Japanese gaming giant Nintendo has just posted its first ever operating loss, reporting a net loss of £329 million for the year to the end of March, blaming poor Nintendo Wii sales and a strong yen.
- £4.9bn sales (down 36 percent)
- £329m net loss
- 13.5m Nintendo 3DS sold; 36m games
- 9.8m Wii consoles sold; 102m games
Nintendo sank to a 37.3 billion yen (£285m) net loss for the fiscal year just ended as weak sales of the Wii home console and the strong yen eroded earnings. This was less than analysts expected for the company. Nintendo has predicted it will return to profit in 2013. Fellow Japanese giant Sony is going through similar financial woes at the moment as it just posted a £4bn loss and let 10,000 staff go.
The company has reported sales of £4.9bn, down over a third from the previous year, when it reported sales of £7.7bn. In 2011 the company reported a profit of £590m but slumped to a loss of £329m in the past 12 months.
At the beginning of the fiscal year, Nintendo launched the 3DS, the latest it is lineup of portable handheld game consoles. Initial sales levels were disappointing, and in August 2011 the company decided to initiate an aggressive price-cutting strategy.
The result was that 13.5m units were sold worldwide, with 5m alone being sold in the company's home territory of Japan. Thirty-six million software titles were sold, with sales in Japan growing, but despite AAA titles such as "Mario Kart 7" and "Super Mario World 3D," sales in Europe and the U.S. were slower than in previous years. In comparison, sales of the older DS range of handheld consoles (which include the DS, DS Lite and DSi) totalled 5.1m, with software sales over 60m games.
Nintendo says it expects to be selling the 3DS hardware below production costs by the middle of the current financial year and mentioned the launch of a new Mario game as well as a new "Animal Crossing" series of games as highlights during 2012. It also said that the 3DS would be released more widely in Asia "in due course."
Sales of the company's home game console, the Wii, also fell, with only 8.8m units shipping globally, down from 14.2m in the previous fiscal year, a drop of almost 40 percent. With the next-generation console from Nintendo, the Wii U, set to launch during 2012, it is not surprising that sales of the Wii have fallen so dramatically.
In terms of games, Nintendo shipped 102m Wii titles in the 12 months leading to the end of March, which is a drop of over 40 percent compared to the same period last year, when Nintendo shipped 171m titles. The 25th anniversary of the iconic game "Zelda," along with the release of "The Legend of Zelda: Skyward Sword," was one of the biggest hits of the last year, especially in the U.S.
Nintendo said it would release the Wii U at the end of the year, mainly in Japan, the U.S. and Europe, and it believes it will "propose a new play style of home entertainment with its unique controller embedding a 6.2in touch screen."
Looking forward, Nintendo, in its financial statement report, said it expected sales to grow to £6.2bn for the fiscal year ending March 2013, with the company returning to a profit of around £150m.