Nintendo Lost $461.2 Million Last Year

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alex

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#1  Edited By alex

Nintendo has generally been the sole console maker to post significant profits in the gaming space, a fact that no doubt had much to do with Nintendo's insistence on actually making money on its hardware, as opposed to taking a loss in service of making up the money later in game sales. Unfortunately, 2011 marked a shift for Nintendo in regards to profitability. Specifically, it marks a shift away from profitability.

"How in the hell does this thing cost more than $170 to produce..."

Nintendo posted a $461.2 million (¥37.3 billion) loss for its fiscal year in 2011, which officially ended on March 31. That came from an overall net sales number of $8 billion (¥647 billion) on the year.

One of the key contributing factors to the loss was the 3DS price drop. The $170 price point for the system put Nintendo in the red on each unit sold. The company believes that by the end of its next fiscal year, it should be seeing a profit on all 3DS units sold, presumably through decreased manufacturing and component costs.

The company's effort to increase 3DS software sales was deemed "successful" according to the report, but not quite successful enough to offset the loss on each 3DS sold, as well as the reduced price of the Wii, which now retails for $149.99.

This isn't a position we're typically accustomed to seeing Nintendo in, but it's not all doom and gloom, either. Nintendo has a number of significant games coming up for the 3DS, and there is, of course, the impending Wii U launch. We don't yet know how Nintendo will price its new console, but it wouldn't be crazy to assume that the company will look to make some money out of the gate from hardware sales there. Question is, can they make money on that system while still keeping the price reasonable for consumers? If any of the current rumors circulating around are true, then that doesn't sound too far fetched. Guess we'll find out at E3.

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superscott597

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#2  Edited By superscott597

Wow. Really? I didn't think it cost THAT much to manufacture 3DS, either...

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kurtbro900

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#3  Edited By kurtbro900

Oh no, Nintendo's doomed.

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White_Silhouette

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#4  Edited By White_Silhouette

Curious to see how the WiiU does. A lot of the people I know who have a Wii are not interested in the WiiU. Hell most of them just still use it for Wii Sports. But then again I didn't think the Wii would sell as well as it did.

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MikkaQ

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#5  Edited By MikkaQ

How isn't there a $99 Wii yet?

Anyway, a lot rides of the Wii U's adoption and success, so it's kind of all up in the air for Nintendo.

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sweep

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#6  Edited By sweep  Moderator

Perhaps as a result of market saturation? Nobody is buying Wii's anymore because everyone already owns a wii.

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Julmust

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#7  Edited By Julmust

Nintendo is finished!

Hopefully they can turn a profit later in fall/holiday when Wii U ships.

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YoThatLimp

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#8  Edited By YoThatLimp

@MikkaQ said:

How isn't there a $99 Wii yet?

Anyway, a lot rides of the Wii U's adoption and success, so it's kind of all up in the air for Nintendo.

For a hundo, I would definitely pick up a wii.

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Xeirus

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#9  Edited By Xeirus

I have a feeling the WiiU won't have near the same success of the Wii, I miss the days when every console they made was insanely different from the last. The fact that this is even titled "WiiU" kind of bums me out.

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Brendan

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#10  Edited By Brendan

@superscott597 said:

Wow. Really? I didn't think it cost THAT much to manufacture 3DS, either...

I think the laymen's perspective on how cheaply things can be produced, especially electronics, is a little exaggerated. People seem to have this idea of the business and manufacturing world where everything costs $2 to make and companies get 1,000,000% profit margins on everything because they're evil and greedy. In the realm of expensive hardware this just isn't the case.

Actually, it's even worse in other areas. Do you want to guess what the profit margins are for grocery stores on the average item? It's less than 1%.

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JohnDudebro

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#11  Edited By JohnDudebro

Why do I have to click the GIF for it to animate!

Take notes, Dave. I want this shit fixed in the new site.

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Seraphim84

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#12  Edited By Seraphim84

One thing to keep in mind with this is that while that's a decent chunk of change to be down, Nintendo's been swimming in money for the past decade practically. Anyone yelling about the fall/end of Nintendo from this isn't looking at the long math.

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Liquid_Flood

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#13  Edited By Liquid_Flood

...and by lowered costs, you actually mean lowered prices. Lowered costs would be a good thing for Nintendo, which would help their bottom line.

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jesterroyal

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#14  Edited By jesterroyal

This is one of the reasons I think the vita should hold fast on its price point.. 3DS really only dropped because of the Vita's surprisingly low  price point for a device made of pretty expensive components. The games will come. I'm just not sure what 1st party games nintendo is banking on at this point to bolster their books and I'm not sure how low they can get the manufacturing cost down on the 3DS. All game companies don't need to go broke just to meet the demand that price always be lower.  (I would also be willing to bet that the 3d screen is something outrageous like 100 dollars.)

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nohthink

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#15  Edited By nohthink

I wonder how much Vita lost... I love my Vita buti can't imagine it doing well financially

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zombie2011

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#16  Edited By zombie2011

man Sony and Nintendo have lost quite a bit.

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toowalrus

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#17  Edited By toowalrus
@JohnDudebro said:

Why do I have to click the GIF for it to animate!

Take notes, Dave. I want this shit fixed in the new site.

I'd rather not see the forums clogged full of shitty animated jiffs...
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Duxa

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#18  Edited By Duxa

Not surprising... they need to come out with better products. 3DS should have had a 2nd analog stick... and a good launch lineup... Ocarina of Time 3D is not a good lineup... good game... but not a good lineup.

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BonOrbitz

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#19  Edited By BonOrbitz

@White_Silhouette said:

Curious to see how the WiiU does. A lot of the people I know who have a Wii are not interested in the WiiU. Hell most of them just still use it for Wii Sports. But then again I didn't think the Wii would sell as well as it did.

I see the exact same thing. They feel they don't need a HD Wii because they already have one for their Wii Sports which they don't play anymore unless there are young children around that need something to do. It's a shame too because there's a ton of quality titles out there that haven't been experienced.

I love Nintendo, but have a lot of concerns for the WiiU. I'm excited to get it at launch, but I have a bad feeling about how it'll sell.

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fattony12000

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#20  Edited By fattony12000

Whoops!

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Animasta

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#21  Edited By Animasta

@TooWalrus said:

@JohnDudebro said:

Why do I have to click the GIF for it to animate!

Take notes, Dave. I want this shit fixed in the new site.

I'd rather not see the forums clogged full of shitty animated jiffs...

you can make it so that it can only be in articles and stuff like that though, right?

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BrockNRolla

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#22  Edited By BrockNRolla

@Brendan said:

@superscott597 said:

Wow. Really? I didn't think it cost THAT much to manufacture 3DS, either...

I think the laymen's perspective on how cheaply things can be produced, especially electronics, is a little exaggerated. People seem to have this idea of the business and manufacturing world where everything costs $2 to make and companies get 1,000,000% profit margins on everything because they're evil and greedy. In the realm of expensive hardware this just isn't the case.

Actually, it's even worse in other areas. Do you want to guess what the profit margins are for grocery stores on the average item? It's less than 1%.

Your point is certainly valid, but when you consider that both Sony and Microsoft sell their hardware at a profit deficit, Nintendo doesn't necessarily have an excuse to charge more than it costs to make their hardware. I'm not aware of the margin on the 3DS, but if it were any other company, they would be losing money on every system sold and that would be considered a completely valid business practice as they would make up the profits on software sales. Other companies still manage to turn a profit with such an arrangement.

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paulunga

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#23  Edited By paulunga

All things told 461.2 million really isn't that much of a loss for Nintendo. If they can convince consumers this year that the 3DS is worth 170$ (it already is for me, hence why I got one) and have decent sales of the WiiU around Christmas they could easily turn that around.

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BrockNRolla

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#24  Edited By BrockNRolla

@JohnDudebro said:

Why do I have to click the GIF for it to animate!

Take notes, Dave. I want this shit fixed in the new site.

I wouldn't have even known it was animated had I not read this.

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algertman

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#25  Edited By algertman

They have billions in the bank. This loss won't effect them that much. The 3DS is selling high with huge software sales. Unlike Sony who has a failed handheld right out of the gate, Vita, and just posted a loss in the billions.

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bretthancock

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#26  Edited By bretthancock

The Wii U cost rumors shouldn't surprise anyone. They did the exact same thing with the Wii and "better" technology comparable to the 360/PS3, capable of pushing native 720p ish graphics is so dirt cheap now. Not an indicator of how powerful or competitive the Wii U will be with horsepower, just a sign of the times.

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spazmaster666

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#27  Edited By spazmaster666

It seems like lowering the 3DS price was still the right move in the long term since it's ultimately software sales that will make money in the long run.

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MeatSim

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#28  Edited By MeatSim

That's a lot of money but it's Nintendo so chances are they will turn it around.

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excast

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#29  Edited By excast

Well, look at Nintendo as a company.  They have totally refused to adapt to the changing times.  Yes, the Wii sold a lot of units and made them a lot of money, but they failed to capitalize on that success because they have never embraced 3rd party developers and have tried to skate by with an endless stream of terrible ports, gimmick games, and bastardizing their own franchises to such an extent that they no longer mean as much as they used to.
 
I think that the Wii U, or whatever it ends up being called, is going to be the last Nintendo console.  They have fallen too far behind in terms of tech, multiplayer, and providing a platform that is easy to port too.  People are not going to spend hundreds of dollars to buy another gaming console that basically amounts to a PS3 with tablet controller.

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Enigma777

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#30  Edited By Enigma777

Yay!

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Blunt

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#31  Edited By Blunt

Doomed, Apple buy-out, Wii-U will be dead on arrival, etc

Just getting the usual shtick out of the way.

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Jayzilla

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#32  Edited By Jayzilla

Alex does a straight news piece. I didn't know that was a thing.

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Shaanyboi

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#33  Edited By Shaanyboi

It's going to be REAAAALLY interesting how they approach E3. Alot is riding on the WiiU, and yeah, I'll pick one up for Nintendo's own games and whatever cool weird shit other developers do for it, but I can't see that being the case for every grandma that bought it as "The Wii Sports machine"

@Xeirus said:

I have a feeling the WiiU won't have near the same success of the Wii, I miss the days when every console they made was insanely different from the last. The fact that this is even titled "WiiU" kind of bums me out.

I'd say the WiiU is pretty insanely different. Yeah, you CAN use your Wii controllers for some stuff, but at the same time, the tablet controller COULD have pretty crazy implications for gameplay... Note the use of the word 'could'.

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Brendan

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#34  Edited By Brendan

@BrockNRolla said:

@Brendan said:

@superscott597 said:

Wow. Really? I didn't think it cost THAT much to manufacture 3DS, either...

I think the laymen's perspective on how cheaply things can be produced, especially electronics, is a little exaggerated. People seem to have this idea of the business and manufacturing world where everything costs $2 to make and companies get 1,000,000% profit margins on everything because they're evil and greedy. In the realm of expensive hardware this just isn't the case.

Actually, it's even worse in other areas. Do you want to guess what the profit margins are for grocery stores on the average item? It's less than 1%.

Your point is certainly valid, but when you consider that both Sony and Microsoft sell their hardware at a profit deficit, Nintendo doesn't necessarily have an excuse to charge more than it costs to make their hardware. I'm not aware of the margin on the 3DS, but if it were any other company, they would be losing money on every system sold and that would be considered a completely valid business practice as they would make up the profits on software sales. Other companies still manage to turn a profit with such an arrangement.

You could also make the argument that Sony and Microsoft's strategies are not good business practices, and that thus far Nintendo has sold their products more intelligently. Up until this year it's certainly put them in a better situation than their competitors so I would find it difficult to argue against them from a business perspective.

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Wuddel

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#35  Edited By Wuddel

In line with my continued disinterest.

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BBQBram

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#36  Edited By BBQBram

They'll be fine...right?

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kurtbro900

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#37  Edited By kurtbro900

@Xeirus said:

I have a feeling the WiiU won't have near the same success of the Wii, I miss the days when every console they made was insanely different from the last. The fact that this is even titled "WiiU" kind of bums me out.

Yeah, adding a touch screen to control is barely different. I miss super nintendo when they added 4 buttons!

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BrockNRolla

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#38  Edited By BrockNRolla

@Brendan said:

@BrockNRolla said:

@Brendan said:

@superscott597 said:

Wow. Really? I didn't think it cost THAT much to manufacture 3DS, either...

I think the laymen's perspective on how cheaply things can be produced, especially electronics, is a little exaggerated. People seem to have this idea of the business and manufacturing world where everything costs $2 to make and companies get 1,000,000% profit margins on everything because they're evil and greedy. In the realm of expensive hardware this just isn't the case.

Actually, it's even worse in other areas. Do you want to guess what the profit margins are for grocery stores on the average item? It's less than 1%.

Your point is certainly valid, but when you consider that both Sony and Microsoft sell their hardware at a profit deficit, Nintendo doesn't necessarily have an excuse to charge more than it costs to make their hardware. I'm not aware of the margin on the 3DS, but if it were any other company, they would be losing money on every system sold and that would be considered a completely valid business practice as they would make up the profits on software sales. Other companies still manage to turn a profit with such an arrangement.

You could also make the argument that Sony and Microsoft's strategies are not good business practices, and that thus far Nintendo has sold their products more intelligently. Up until this year it's certainly put them in a better situation than their competitors so I would find it difficult to argue against them from a business perspective.

They certainly have the safer business strategy, but I wouldn't necessarily say it is better or more intelligent. By comparison to Sony, I would agree that Nintendo seems to have made better financial moves, but I haven't heard that Microsoft will be posting a loss this year.

I'm simply saying Nintendo can't justifiably cry foul on their profits due to cutting the price of the 3DS, as a $250 handheld with that technology wasn't a sustainable business model. They need to be selling more games to their customers if they want to make a profit. That's certainly the largest failing of the Wii as a console as well. Nintendo was simply able to convince people to buy into that technology at a higher price. It didn't work for the 3DS.

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Protonguy

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#39  Edited By Protonguy

Meh. When nintendo decides to join the 21st century i'm sure they'll turn things around. They made a fortune off the Wii and I don't see where all that money has gone to. Their online platform is non-existent, graphics massively under par (yes graphics aren't everything but as a heavy PC user i find it hard to look at 15 - 20 year old graphics at this point), next to no decent 3rd party support. Really, where has the money gone other than their pockets.

I by no means want Nintendo to die but if i could buy Mario on my 360 or ps3 and nintendo consoles ceased to exist i wouldn't shed a tear at this point. They're underwhelming.

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MormonWarrior

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#40  Edited By MormonWarrior

@Excast said:

Well, look at Nintendo as a company. They have totally refused to adapt to the changing times. Yes, the Wii sold a lot of units and made them a lot of money, but they failed to capitalize on that success because they have never embraced 3rd party developers and have tried to skate by with an endless stream of terrible ports, gimmick games, and bastardizing their own franchises to such an extent that they no longer mean as much as they used to.

This, exactly. All of it. I can't think of a better way to put this. I'm a retro Nintendo fanboy of sorts, but I felt seriously burned as a fan by the Wii overall. Mario Kart, Smash Bros, Skyward Sword, Other M, and numerous other games were just not as good as they should have been.

If the Wii U ends up releasing more stuff like, say, Super Mario Galaxy (best freaking game ever...) or Donkey Kong Country Returns, then I'm on board. I'm not sure I agree with analysts who think that Nintendo will bow out of the console wars eventually (they might though - and just focus on portables and software) but they're not in a great position right now. I'm hopeful, but I honestly would enjoy seeing Nintendo taking advantage of the smart infrastructure of the Xbox 360 or PS3 instead of hamming it up with their own stuff and constantly playing catch-up.

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Hizang

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#41  Edited By Hizang

Everybody already owns a Wii and the people who originally had a DS now have an iPad.

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Vegetable_Side_Dish

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@BrockNRolla said:

@Brendan said:

@superscott597 said:

Wow. Really? I didn't think it cost THAT much to manufacture 3DS, either...

I think the laymen's perspective on how cheaply things can be produced, especially electronics, is a little exaggerated. People seem to have this idea of the business and manufacturing world where everything costs $2 to make and companies get 1,000,000% profit margins on everything because they're evil and greedy. In the realm of expensive hardware this just isn't the case.

Actually, it's even worse in other areas. Do you want to guess what the profit margins are for grocery stores on the average item? It's less than 1%.

Your point is certainly valid, but when you consider that both Sony and Microsoft sell their hardware at a profit deficit, Nintendo doesn't necessarily have an excuse to charge more than it costs to make their hardware. I'm not aware of the margin on the 3DS, but if it were any other company, they would be losing money on every system sold and that would be considered a completely valid business practice as they would make up the profits on software sales. Other companies still manage to turn a profit with such an arrangement.

It is worth noting that Sony has stated that they do not lose money on every Vita sold, unlike the 3DS. While the hardware sales have been poor in Japan and only mediocre at best elsewhere, people fail to realize it is a profit vehicle for them, both in hardware and software terms (especially due to the larger focus on downloadable software, as there is no longer the retailer's cut to be worried about, nor the money being paid for manufacturing and distribution). 
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BrockNRolla

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#43  Edited By BrockNRolla

@Vegetable_Side_Dish said:

@BrockNRolla said:

@Brendan said:

@superscott597 said:

Wow. Really? I didn't think it cost THAT much to manufacture 3DS, either...

I think the laymen's perspective on how cheaply things can be produced, especially electronics, is a little exaggerated. People seem to have this idea of the business and manufacturing world where everything costs $2 to make and companies get 1,000,000% profit margins on everything because they're evil and greedy. In the realm of expensive hardware this just isn't the case.

Actually, it's even worse in other areas. Do you want to guess what the profit margins are for grocery stores on the average item? It's less than 1%.

Your point is certainly valid, but when you consider that both Sony and Microsoft sell their hardware at a profit deficit, Nintendo doesn't necessarily have an excuse to charge more than it costs to make their hardware. I'm not aware of the margin on the 3DS, but if it were any other company, they would be losing money on every system sold and that would be considered a completely valid business practice as they would make up the profits on software sales. Other companies still manage to turn a profit with such an arrangement.

It is worth noting that Sony has stated that they do not lose money on every Vita sold, unlike the 3DS. While the hardware sales have been poor in Japan and only mediocre at best elsewhere, people fail to realize it is a profit vehicle for them, both in hardware and software terms (especially due to the larger focus on downloadable software, as there is no longer the retailer's cut to be worried about, nor the money being paid for manufacturing and distribution).

I was not aware of that margin on the Vita, but I think it is also quite likely we'll see a Vita price cut this holiday that will push them outside this profit margin given the slow sales. The long term profitability of the system still requires a large user base even if it means losing money on each system sold.

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GunnBjorn

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#44  Edited By GunnBjorn
@BBQBram said:

They'll be fine...right?


Yes, they'll be fine. Nintendo is the king of marketing. Yeah, they made a few misakes with putting out the 3DS a bit to early. The regular DS has an enormous install base. They should've (and as of now, they are) supported/exploited the system longer. And the Wii U... I wouldn't be at all surprised if it turns out to be a really good console.
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freewilly5

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#45  Edited By freewilly5

@Vegetable_Side_Dish said:

@BrockNRolla said:

@Brendan said:

@superscott597 said:

Wow. Really? I didn't think it cost THAT much to manufacture 3DS, either...

I think the laymen's perspective on how cheaply things can be produced, especially electronics, is a little exaggerated. People seem to have this idea of the business and manufacturing world where everything costs $2 to make and companies get 1,000,000% profit margins on everything because they're evil and greedy. In the realm of expensive hardware this just isn't the case.

Actually, it's even worse in other areas. Do you want to guess what the profit margins are for grocery stores on the average item? It's less than 1%.

Your point is certainly valid, but when you consider that both Sony and Microsoft sell their hardware at a profit deficit, Nintendo doesn't necessarily have an excuse to charge more than it costs to make their hardware. I'm not aware of the margin on the 3DS, but if it were any other company, they would be losing money on every system sold and that would be considered a completely valid business practice as they would make up the profits on software sales. Other companies still manage to turn a profit with such an arrangement.

It is worth noting that Sony has stated that they do not lose money on every Vita sold, unlike the 3DS. While the hardware sales have been poor in Japan and only mediocre at best elsewhere, people fail to realize it is a profit vehicle for them, both in hardware and software terms (especially due to the larger focus on downloadable software, as there is no longer the retailer's cut to be worried about, nor the money being paid for manufacturing and distribution).

Did Sony actually say this? I know some website tore open the Vita and judged that the parts cost about $159, but that didn't take into account software development, R&D costs and marketing. If Sony actually said it though, then I believe it.

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#46  Edited By monkeyking1969

To be fair everyone is/was losing money, and MS and Sony are skipping off the bottom rung of profitability quarter to quarter even now. Bu the big pint is Nintendo should have been folding those 'wild prifits' from 2006-2009 into a news system, new IPs and R&D. Yet, they seemed to be adverse to spending what they made, so now they are in this weird spot where there's not enough games coming out and the next system seems under engineered to even compete with six year old tech.

Going forward I'm am interested in how XBL or PSN will evelove. I am intereed in how Sony and MS will engineer new systems. I care about what 3rd parties put out and on what system or even if it will matter if both PSNext and XB-Next have similar hardware under the hood. For me I'm interested in what Sony and Microsoft will do next, but I could not care less about Wii U.

Most of what Nintendo showed off when we first viewed Wii U has not come to pass. It is seemingly less capable than promised. The tablet-pad has had problematic development and is causing head-aches from what I hear. And now 3rd parties are pulling away...hell then seem to be slinking away in the night. All that adds to something I see has a hard sell this holiday.

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sins_of_mosin

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#47  Edited By sins_of_mosin

I might buy a Wii if it was new for $50.  Or just borrow one from a friend as they sure as hell aren't using it anymore.  After a week, neither would I.  Heyo!

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#48  Edited By Rirse

Doesn't help they still won't put any damn new VC games on the 3DS. It been over a month since it had a new one. The last VC game in general was for the Wii..and it was the fifth Street Fighter II release on the VC there!

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#49  Edited By Claude

I guess I should have bought two Wiis since I love them so god damn much. I'm still not going to buy a handheld gaming device though.

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#50  Edited By Brackynews

I could think about a 3DS this Christmas. Just no interest in the current lineup when I still have a fat stack of unfinished DS games.

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