Nintendo: Time for an intervention?

#1Nice_Kirbyfan9Posted 1/31/2013 10:32:01 AM(edited)
http://www.gamesindustry.biz/articles/2013-01-31-nintendo-time-for-an-intervention?

Choice bits
The quarterly report from Nintendo was, once again, disappointing. Not only did the company miss its numbers, but Nintendo lowered its forecast for the fiscal year by a couple billion dollars. CEO Satoru Iwata apologized as he cut sales estimates for all of the company's consoles. This is becoming a regular quarterly ritual for Nintendo, and it's agonizing to watch. What's going on? Is this just a bad patch before a great surge in sales? Let's look at the overall picture.

Nintendo has known for years that Wii sales are declining, and the pace is accelerating. Nintendo's answer was the introduction of the Wii U, a new console that finally brings Nintendo to relative parity with the current generation of HD consoles. Many have argued that Nintendo should have done this a year or two earlier, before the Wii completely lost its ability to sell and to attract third-party development. Regardless, Nintendo finally introduced the Wii U, but with a relatively high price of $299 for the entry level (and most sales were of the $349 version).

As was expected, many fans rushed out to buy the Wii U; after all, it's a new console from Nintendo. Yet as many in the industry feared, Wii U sales have dried up since Christmas, and Nintendo just lowered its Wii U sales forecast for the year ending in March to 4 million consoles total, down from its previous forecast of 5.5 million units. That's a reduction of of over 25 percent

Nintendo is still planning on generating a profit this year, though the net income projected is only $154 million on total sales of $7.368 billion, which works out to about a two percent profit. Nintendo would be better off investing its money; that's a terrible rate of return. It's especially embarrassing when you look at the profits Japanese companies like Gree and DeNA are posting, which are hovering around the 45 percent level on sales of over $2 billion apiece.

Clearly, for Nintendo to post a profit on this scale is not a sustainable business strategy; it's a way to avoid embarrassment, such as the massive $473 million loss of last year. With slower than expected sales of hardware and software, Nintendo has probably been cutting back on marketing expenditures. Certainly we didn't see a massive amount of TV commercials, nor other kinds of marketing efforts over the holiday season.

Look no further than EA's earnings call yesterday, when EA CEO John Riccitiello basically said the Wii U was not a next-gen console, and not one the company is looking at to revitalize the game industry. The Wii U can expect weak support from publishers who are gearing up for new consoles from Sony and Microsoft. Sure, they may not sell all the that well, either, but at least it hasn't been proven that they are slow sellers. Sources in the industry indicate there are not many big titles being planned for the Wii U among major publishers, and this should not be a surprise

In other words, don't look for any price drops soon. Nintendo will first try to get some good games out there, and perhaps spend some money on marketing trying to explain why the Wii U is a great console to buy, and pay no attention to those shiny new consoles coming from other manufacturers soon. Or those tablets. Or those free-to-play games on your computer. Anyway, maybe if Wii U sales are still slow after some new games and some marketing, maybe then there will be a price drop. Maybe.

Only 74 percent have connected their Wii U online? Add that to the list of reasons Nintendo is struggling to make money; it hasn't figured out that selling things online to game players is a great business opportunity.


Good read. They sum up a lot of nintendos issues well. Nintendo is not doomed, but they are slipping up.Hopefully they can turn it around.
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#2NintendoKnight9Posted 1/31/2013 10:48:14 AM
Nintendo. T_T
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#3zalmutePosted 1/31/2013 10:52:12 AM
I wonder... Personally the day Nintendo goes under the day i go PC only.
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#4ObturatorPosted 1/31/2013 10:54:11 AM
You do realize that Nintendo's profits on the Wii far outstretch any profits made by Sony and MS right?

They developed their systems at a loss, as did Nintendo this gen (But not nearly as much as their competitors)
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Yea, I thought so.
#5Xeeh_BitzPosted 1/31/2013 10:54:28 AM
Nintendo still living in 2001.

They seemed to step up to 2005 with the Wii U..

Old fashion ideas, far as gaming goes.. People who game, changed, the problem is.. Nintendo doesn't keep up with its customers and the direction they're going.

They do have a dedicated fan base but it's shrinking as you can see by the Wii U sales.

The Wii sold well but that's due to the motion control, Wii sports so a lot of non gamer casuals purchased the system just for those types of games but since it's not the direction of this console those sales are not going to be obtained this round and the touchscreen controller doesn't offer anything for the completely casual party gamer crowd the Wii offered.

They totally dropped the ball, the Gamepad controller gimmick is not designed well enough to attract those people, the hardware in the console is weak and it'll not attract the new breed of gamers.
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#6Rasputin77Posted 1/31/2013 11:34:07 AM
I haven't touched my 3DS since I stopped smoking cigarettes, so I personally apologize for any decline in handheld sales. =(
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#7icarus231Posted 1/31/2013 11:44:50 AM
And this guys opinion matters why?
#8Nice_Kirbyfan9(Topic Creator)Posted 1/31/2013 11:47:29 AM
From: icarus231 | #007
And this guys opinion matters why?

It is just something to read. If it doesn't matter to you don't read it. Go find some positive nintendo article.
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#9icarus231Posted 1/31/2013 11:48:22 AM
"We're no hive mind at GamesIndustry International, so we prefer to give you both sides of the argument whenever we can. To that end, we'll have two pieces about the impact of both the financial results and the sales figures revealed by Iwata, each arguing from a different perspective.

Below, we have an op-ed from our West Coast Editor, Steve Peterson, arguing that Nintendo needs to make some changes or risk serious damage. Tomorrow, regular columnist Rob Fahey will be putting his case for a different interpretation: that any doom sayers are over-reacting and that the publisher will ride out the storm quite happily. Of course, we expect to see you having your say in the comments threads, too."


Also this isnt even their normal editor, the usual editor will be coming out with the real article more adequately stating the facts.
#10RahzarXPosted 1/31/2013 11:48:48 AM
Nintendo is in a period of development. They jumped the gun releasing the Wii U so early, but the feedback will allow the console time to evolve for when March hits and the games start rolling in, it will be a different console entirely.
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