Nintendo expects first loss ever
The video game giant is getting whacked by a strong Japanese yen and by flagging sales of hardware and software.
Nintendo (NTDOY), the biggest video game company in the world, is set to post its first annual loss ever. The company had previously expected to make a profit of about 20 billion yen, or $264 million, for the year ending next March.
But on Thursday, Nintendo delivered the crushing news: Instead of a profit, the company could see a net loss of about 20 billion yen. That was a surprise to analysts, who had expected to see a profit of about 12.2 billion yen, Bloomberg reports.
It's the second time in six months that Nintendo has cut its outlook.
How could this happen? Blame the surging yen -- disastrous for a company like Nintendo, which gets nearly 80% of its sales from overseas. In just the six months ended Sept. 30, Nintendo's losses from the exchange rate alone totaled nearly $700 million.
A downturn in Nintendo's business is also a factor. The company made a killing by appealing to non-gamer types. The Wii was a smash with younger children, parents and even grandparents, and children also adored the portable DS handheld.
But in the past few years, games have flourished on smartphones like the iPhone. Farmville and Angry Birds are all the rage. People are playing on Facebook and other online sites.
The very crowd that Nintendo built a fortune on suddenly has dozens of other options.
"Nintendo faces a very harsh time now," one Japanese portfolio manager told Bloomberg. "Competition in the video game industry is getting severe, and Nintendo must fight for customers who are using smartphones and tablets."
On top of that, Nintendo is in that squishy period between major console releases. The Wii is 5 years old -- a lifetime in video game years. Last holiday season, the Wii's share of the console market fell to 42% from 55% the year before. Nintendo is putting the finishing touches on the Wii U, due out next year.
But can the Wii U achieve the same success? Nintendo had high hopes for the 3DS handheld it launched earlier this year, but that device hasn't seemed to excite consumers. In response, Nintendo cut the price of the 3DS by 40% in August. The company cut its full-year sales forecast to 790 billion yen from 900 billion.
The company heads into the crucial holiday period, then, with no new console and a handheld that isn't a knockout. Now is the time when video game sales should kick in, but Nintendo said its games haven't been selling as well as it expected. The company is counting on the next game in its popular Zelda franchise and some new Mario titles to increase sales.
Nintendo is now six months into its current fiscal year, and those six months have been worrisome. The company's net loss grew to $925 million for the first half of the year. Sales fell more than 40% to $2.8 billion.
"They're still in the transition phase," a JP Morgan analyst told The Wall Street Journal. "I can't find much salvation in the numbers."
The reason Nintendo is flagging is because they've turned thier backs on regular gamers. There are no quality games coming out. Just party game shovelware. We need Nintendo's GOOD games. Star Fox, F Zero, Earthbound (Mother), Metroid, Kirby. Thankfully there's a decent Zelda and Kirby game coming out. If they can get out another good "Smash Bros." sequel with decent online capabilities we'll see Nintendo on top again. If they get squaresoft to put out a Final Fantasy for the Wii it'll be unstoppable.
Untill that happens I'll be content to play the classic games for download. Hurry up and put out Earthbound!
Still though, a couple of great first party games are on the horizon. Things will turn around.
Don't get too excited Sony fanboys.
I do not feel sorry for Nintendo in the slightest. They used to be the only video game company I cared about, I was one of the most loyal fans they could ever hope for. But when they started to sell out & produce gimmicky products like the Wii & 3DS, I stopped losing interest because the best games just weren't there. Instead of appeasing the loyal fan base that basically MADE Nintendo, they tried to expand too far out & appeal to non-gamers whose loyalties lie elsewhere. Nintendo is failing because they have totally forgotten where they came from, & instead of making awesome memorable hardcore games, they'd rather make a quick buck off of non-quality kiddie games & mini games. The only good game exceptions I can think of are Nintendo's own bread n' butter titles, Super Mario, Zelda, Metroid, & Smash Brothers. Other than that, I can't think of any games on the Wii that I would ever like to purchase.
iPhone SUCKS for gaming. Nothing but stupid cheap $1 expendable games that aren't even worth anything. Nintendo lost it with the Wii, but the 3DS is going to be sold a lot more come Black Friday pretty much. Although I love my Xbox 360, the PC is the way to go. Once you play Battlefield 3 on PC and compare it to a console, there is no comparison.
i totally agree with you
also,seriously,im am a total earthbound fan.if they ever re-released for any of their new consoles(mr.itoi,why can't you continue the series?),or traslated and released mother 3(i don't say mother 1 cuz they were going to release it before but never did.man,i won't ever see loid again)i would buy a 3ds or wii just to play the game again.
i just hope nintendo won't wind up like sega...
I will say this though: the original Nintendo DS is my favorite handheld gaming system of all time. Castlevania FOR THE WIN!
The 3DS is hardly "gimmicky". Granted, it's not for everyone, but I've have loads of fun with mine. Although, I do admit it took the price drop for me to take the leap.
It's a great little system and I've had a blast playing older Gameboy games that I would have otherwise missed out on.
I do hope to see more first party titles though...
With the PS Vita going to be released in Feburary which I also preordered, Nintendo is going to face a large battle. Remember back in 2004 and 2005 when the DS was struggling before Mario Kart DS released?
Obviously no one at Nintendo is intelligent enough to figure out to port some of their games to other phone OS's.
Well Nintendo makes the bulk of its profit from hardware sales, not software, so porting games to other hardware might put them at another disadvantage. And the ported games would be severely crippled versions of the originals, given that most smartphones do not have yet the powerful GPUs and full capabilities of the console.
Sony, in particular, has made it more then difficult to purchase their consoles and games.. I waited and waited for the PS3 to come down in price but finally ended up buying a used one because it never did come down to a more affordable cost..
The big game designers are going to be hit hard during these times because parents and grandparents simply have more important things to buy then games.. EBay and other used game places will do alright..
Maybe Song and Nintendo, etc, should think about bringing the price of games down, they ARE a little on the outrageous side and always have been..
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