Nintendo reports first annual loss of about $460 million
by Steve Watts, shacknews.com, Apr 26, 2012 9:00AM PDT
Nintendo has reported its results for the fiscal year ending March 31, 2012, and they weren't pretty. The company reported an annual operating loss of 37.3 billion yen (approximately $460 million), the first time in the company's history of reporting such a loss. This is a slight improvement from its adjusted forecast from January, which predicted a 45 billion yen loss.
The company suggests that the "sales slump" from early last year never fully recovered, and as a result Nintendo sold roughly 3 million fewer Wii units, and 2.5 million fewer 3DS units, than expected. Nintendo claims these slumps, along with price reductions, a slower holiday season, and the strong yen, are the causes behind its loss.
Despite the sour financial news, Nintendo is positive on its predictions for the coming year. The 3DS is selling more consistently, but since the price drop Nintendo has been selling it at a loss. The company plans to get the manufacturing cost below the sales cost by the end of this fiscal year. It also is counting on big franchise games like New Super Mario Bros 2, Animal Crossing 3DS, and Brain Age, along with the continued success of Super Mario 3D Land and Mario Kart 7, to carry the system this year.
In terms of hardware, the company plans to move 18.5 million 3DS units. It also predicts 10.5 million Wii unit sales, but interestingly that figure lumps Wii and Wii U sales together. Overall the company is planning on a 35 billion yen operating income profit for the fiscal year ending March 31, 2013. Strategically, Nintendo claims it will lean on the Wii U, and make more use of the "Nintendo Network" and digital distribution.
The company itself didn't acknowledge the increased adoption of mobile games, but analysts certainly have. Analyst David Gibson told Reuters that smart phones and tablets have beaten Nintendo for "consumers spending and, more importantly, time." Another, Nanako Imazu, says Nintendo should "deal with the change and let Mario games be played on non-Nintendo devices." But, he acknowledges that we won't see that attitude shift for a few more years.