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How can Nintendo remedy its biggest money drain?

Forums - Nintendo Discussion - How can Nintendo remedy its biggest money drain?

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The best option I can think of for Nintendo is to get involved with foreign exchange options (no pun intended), but this would only put an upper limit on how much money they could lose in a year.

While people didn't listen to me months ago, I have always suspected that the 3DS launched at $250 because changes in exchange rates (and Nintendo protecting against future exchange rate changes). After all, when the DS launched the dollar was worth (roughly) 120 yen and today it is worth 75 yen which means that a $150 system in 2004 would launch at $240 today if the Japanese price was constant.



Train wreck said:
Joelcool7 said:
Train wreck said:
Nintendo is not in a position to be a hedger of currencies because:

And Nintendo business is deteriorating, if it wasn't, they would not be revising everything. That's not a currency problem. They should be worrying about how to get back to its mid wii days as opposed to trying to alter currencies to make their business look good.


Thanks for your input. Anybody else have any ideas how Nintendo could lessen the blow or find a way around the strong Yen?

You are asking the same question again expecting a different answer, thats the defination of insanity.  There are alot of smart business people who work for nintendo and I am sure if their was a way to "lessen the blow" of a strong yen, they would have found it.  You are not going to find a better answer.

I wasn't necessarily asking you the same question and expecting a different answer I was asking if any other users had a different idea that Nintendo could use. Also yes I am positive Nintendo has looked into this issue greatly and I have no doubt anything we could come up with they have already thought over. This thread wasn't created so Nintendo could see our answer and save the company. It was created to see what users think are Nintendo's options and lead to intellectual discussion over why Nintendo is doing what there doing and how they could pull out of this.

Also yah if 80% of Nintendo's losses are attributed directly to the Yen then they are not doing as horrible as it looks. I wouldn't say they aren't deteriorating because we all know they are. But 3DS has now sold more then the origional DS did at this same point in time during its life span. Hardware sales are way up, the problem is the hardware is selling at a loss but Nintendo has stated that they aren't losing much on every unit. A major other reason is while hardware sales are threw the roof software sales are dropping. Without software sales to make up for the hardware loss Nintendo is going to lose money.

If curreny changes was the only aspect of Nintendo business that prevented them from making a decent quarter, then investors would be piling into the stock because their outlook would be .  Yes the 3DS outsold the DS in the same time frame, but lets take out the fact there was a 33% price cut. 

The price cut doesn't matter much sales wise when we are talking market share which is what I was talking. DS launched at 199.99$ 3DS isn't drastically cheaper since it still costs a good 169.99$ though I must admit if I was making the decision I would have dropped only to 199$. Investors are getting bad advice from many analysts and if you take the comments made to media the investors at least the ones verbally shedding their frustration are not knowledgable of the industry. Many investors have apparently suggested Nintendo would be better off going third party and supporting all the platforms from Mobile to Social to PS3/360/PS4/Nex-Box and PC/Mac. The fact that anyone would suggest such a suicidal move shows they aren't aware of Nintendo's business model or how much damage a move like that could do!

But market share wise and Nintendo's ability to sell there products appears to be back on track. The loss of money on each unit was necessary to bring 3DS in line with DS. The lack of software sales is also not entirely Nintendo's fault, third parties were supposed to continue launching software on a regular basis during this time frame. But third parties got scared and jumped ship (I'm talking about you UbiSoft) this wasn't Nintendo's fault entirely.

Can you post a link where 3rd parties were supposed to continally launch games for the system?  Companies dont get "scared" its called making sound business decisions.  Why would companies throw good money after bad, especially for a faulty launch.

I don't really need a link at E3 2010 over 30 titles were announced for 3DS. More games got announced between then and E3 2011. Titles should have been getting released every few weeks, at least a few each month. Yet barely any have been delivered and most of the western publishers halted development or cancelled it altogether. Well for starters game publishers are aware of Nintendo's track record Nintendo's platforms are always profitable and they always lead to sales of software. In the past on home platforms sure sales weren't as robust as PS2 but UbiSoft and many western publishers didn't stop development of GameCube games completely just because the hardware didn't sell as well as Sony's.

Nintendo would have notified its third parties to re-assure them that they would remedy the situation. UbiSoft being their biggest third party supporter had to have known about Nintendo's plan and they must have also realized it would no doubt succeed. Obviously many Japanese developers and publishers were pretty confident in Nintendo's ability to push 3DS hardware so why weren't the western publishers?

If you wouldn't call it companies getting scared what would you call it? The supposed biggest third party supporter of Nintendo bails early on because they fear Nintendo couldn't save 3DS. Well that is getting scared they were scared Nintendo would fail.

In the end I don't doubt Nintendo is trying really hard to lower costs and regain profitability. I also don't think they can be held responsible for most of their losses. 80% of those losses had nothing to do with Nintendo's performance, there is nothing Nintendo could have done to prevent these losses. Then I'd suspect about another 5-7% at least is due to 3rd party publishers and their in ability to sell software, with the 3DS numbers there is no reason that these publishers should not be releasing new great software every month. Then the remaining 13-15% is soully Nintendo's fault.

Saying that there is nothign nintendo could do is false.  Currency flux doesnt happen in  a straight line.  There is no strong Yen problem in japan, they could have upped sales in that reigon and rely less on foreign markets.

How could they increase sales in Japan drastically enough to balance the books? I can't see how they could make up for almost a billion dollar loss with Japanese sales.

But judging from the numbers I am fairly optimistic. I mean PS3 lost Sony over 2-billion dollars in its first year on the market 2007. If Nintendo only loses 200-mill launch year I'd say they are not in trouble at all, I suspect next year 3DS will become profitable and WiiU will lose Nintendo some money. But I'd fully expect Nintendo to turn everything around by 2013 if the Yen doesn't continue to grow this fast!

 







-JC7

"In God We Trust - In Games We Play " - Joel Reimer

 

Haven't been here in a while.

I am upset with how people are treating this news. Looking at the statements themselves, Nintendo biggest problem is sales are too low. I'll write a post about this in due time. But Nintendo's problem is the normal business operations.



Or change everything into Bells and live happily ever after in Animal Crossing!

Just joking of course



Switch!!!

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fedfed said:
Or change everything into Bells and live happily ever after in Animal Crossing!

Just joking of course


Or are you?  Ofcourse you are...



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