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Nintendo Reports First Loss In 30 Years

April 26, 2012

Michael Harper for RedOrbit.com

Gone are the days of Nintendo´s dominance. Once a video game powerhouse in the 80s and 90s, the Japanese play makers all but fizzled out at the turn of the century. Then, in 2006 Nintendo brought the Wii into living rooms once more as families gathered together to play games of virtual golf or give way to nostalgia and play their favorite games of yore, the likes of Super Mario Brothers or Donkey Kong.

The next year, Apple introduced the iPhone and iPod touch, sending shockwaves all the way to Tokyo. When the App Store was introduced in 2008, mobile gaming took off to a level not seen since the heyday of the GameBoy. After subsidiaries, a new iPhone cost about as much as a Nintendo Wii, but the games available in the App Store are dramatically cheaper, 99 cents to $10-$15 as opposed to $50-$75 for the Wii. As the iPhone improved, so too did the quality of games in the App Store. Nintendo stubbornly refused to jump onboard, staring defiantly in the face of excessive demand as Apple users clamor to play their favorite 80s and 90s Nintendo games on their portable devices.

Now, they are starting to feel the pinch as the company reported a massive net loss of 43.2 billion yen ($532.5 million), their first loss in 30 years. In previous year, they had managed to generate a 7.6 billion yen profit.

Last year, Nintendo fell short of their projected Wii sales, moving only 9.8 million consoles instead of the 13 million they had hoped for. Ditto for the 3DS, which fell short of their estimated sales by 2.5 million units. As for their DS, Nintendo only managed to ship half of the 11 million units it hoped to sell.

Nintendo can´t only blame the emergence of Apple and other smartphone and tablet makers for these numbers.

In order to get devices in the hands of customers, the company was forced to sell their 3DS at a loss. According to Nintendo president Satoru Iwata, these deep cuts weren´t the only thing to go wrong with the 3DS this past year:

“What went wrong was that sales of the 3DS didn´t take off as we expected,” Iwata said according to Bloomberg.

“Sales of the 3DS in Europe have not been as buoyant as those in Japan.”

Even though Nintendo was able to move more than 13 million 3DS devices, the fact that they took a hit on each one leaves analysts worried about the future of the gaming company.

They aren´t yet throwing in the towel. In a statement reminiscent of RIM´s Thorsten Heins´ “Back to basics” comments,  Nintendo says they will continue their “basic strategy of ‘Gaming Population Expansion’ by offering compelling products that anyone can enjoy, regardless of age, gender, or gaming experience.”

Nintendo is also placing high hopes on its new Wii U console. This new console will go on sale during the very lucrative holiday shopping season and features high definitions graphics and a 6.2 inch controller which will be used to shift the content between the screen and controller.

This new device will not address a main drawback to every Nintendo device: Seamless, go-anywhere gameplay. Gamers can take their iPads, iPhones, and iPods everywhere they want to go, continuing one game while in bed, on the bus, or on the toilet.

Furthermore, some analysts are still calling for Nintendo to start selling their games on competing devices in order to cash in on this incredible demand.

“Nintendo has to deal with the change and let Mario games be played on non-Nintendo devices,” said Nanako Imazu, analyst for CLSA in Tokyo, according to Reuters.

“I think it will take at least couple of years to see that.”


Source: Michael Harper for RedOrbit.com