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.
- 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.
- 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.
- 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