Nintendo Suffers 29.1 Billion Yen Operating Loss

Nintendo Suffers 29.1 Billion Yen Operating Loss

image

Nintendo's operating results were negatively affected by a strong Yen and Wii U manufacturing costs.

Nintendo has released its operating results for the six months September 2012, and they don't make for happy reading. A strong Yen, which negatively affects exports, and manufacturing costs associated with the Wii U, its latest console due out in November, were cited as the two main factors behind its 29.1 billion Yen ($364 million) operating loss for the six month period ending September 2012.

A modest gross sales profit of 44 million Yen was eaten up by operating expenses of over 73 million, resulting in a loss for the period. Geographically while net sales in Japan are doing very well, sales everywhere else aren't so great. North America is holding steady, with only a modest decrease; sales in the rest of the world have suffered a significant dip.

Wii hardware sales in particular have taken a hit, in Japan and everywhere else. In the Americas Wii sales are pretty much in freefall, actual hardware sales dropping more than 67% over the previous 2011 period, in the six months ending September 2012. A lack of new title releases - despite the success of Mario Party 9 - was cited in the report as the reason for this decline.

Source: Nintendo report

Permalink

73 million?
Maybe the costs are SLIGHTLY bloated, Nintendo?
Did you REALLY think this was gonna sell?

They're more than likely banking on a strong holiday season with the Wii U to recoup the losses.

that's what happens if you keep remaking the same shit over and over

I am not a Nintendo fan. That said, this is standard market procedure. Take losses in the short term, and count on the new stuff to power you through the next period. No wonder Wii sales are falling: who wants to pick up a Wii when the new version is gonna be out soon?

Nothing to worry about for Nintendo fans.

That's what you get for following the Italian business model.

robinkom:
They're more than likely banking on a strong holiday season with the Wii U to recoup the losses.

business profit/loss goes in cycles for any company, and any product, and as such this is just a down period. this is why Microsoft is Doing this to boost 360 sales so that they don't have to report a loss on the system because of market saturation, and to have people finally replace the gen 1 systems that have survived all this time.

DVS BSTrD:
That's what you get for following the Italian business model.

WTF are you even talking about. this has no context, and makes little sense without it.

gardian06:

robinkom:
They're more than likely banking on a strong holiday season with the Wii U to recoup the losses.

business profit/loss goes in cycles for any company, and any product, and as such this is just a down period. this is why Microsoft is Doing this to boost 360 sales so that they don't have to report a loss on the system because of market saturation, and to have people finally replace the gen 1 systems that have survived all this time.

Right, right. I had trouble figuring out why this is news to anyone. And my statement was a bit generalized. The Wii U will sell at a loss, like all consoles when they're brand-spankin'-new. Losses will be eased with software sales and the console itself won't start to turn a profit until much later in it's life cycle when manufacturing costs are lower and production of the units is streamlined.

l3o2828:
73 million?
Maybe the costs are SLIGHTLY bloated, Nintendo?
Did you REALLY think this was gonna sell?

The WiiU isnt due out for another 3 weeks anywhere so im not quite sure what youre talking about.

Well the WiiU has had a high manufacturing cost with no chance at all to actually generate revenue to make it up. Kinda figures that there'd be a loss. What I'm curious about is how the 3DS did, because that could actually be a problem.

.

l3o2828:
73 million?
Maybe the costs are SLIGHTLY bloated, Nintendo?
Did you REALLY think this was gonna sell?

First of all, billion. Yen. That's $913 Million USD

Second, the console isn't even out yet, so no, it hasn't sold at all.

Third, like hell the costs are bloated: this is how consoles are made and sold, i.e: Sell the consoles at a big loss and hoping to recoup through software and accessories. The original Xbox was famously sold at a $4 billion loss for Microsoft (that's 319 billion Yen for comparison).
But even then, Nintendo probably won't be selling the WiiU at a sizable loss, it's just that their fiscal quarter ends before they start selling the console so they only have the manufacturing costs with zero sales. Conversely, their next fiscal quarter is likely to be extremely strong with all of the sales and less development costs.

Tangentially, people keep harping on the fact that consoles are so much cheaper than PCs, but that only because those companies shift the costs around to achieve this effect.

gigastar:

l3o2828:
73 million?
Maybe the costs are SLIGHTLY bloated, Nintendo?
Did you REALLY think this was gonna sell?

The WiiU isnt due out for another 3 weeks anywhere so im not quite sure what youre talking about.

I'm just saying that the cost of production seems kinda bloated for a console that isn't very liked by the general audience.
maybe i'm wrong.

Well, duh!

No-one's buying the Wii, because the Wii U is almost literally just round the corner. Nintendo will have been paying for the production of however many millions of consoles they expect to shift over the next few months, without being able to sell any of them on for a profit.

That's kind of how investment in a new business venture works. If you take a bank loan of £20,000 to get your new business set up, that doesn't automatically mean you're broke and have lost £20,000. It simply means you've invested money in the short-term, with a view to making back that 20 grand plus a lot more in the long term. Business investments don't operate on a day-long life cycle. They often take months, if not years, to make back the money initially invested. As long as you make a profit at the end of it, then all's fair.

If you don't believe me, then just look at the business models Sony and Microsoft adopted at the start of this generation.

So yeah, I very much doubt Nintendo management are going to be sitting there with heads in hands, or jumping out the windows a la the Wall Street Crash. The last few months before a new console releases are always the most expensive for a games company, as you have all the costs of getting the thing set up, with none of the income from actually selling it. And more often than not, people aren't buying your old console, because they're waiting for the new one.

Perspective, people...

Well that's a depressing headline. I do hope they manage to make this up over the holiday season when they actually begin to start selling Wii Us.

I'm surprised they didn't do worse.
Page 7 of the report shows that new Software is down a lot more than others have been reporting. It varies from System to System but it looks like they are anywhere form 50% to 75% down in the number of new titles being made. GameStop only cited a 20% - 30% decrease in new titles so I wasn't expecting Nintendo's report to be that different but there it is.

Hmm....

this sounds like me playing Dawn of Discovery

so much red :sigh: ..

And of course people grossly misinterpret data because the Escapists' mindset is "An excuse to bash Nintendo!? WHEEEEE!!!" like Miyamoto beat them up and stole their lunch money.

l3o2828:
73 million?
Maybe the costs are SLIGHTLY bloated, Nintendo?
Did you REALLY think this was gonna sell?

Considering it's sold out EVERYWHERE, yea, I think they did.

But seriously: this is probs just because the Wii U hasn't started selling yet. They have all these consoles sitting in warehouses and they haven't moved them to stores yet... they're just losing money.

But talk to me AFTER the Wii U launches. If they're still in the red, THEN I'll be concerned.

I'd love to pull up some analysis data and find out if historically console makers have been in the red JUST PRIOR to releasing a new console. I bet the findings would be in support of Nintendo.

Aiddon:
And of course people grossly misinterpret data because the Escapists' mindset is "An excuse to bash Nintendo!? WHEEEEE!!!" like Miyamoto beat them up and stole their lunch money.

The gaming community in general seems to love bad news, AND NEVER looks at things logically. Read my above post for context of what I mean.

This seriously isn't a big deal. ZOMGWTFBBQ NINTENDO'S SALES OF THE WII HAVE GONE DOWN 67%!!! NINTENDO'S FLOUNDERING!

Yea... or people are just waiting for the new console... AND they've lost money on the manufacturing of a new console that isn't up for sale yet...

Mimsofthedawg:

Aiddon:
And of course people grossly misinterpret data because the Escapists' mindset is "An excuse to bash Nintendo!? WHEEEEE!!!" like Miyamoto beat them up and stole their lunch money.

The gaming community in general seems to love bad news, AND NEVER looks at things logically. Read my above post for context of what I mean.

This seriously isn't a big deal. ZOMGWTFBBQ NINTENDO'S SALES OF THE WII HAVE GONE DOWN 67%!!! NINTENDO'S FLOUNDERING!

Yea... or people are just waiting for the new console... AND they've lost money on the manufacturing of a new console that isn't up for sale yet...

Which is sad, because no one should be rushing to declare Nintendo dead. Nintendo's death would be one of the worst things that could happen to the gaming industry in general, primarily because of the fact that Sony and Microsoft's participation in the market could come to an end in just ONE bad board room meeting.

People take industry participation for granted because it's been a while since the last death of a console salesman. These kids nowadays are too young to remember Atari or Sega, etc. They think the next Sony or MS console will come out regardless of things like losses or office politics. And I suspect this lesson won't be learned until it actually happens. >_>

Mimsofthedawg:

l3o2828:
73 million?
Maybe the costs are SLIGHTLY bloated, Nintendo?
Did you REALLY think this was gonna sell?

Considering it's sold out EVERYWHERE, yea, I think they did.

But seriously: this is probs just because the Wii U hasn't started selling yet. They have all these consoles sitting in warehouses and they haven't moved them to stores yet... they're just losing money.

But talk to me AFTER the Wii U launches. If they're still in the red, THEN I'll be concerned.

I'd love to pull up some analysis data and find out if historically console makers have been in the red JUST PRIOR to releasing a new console. I bet the findings would be in support of Nintendo.

Yeah, first half of the year is typically the slow part of the year; the spring has a moderate library of releases at best and the summer is usually dead. It's only when the fall rush and beyond starts moving where you can get an idea of a company's health. Plus Nintendo has so much goddamned money in the bank they could lose a billion every year for a decades and STILL not be in danger of bankruptcy.

This is sad news

DVS BSTrD:
That's what you get for following the Italian business model.

I see what you did there.

From what I've heard about the next console generation, I didn't think anyone with a mind would consider getting the new systems. The Wii-U seems to sound stupid, and when Nintendo Power said they'd have a "pro" controller which resembled a 360 controller, and I knew what I wasn't gunna buy.

The PS4 or whatever apparently is going to eat your games, essentially trying to kill EB games. I'll stick with my CPU thanks, at least I can bring my steam account over to my friends house a hell of a lot easier than a PS4.

I've heard nothing about Microsoft, but I don't use my 360, Wii, or PS3 very much anymore, so why should I bother?

As those above have said, It's mostly because no ones been able to buy any yet, so nothing is happening. Nintendo fan boys will buy it, and I'll probably buy it the moment It's cheap as shit like the Wii is now. Nintendo isn't going to be harmed much, they'll spring back, they always do.

Fin Morrison:
that's what happens if you keep remaking the same shit over and over

Call of Duty is remade over and over and apparently gets the fastest sales in media history.

Nintendo aren't doing bad. But no one's going to buy a Wii when the Wii U is backwards compatible and is coming out in a month.

Be a Nintendo hater all you want but in reality the only arguments that you can come out with are "Mario Bros keeps getting a new version for every console" (which has been happening since the gameboy) and "The Wii U luks stoopid cus tablat" (which has had pretty much every user who's actually use it say that the controller actually feels natural)

Why would a strong Yen negatively affect Nintendos manufacturing costs? The WiiU isn't being built in Japan so wouldn't a strong Yen help manufacturing costs? I must be missing something here, that or Nintendo are talking rubbish in order to try and cast a better light on the losses.

robinkom:

gardian06:

robinkom:
They're more than likely banking on a strong holiday season with the Wii U to recoup the losses.

business profit/loss goes in cycles for any company, and any product, and as such this is just a down period. this is why Microsoft is Doing this to boost 360 sales so that they don't have to report a loss on the system because of market saturation, and to have people finally replace the gen 1 systems that have survived all this time.

Right, right. I had trouble figuring out why this is news to anyone. And my statement was a bit generalized. The Wii U will sell at a loss, like all consoles when they're brand-spankin'-new. Losses will be eased with software sales and the console itself won't start to turn a profit until much later in it's life cycle when manufacturing costs are lower and production of the units is streamlined.

PS3 sold for $1200 at a slight profit in Australia, which is why I'm never buying another Sony product for as long as I can (it came free with the TV and our current TVs at the time were more than 15 years old so we figured we should upgrade).

But yes, this is correct, the Wii U has to be manufactured many months in advance thus of course in the previous financial periods the company will run at a loss due to the fact that you can't (well under local accounting law) report their sales price on your balance sheet, only their cost.

J Tyran:
Why would a strong Yen negatively affect Nintendos manufacturing costs? The WiiU isn't being built in Japan so wouldn't a strong Yen help manufacturing costs? I must be missing something here, that or Nintendo are talking rubbish in order to try and cast a better light on the losses.

Welcome to economics, they're REALLY fucking complicated.

At original poster: You say they had a 29.1 billion yen total loss stemming from a 73 million yen loss that was partly negated by a sales profit of 44 million yen, (29 million loss total). Shouldn't those read billion, not million?

 

Reply to Thread

Posting on this forum is disabled.