We’re no financial wizards here at TSA. That’s evidenced by the bare interiors of our wallets and the alarming regularity our credit card company sends us letters. But we almost certainly won’t be losing ¥25 billion ($250 million) this year. At least, I really hope we won’t.
Nintendo has had a mountain to climb with the Wii U and sales have been well below their predictions. In light of that console’s underperformance, they’ve just released a statement announcing that they’re cutting their forecast from 9 million units sold down to a rather more paltry 2.8 million units sold. They’ll also be cutting the forecast for 3DS from 18 million down to 13.5 million.
Their ordinary income forecast has been cut from ¥55 billion to -¥25 billion, with their operating profit forecast cut from a profit of ¥100 billion down to a loss of ¥35 billion. The company has had huge research and development budgets over the past few years too, with many assuming this means some kind of new product on the horizon, even after the Wii U’s release.
It’s something of a received wisdom in modern videogame reporting that one should never bet against Nintendo. But these figures make for disturbing reading, if you’re a fan of the company.
It appears that Nintendo had been pinning its hopes on some great Wii U sales over Christmas but they didn’t materialise on the scale needed to reach the forecasts they made at the start of the financial year. This statement acts as a warning to investors that there will not be a dividend payout this year.
This will be the third consecutive year that Nintendo has posted an operating loss and it will no doubt increase pressure on the management structure, with many analysts starting to indicate that Iwata himself might be forced to stand down.
Of course, the Wii U might not have sold as well as Nintendo hoped but this year sees some big releases for the console that might help boost sales if managed correctly. It should also be noted that the 3DS’ continued strength, albeit not as strong as previously predicted, will potentially offer Nintendo management some comfort.
As a publicly traded company, though, Nintendo is answerable to its investors and posting losses is a great way to get those investors to drop stock (Nintendo’s is down 80% since its 2007 Wii-fueled high) or demand action. One strategy that is often called for is to allow their characters to appear in games for the mobile devices that are assumed to be stealing away so many of Nintendo’s casual user base. Mario on iPhone still seems like a very strange idea to me but it might not be as far fetched after this news.
nofi
“Mario on iPhone still seems like a very strange idea to me but it might not be as far fetched after this news.”
We thought the same about Drake, Kat and that bloke from Infamous too. All-Stars is a great mobile game.
Peter Chapman
yep, and Sonic too, although those aren’t so great…
But Nintendo has resisted the longest and could potentially have the most to gain, I would’ve thought. They need to to something drastic, they’re running out of time to turn things around.
jimmy-google
Nintendo characters or games on mobiles would be the wrong move. The 3DS clearly still has a decent market. Even those reduced numbers are pretty healthy.
It’s the home console where their issues are. The Wii was an anomaly rather than a norm for Nintendo. Their sales have bee declining since the first PlayStation. Unless they can catch the imagination of the less traditional gamer again then they will be in trouble. Worst off all is the number of third parties they’ve lost.
They don’t want to (or can’t) go after the traditional gamers that provide Sony and MS with such relatively high sales. A better idea for Nintendo would be to create handheld games and consoles but only home console games.
They can’t make competitive consoles but they can certainly sell games.
Starman
Always thought the Wii’s huge sales were a one-off. I think a lot of the family types that bought one will still be happy with it (if they ever use it) and have no reason to buy another console.
mrfodder
A start would be to rename the Wii U to the Wii 2. Emphasis it is a whole new system.
Cron_13
Its not rocket science, it all comes down to software. People generally buy games consoles for *dum de dummmmm* ….. gaming! Look at the software lineup. There are only 5 games worth considering on the WiiU at the moment, with I’d say only 2 must have’s…
The console’s been out for well over a year now and we still haven’t got our hands on the likes of Mario Kart, Smash Bros and Zelda (apart from a Wind Waker HD remake).
Mario 3D World was one of the best games of last year (one of my all time favourites too…), but that’s only ONE game. People aren’t going to buy a WiiU for current 3rd party titles, simply because the console isn’t as powerful as a PS4 or XBOX one. As I’ve said before people generally will buy a Nintendo console for Nintendo games.
Games sell games consoles. I don’t get why there is ANY confusion about why their profits and sales are suffering?!? Until they get some AAA quality titles out then the pattern will continue. If there was Mario Galaxy 3, Zelda, Mario Kart, Pilot Wings, Pokemon, Smash Bros (etc) out now, I’d bet my PS4 the situation would be very different. Maybe they should abandon hardware if they are too stupid to see that – and follow the likes of Sega.
I don’t regret buying my WiiU at all, but I don’t expect I’ll have more than a handful of games on it over its life cycle. I bought it knowing that. As Starman said above, the Wii was a one off – Christ even my parents bought a Wii and they are in their 60’s… I’d compare the WiiU to the GameCube – niche market simply bought for 1st party Nintendo titles. I believe there were similar cries of “doomed Nintendo” when that console didn’t sell in high numbers and yet they are still here making hardware and software.
TheShepanator
Even if the WiiU is tanking the 3DS is printing money for nintendo. They’re still turning a profit
Kennykazey
Not only is the system a bit confusing on it’s own, what with the name and everything, but the marketing just isn’t good enough.
The Lone Steven
The main cause of the Wii U strugglign to sell is the timing of the release. It got caught in between the PS3/360 and the PS4/X1. They should have delayed it, upped the specs of it and focused on getting a lot of third party support instead of doing what they did. They’ve lost Bethesda and a few other major publishers/developers so far. If it keeps up, they will continue to lose cash and could go under. Just call it a day with the Wii U or focus on getting support.
Awayze
Maybe Nintendo shouldn’t have released it a year early than PS4/Xbone and after 6 or so years after Xbox 360/PS4 with the same specs as them. The Wii was an anomaly and I think people thinking motion control was the future rushed out to to buy it.
Tuffcub
Reading through all the business reports it looks very likely Nintendo will start producing games for mobile devices.