Nintendo Blames First Annual Loss in 30 Years on Last Year’s 3DS Price Cut
Though we’ve known that Nintendo has been predicting an annual loss for several months now, they finally published their results for fiscal year 2012, which ended a few weeks ago on March 31. According to the published results, the company earned ¥647 billion, or $8 billion, which was a 36.2 percent drop from last year’s sales of ¥1.01 trillion, or $12.3 billion. The company took home a total loss of ¥37.3 billion, or $461.2 million.
According to the report, much of the blame for the income loss—the first such annual loss in three decades, say many reports—is being placed on the shoulders of the 3DS system, specifically the massive price cut the console saw last summer. The cut was a double edged sword for the company: it managed to finally spur the system’s sales, but began taking a loss on every system sold. It should be noted that most console-making companies take a loss on systems for the first year or so of its life-cycle, making up the money lost (and, ideally, profiting) on software sold. Nintendo is different in that, at least for the last several console generations, they’ve been able to sell their hardware and make a profit. That ended with the 3DS.
However, the report notes that it plans to stop taking a loss on the system by this summer, probably due to lower costs of production (thanks, Moore’s Law!). In addition, the post also blames this year’s loss on slowed Wii sales and the stronger-than-expected value of the yen. By all accounts, it was a perfect storm of bad luck for Nintendo this year.
(Update: The report notes that the 3DS has sold 17.13 million units worldwide, with over five million units sold in Japan within its first year of existence, giving it “the fastest record of all dedicated game platforms.” In addition, the company predicts next year’s sales to double the system’s lifetime sales so far, forecasting 18.5 million units sold by the end of the next fiscal year.)
The company is planning on turning things around with hoped-for hit software, like the recently announced New Super Mario Bros. 2, Animal Crossing (in Japan), and the Wii U console, set to launch this fall. Chances are that the Wii U will return to the profit-providing method of being sold for more than it costs to produce, if reports of its relatively lackluster tech specs and graphics power are to be believed. What that price is remains to be seen…