/04/2011 at 15:31.
    • colmshan1990
      Member
      Since: Apr 2009
      Comment posted on 25/04/2011 at 16:13.
      • Watchful
        Team TSA: Writer
        Since: Oct 2008

        You weren’t reading TSA just after 8AM this morning then… :-) Or following the link in the second paragraph above.

        Comment posted on 25/04/2011 at 16:35.
      • colmshan1990
        Member
        Since: Apr 2009

        You’d be right. :P
        That’s actually quite embarrassing. :(
        In my defence, I’m literally yawning from tiredness right now, and I don’t normally pay attention to the links in the articles- they usually cover all the info I need anyways.
        So, um… Edit button? :P

        Comment posted on 25/04/2011 at 16:46.
  5. Enzo DeGregorio
    Member
    Since: Feb 2010

    What’s that saying about money being the ultimate drivers of men?

    Comment posted on 25/04/2011 at 15:40.
  6. Gamoc
    Member
    Since: Forever

    Maybe they should think about releasing a new game instead of 20 year old franchises?

    Comment posted on 25/04/2011 at 16:26.
    • Mr.Spo
      Member
      Since: Apr 2011

      By new game, I take it you mean IP… So like Pandora’s Tower which is out in Japan next month, or Last Story which is already out in Japan and due for localisation, and Xenoblade Chronicles which is due out in Europe in September (Wii games) or Steel Diver which is due out on 3DS next month. All of those are internally developed or co-developed by Nintendo.

      Fact is, at no point since the 1980s have Nintendo made so much money on new IPs–their biggest money spinners this generation (along side Mario) have been the Wii branded titles, Brain Training, Nintendogs and Professor Layton. Also, if you look at how much money Nintendo have lost because of currency fluctuation (somewhere to the tune of $700million during the first six months of 2010), a much bigger help than new IP right now would be a weak yen and a strong euro, dollar and pound. But I’m sure they won’t be complaining, even with declining sales and profit, they’ve made hundreds of millions and managed to remain ahead of their rivals on yearly sales levels.

      Comment posted on 25/04/2011 at 18:09.
  7. Watchful
    Team TSA: Writer
    Since: Oct 2008

    One set of facts I meant to include in that post when I wrote it this morning was the number of million-selling games on the different platforms.

    Nintendo stated that there have been 139 so far for the DS, 103 for the Wii and already 2 for the 3DS (one of which we know is SFIV 3D).

    Comment posted on 25/04/2011 at 16:41.
  8. TURRICAN-808
    Member
    Since: Jan 2011

    Re-releasing a modern SNES with an in-built HD upscaler so your games look sweet on a HDTV !

    Comment posted on 25/04/2011 at 16:48.
  9. Awayze
    Member
    Since: Jul 2010

    Wii is lame, for kids and old people ie not for people between 16-28 year olds, I don’t know anyone around my age who owns a Wii, 360 or PS3 only.

    16M 3DS’s this year, I highly doubt, I’d say 8M-10M but not 16 Million.

    Comment posted on 25/04/2011 at 16:59.
    • Watchful
      Team TSA: Writer
      Since: Oct 2008

      “Wii is lame” Really? Then you’ve missed out on some great games.

      Comment posted on 25/04/2011 at 17:03.
      • colmshan1990
        Member
        Since: Apr 2009

        Do you really think 29 year-olds are ‘old?’

        Comment posted on 25/04/2011 at 17:15.
  10. TURRICAN-808
    Member
    Since: Jan 2011

    Isn’t the age of the average gamer now 32>

    Comment posted on 25/04/2011 at 18:03.

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