Nintendo faces billion dollar loss

Nintendo’s US$925 million losses are staggering, with the Kyoto videogame company blaming a lack of stellar titles and an ever-climbing Yen. For Nintendo, this is a full-year loss and for any other company would surely be a nail in its coffin.

Nintendo issued a statement preceding the sales report. “Profits suffered due to re-evaluation of assets in foreign currencies, exchange losses totalling 52.4-billion yen (US$711 million) occurred”.

It piled its gaming eggs into one basket with the then US$249 Nintendo 3DS. It later dropped the price to US$169 and included 20 free games for existing owners. Despite this, inexpensive smartphone and social media games have continued to chip away at Nintendo’s profits, with titles such as Angry Birds succeeding where The Legend of Zelda 3DS cannot.

Early estimations for Nintendo’s profits were 20-billion Yen (US$263 million) in net profit, but these had to be revised to a loss of 20-billion Yen. Other revised earnings saw Nintendo drop its 12 month profit from 900-billion Yen (US$11.8 billion) to 790-billion yen (US$10.4 billion). Nintendo said, “The earnings forecast has been modified to reflect the trends of stronger-than-expected yen appreciation”.

As the Yen continues to strenghten, it decreases the competitiveness of the Japanese exporters and further strains the economy which has already been ravaged by a series of natural disasters.

While more than 8-million 3DS consoles sold, Nintendo was still forced to cut the price by 40%. It is easy to blame the lack of software, such as a new Mario, Castlevania or Metroid  title but it is even easier to poke holes in Nintendo’s strategy.

For too long it has coasted on the success of the “casual” market with the Wii, dropping its “hardcore” gamers and relying on an easy sell with motion controls. With the Wii preparing for obsolesce, Nintendo will have to pull an ace out of its sleeve in the form of the Wii U in order to win back its previous fans and increase its profit share.

Steven Norris: grumpy curmudgeon


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