Nintendo earnings and profits in freefall

Nintendo earnings and profits in freefall

Summary: Nintendo has posted financial earnings for the nine-month period that ended December 31st, 2010, and it shows a company where earnings and profits are in freefall.

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Nintendo has posted financial earnings for the nine-month period that ended December 31st, 2010, and it shows a company where earnings and profits are in freefall.

Here are the highlights (or low points):

  • Earnings of 808 billion yen, down 31.7% from the same period in 2009
  • Profits of 49.6 million yen, down 74.3% from the same period in 2009
  • 15.7 million DS units, down from 23 million sold during the same period in 2009
  • 13.7 million Wii units, down from 17 million sold during the same period in 2009

Nintendo isn't expecting things to get better over the remainder of the fiscal year. It expects revenues to be down 23.3% and for profits to fall by 60.6%

The only upside for Nintendo is that the company expects Wii software sales to be up 32 million units above the original estimates of 170 million unit sales. 

It seems that Nintendo is in desperate need of a new product to revitalize sales. The Nintendo 3DS, which is already for sale in Japan and due to hit shelves in the US and Europe in March, might help to do just that.

Thoughts? Does Nintendo need to revitalize its product lineup, or should it just release a selection of Mario games on the iPhone in the App Store?

Topics: Enterprise Software, Banking

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  • Dedicated game devices are....

    a dead end, for the most part. When you can get cheap and good games on your smart phone, tablet and TV, only hard core gamers will spend money on a dedicated box.

    Nintendo, Sony and MS will all discover this over the next few years. Kids would much rather carry a smart phone that can do it all, than a DS/PSP/Zune plus a cheap phone.
    Economister
    • RE: Nintendo earnings and profits in freefall

      @Economister You have absolutely no clue, do you?
      OxBAADFOOD
      • But ....

        @HalfAKilo <br><br>I have more than HalfABrain, which seems to be your affliction
        Economister
      • RE: Nintendo earnings and profits in freefall

        @Economister More than half a brain? How much, 51%? LOL, that's techically more than half a brain, but not by a big margin.
        OxBAADFOOD
      • Clearly.....

        @HalfAKilo

        a LOT more than you.

        My last post to a moron
        Economister
    • Right, which is why no one buys XBox or PS3.

      @Economister
      Oops, look at that: they [b]do[/b] buy XBox and PS3!

      Oh, and I think MS undestands that, they did incorporate XBox Live into WP7.

      Why would they do that if they didn't understand that?
      AllKnowingAllSeeing
      • Why is it that....

        @AllKnowingAllSeeing <br><br>all you fan boys can only look in the rear view mirror, but not forward. It happens repeatedly here: I comment on the future, and mindless idiots talk about the past to try to prove me wrong.<br><br>Sheesh

        Edit: Your first paragraph seems to disagree with me, and your second paragraph seems to agree with me. Are you confused often?
        Economister
      • RE: Nintendo earnings and profits in freefall

        @Economister You comment out of your ass, not on the future. Big difference.
        OxBAADFOOD
      • So that's how it works, econmister: If we disagree with you on

        we all of a sudden become a "fanboi" or a "mindless idiot"

        Here, in case you missed it:
        Your statement: [i]Nintendo, Sony and MS will all discover this over the next few years. Kids would much rather carry a smart phone that can do it al[/i]

        My response: [i]Oh, and I think MS undestands that, they did incorporate XBox Live into WP7.[/i]

        Now, WP7 is a [b]smartphone OS[/b], and they did incorporate [b]XBox Live, (games)[/b] as well as [b]gaming capability (games)[/b] into WP7, which, as my first sentence states, is a [b]smartphone OS[/b], so do you think that they already learned, and planned for the future?

        So how is that "looking in the review mirror. To me it looks like they're looking towards the future?

        But you're an ABMer, so if you don't like the truth, or are embarrased that you spoke without thinking (proven wrong), then I can see why you would call us fanbois and mindless idiots.
        AllKnowingAllSeeing
    • True enough

      @Economister

      For at least portable gaming devices. A quick trip to the local mall can quickly confirm what the kids are using these days for portable gaming and it's increasingly not Nintendo or Sony products. IMHO consoles have some life left because makers are quickly moving toward online game distribution but their advantage is fading as built-in processing horsepower for TV's and other devices is moving fast while the consoles are standing still with their minimum 5+ year refresh cycle.
      oncall
      • For casual gamers....

        @oncall

        I see a huge advantage in being able to play your favorite games ANYWHERE, whether it is on your smart phone, tablet or TV, and maybe even be able to pick up where you left off on a different device. I think we will see an explosion of that type of integrated and pervasive gaming environment, especially on Android, but both Apple and MS will try hard to conquer this market also. If you do not cater to that market, you may be missing the boat big time. We all want a bit of mindless R&R every now and then.
        Economister
      • RE: Nintendo earnings and profits in freefall

        @oncall

        Your theory ignores the lifetime sales of the Nintendo DS. Thing is, there are experiences that you cannot get on any smartphone that you can on a DS or PSP. Why? Core gamers will never be able to get their fill on a device with no controller interface. We need to feel the buttons beneath our fingers to play successfully, and virtual buttons don't cut it. Besides, there is no Mario or Zelda on iPhone, and as long as that's the case I'll keep getting the systems that do have them (and other big franchises, of course).
        guardianmega
      • Trivial

        @guardianmega<br><br>Why not a "slide out" for game controllers and use a virtual keyboard/number pad? You can have three basic HW configurations for essentially the same device: Virtual keyboard only OR a "slide out" with either a keyboard or game controls, maybe even both.<br><br>Other than the dual screen (which a large screen smart phone could replicate in any event), it is hard to see how a hand held dedicated gaming device will have much success except for children too young to have a smart phone.<br><br>Edit: Look at Sony putting their games on Android. Are you saying Nintendo would never do that even if their HW sales are tanking?
        Economister
      • I call it as I see it

        @guardianmega

        Nintendo earnings in the tank, brick and mortal game distributors stocks gutted, and what I see with my own eyes. Core gamers like you might be able to keep Nintendo on life support for many years as it tries desperately to parlay its game library into just one more round of hardware. What's really happening is their game ideas are being mercilessly copied by iOS app makers. Did you see how many wannabe farming programs were on iOS before Zynga finally got off its butt and ported Farmville to iOS? How many times do we have to hear about the "core" anything keeping a company that refuses to adapt afloat? Is the core "I wanna feel a book in my hand" reader keeping Borders alive or the core "I want instant gratification that a large rental DVD store provides" keep Blockbuster profitable? Profits are made "at the margins", that's just a fact, and the casual gamers are moving on.
        oncall
      • RE: Nintendo earnings and profits in freefall

        @Economister

        Nintendo has already said that they will never make games for other people's systems, so I'm just going by what they're saying. Slideout controllers would be fine, but there are none available on the market. And slideout keyboards would need to have pretty enormous keys in order to comfortably use with an action game, especially a platformer. Also, you'd have to make a smartphone very clumsily wide if you wanted to replicate dual screen functionality, so that one's a non-starter. And finally, I would hardly classify Nintendo's sales as "tanking". They're down due to the fact that generation churn is happening on the DS (and is anticipated for the Wii). It happens at the end of every hardware generation. I'm actually typical of this; when the 3DS was announced last year, I immediately decided to pass on a DSi, which is something I otherwise would have purchased. I would be surprised if they were still in the same spot financially once the 3DS takes off, which, if it's game lineup is any indication, it most certainly will.

        Also, although I'm a PSP owner, I have no intention of getting any Sony games on my Droid, unless they're casual games that I really want. Goes back to that whole "no controller" thing.
        guardianmega
      • RE: Nintendo earnings and profits in freefall

        @oncall <br><br>Your analogies don't work. There never was a core "Feel the book" or "DVD Store" audience. There were readers and there were renters, simple as that. There was no alternative back in the day for the original mediums, but there is a better one now, and they are moving on (although I would classify the notion that paper book sales will ever go away as laughable). In the end, though, the products that the consumer buys did not change. But the core gamers were enough to support all of the game console/handheld makes long before the casual gamer audience even existed. What makes you think that they won't be able to keep that up? There will NEVER be as good a core game available for iOS/Android as there is for consoles/handhelds (Mario, Zelda, God of War, Halo, etc.). And when it comes to Nintendo's earnings being "in the tank", you're completly ignoring generation churn, which is happening on the DS with the 3DS looming large. Stuff like this happens with every hardware generation, but it's usually less dramatic because Nintendo's seen more success with the DS and Wii then they have with any previous generation. It makes it seem like a bigger drop-off when you're falling from higher up.<br><br>And I'm tired of Farmville players calling themselves "gamers". Casual gamers, certainly. But they certainly don't represent my prefrences.
        guardianmega
      • Why?

        @guardianmega

        "But the core gamers were enough to support all of the game console/handheld makes long before the casual gamer audience even existed. What makes you think that they won't be able to keep that up?"

        Very simple. When Nintendo was supported by the "core" there were no real alternatives to their games. Nintendo had THE best games and OWNED the mobile market with no viable contender much less a mobile contender that, putting the gaming aspect aside, could actually do many useful things. It was a "small" and "growing" company, growing on the fact that "casual" gamers were becoming "core" gamers and casual gamers were continually being added because the alternatives, if there were any, were actually more expensive and generally useless for anything besides their respective small game libraries. Other than that, there is absolutely nothing special about "core" gamers other than they are more addicted to their games than casual gamers, both groups have spendable money and their money is considered EQUAL by the bank and, perhaps just as importantly, the stockholders.

        Now Nintendo is a "huge" publicly traded company with large operating expenses. And as all huge, publicly traded companies with large operating expenses know deep down, but don't like to talk about, you are either growing or dying.
        oncall
      • RE: Nintendo earnings and profits in freefall

        @oncall I have to agree. I carry my Droid (not even X) with me most of the time. I have a screen full of games that the grandkids and some friends children and grandchildren ask to borrow. I only have simple free games, but the kids love 'em. bigger games are available, but I don't use them, and don't want the grandkids to use them, as they take up too much time. It's hard enough to get the phone back as it is.

        BTW, simple games includes Mah Jong and Chess. I understand there is a WOW client that works on Android, but it must be miserable. I can't imagine World of Warcraft on a two inch screen. Ouch!!

        Movies it can do, but again, not on a two inch screen.

        On a side note, there are a few TV's that run Android, and use the phone as a remote. Now that would make a gaming system. I think that both Apple and Microsoft covet that market.

        Interesting times.
        YetAnotherBob
      • The Problem with smart devices

        as platforms for gaming is the same as the list of problems that come from PC gaming, which has essentially died. There are still good games that come out on PCs, and some time wasters, but overall the differences in the system hardware make a consistent gaming experiences impossible. Its too much work for the developers to design games to work identical across all hardware, with out having to sacrifice quality. It's always been this way.

        But it is really easy for developers to come up with high quality games for a console or devoted portable device. Plus, devoted consoles are usually ahead of their time compared to other consumer electronic devices because they only have to focus on one thing, gaming. I mean, look at the PS3, it has an eight processing cores, how many of people really have eight processing cores in their home computers?

        So, when it comes to playing video games, people are willing, and will continue to be willing, to shell out extra cash for devoted gaming systems. The problem Nintendo is having stems from a lack of quality games, not a weak console. The gaming community, at least as far as I'm involved with it, has been complaining for a long time about the lack of serious gaming titles Nintendo has put out. Yeah, they get their slue of big sellers, but systems like the PS3 and Xbox play not only to the general public, but the niche markets as well. How many RPGs have you seen on the Wii? On the DS? Then compare those to the number you've seen on Playstation systems. And first person shooters or tactical espionage games? Nintendo has almost none. They've been playing to the market like its still full of children, but gamers have grown up. That's their failing. And until they can address their issues, I think they'll continue to decline.
        sehamon
    • RE: Nintendo earnings and profits in freefall

      @Economister Wow, you obviously do not have kids or have kids that hang in groups with kids. That is soo off base it's actually funny. Portable games on phones yes...that will grow but the consoles will be around a long time. For a lot of games the crappy small screens will not cut it. I have a 13 yo and a 16 year old. When out - small portable at home consoles (when they earn their time of course).
      ItsTheBottomLine