State of Nintendo

Nintendo has recently released a ton of information and sales figures and who better to help you analyze all those numbers than your friendly neighborhood (sarcastic) GWW writer?

So let’s start off with the good news…Nintendo has turned a profit for the first time since 2011! Break out the balloons and champagne! The total profits amounts to about $207 million. There’s just one problem…..the profits aren’t from an uptick in sales, those were down about 3.8%. Rather, the profits came from the fact that the yen is weak. In other words, it costs less for Nintendo to make stuff in Japan but they are still selling them for full price in the US and other regions.

This presents a potential serious problem for Nintendo in the future and it knows it. Relying on the strength or weakness of a currency in order to generate a profit is not a solid business model but let’s dig down into the numbers a bit more, shall we?

Nintendo needed a break and it came in the form of the weak Yen.

Nintendo needed a break and it came in the form of the weak Yen.

3DS hardware sales are down to 8.7 million from 12.2 million last year and are projected to go lower by Nintendo. Software sales meanwhile still remain relatively strong though with games like Pokemon Ruby/Sapphire and Smash Bros. selling just shy of 10 and 7 million units, respectively. The company plans to revitalize sales by specifically targeting female customers but wouldn’t provide any specific details. Having been to Japan, I’m not sure who there is left to target. In my experience virtually everyone on public transportation already had a 3ds in some form. I was getting 100’s of streetpasses daily. I’m very curious to see what Nintendo has planned. On the console front meanwhile, the Wii U is in terrible shape. While hardware sales have gone up from 2.7 to 3.8 million year to year  – most likely due to the release of games like Mario Kart 8 and Smash Bros. – this is pathetic when compared to the PS4, which should be rapidly approaching 15 million lifetime sales (versus the Wii U’s 9.5 million) as you’re reading this. This is especially bad considering that the Wii U came out a FULL year before the PS4.

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So what’s Nintendo’s answer to their obvious impending financial doom? For better or worse, it’s diversification. Nintendo’s Amiibo line has been an extraordinary hit. Over 3.5 million Amiibo units have been sold! Interestingly enough, the USA accounts for 66% of the sales while Japan, a place renowned for the sale of figurines (granted most of them female in seductive poses), only accounts for 11%. Regardless, the number is staggering considering that only a handful of games utilize the figurines. More likely than not, most people are buying them to collect or display them and not actually utilize them.

Hey Japan, if you're not using your Amiibo would you lend us some? We have a shortage. Thanks.

Hey Japan, if you’re not using your Amiibo would you lend us some? We have a shortage. Thanks.

As we’ve reported before, Nintendo has also partnered with mobile developer DeNA and has promised its first smartphone game will be out in 2015. Personally, while I have no doubt that millions of people will download the app out of sheer curiosity, I’m very skeptical of how good the game will actually be. Four more games are scheduled to be released in 2016 but details are slim and expectations are quite high.

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Last but not least, Nintendo has also announced a partnership with Universal to develop Nintendo themed attractions at their various theme parks. We don’t have any details yet but this is a great move on Nintendo’s part. Who wouldn’t want to fork over their money to a eat fake sugary mushroom and go for a ride on Yoshi’s back?

Nintendo has quite an uphill battle in front of them, and it’s clear that they know this. The question is whether they will be able to rise to the occasion with a combination of the NX (the new hardware we know almost nothing about) and all their new side projects (like a sleep monitor! ) Or will they fall into ever increasing irrelevancy like Sega? Only time will tell…

Do you think Nintendo will turn it around? Tell us your thoughts in the comments below!

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4 Comments

  1. Good article, Mike. One thing, though: PS4 sales are much higher than that–recently Sony announced the sales surpassed 22.3 million.

  2. Very nice article, Mike. To answer your question, yes, I do think Nintendo will turn it around. In fact, I believe it’s the theme parks and other ways they appeal to kids that will provide them with staying power. Losing money is not where they should be, but growth over time is critical. And they’ll accomplish that.

  3. It sounds like you think 3DS sales are going down because they’ve reached market saturation, in which case it isn’t necessarily a bad thing. Is that right? Was there any report of software sales for WiiU? After all the hardware is not the money maker.

    Can’t wait to see something Nintendo-themed at a Universal park. That will be amazing.

    • Agree. I’d love to walk through Hyrule Forest in a haunted-mansion-like atmosphere.

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