Nintendo Profits Slump
July 31, 2013

Nintendo Profits Sag Despite Strong 3DS Sales

Peter Suciu for - Your Universe Online

It is a tale of two game systems for Nintendo. It is the best of times; it is the worst of times. Nintendo 3DS sales remain strong, and even with increased competition from mobile handsets and tablets, the handheld game system has seen a massive sales surge in Europe and the United States.

In a earnings report covering April to June, Nintendo said it sold 1.54 million units in Europe and another 1.19 million units in the United States on top of the more than 3 million units sold in Japan. In addition to strong hardware sales, the games for the system have been doing well too. These include titles like Luigi's Mansion: Dark Moon, which sold 1.43 million units worldwide, while the Tomadachi Collection has already sold 1.39 million units just in Japan.

All this has been good for the company's bottom line, but apparently not good enough.

On Wednesday Nintendo reported its financial results for the first quarter, which ended on June 30. According to Venture Beat, Nintendo sold only 160,000 Wii U game consoles between April 1 and June 30. "That's a terrible showing for a console that is less than a year old," Venture Beat's Dean Takahashi wrote in the article.

"Nintendo reported an operating loss of 4.92 billion yen, or $50.2 million, on net sales of 8.15 billion yen, or $832.8 million in the first fiscal quarter. Net profit was 8.62 billion yen, or $88 million."

The Wii U has not kept up sales as the company had hoped. Since its release last holiday season, Nintendo has sold 3.61 million Wii U units worldwide. Earlier predictions from Nintendo put sales expectations at 5.5 million units by March 31 of this year. However, actual sales didn't even approach goals set by the company. Software sales for the Wii U are also declining, totaling a mere 1.03 million units for the quarter that closed June 30. Overall, software sales were down by 51.3 percent from the previous quarter.

Software may be a contributing factor to the lukewarm reception the Wii U received. "Last November, Nintendo launched the Wii U amid a series of game development delays that contributed to tepid sales. The company hopes that a pipeline of new games that includes Pikmin 3, Wii Party U, and Super Mario 3D World will eventually woo users into buying the console," the Wall Street Journal reported.

Even as software ramps up to a full release schedule, interest in the console doesn't seem to be catching up. "But sales of the Wii U slowed considerably during the quarter. Citing the continuing lack of key first-party titles being released to drive hardware sales, the gaming giant sold just 160,000 Wii U systems in April to June. It still expects to sell 9 million units of the Wii U machine in the fiscal year to March," wrote the Journal.

Flagging sales for the new console system were not a complete surprise for Nintendo.

"Nintendo has in the past lowered its sales goals for the Wii U, which has a touch-screen tablet controller called GamePad and a TV-watching feature called TVii," the Washington Post reported.

"One thing Nintendo has going in its favor is the yen's recent weakness. A cheap yen is a boon for Japanese exporters such as Nintendo as it boosts the value of overseas earnings when converted into yen."