padib said:
To understand you need to look for properties that weren't there before and are there now. Apart from all the other points I mentioned, the one you bring up might very well be the most considerable one, let's look at the numbers. The truth is, Nintendo sure does make a lot of money off hardware, but their true profit revenue comes from software profit. Truth is, software sells at 183 Mill (top) yearly and makes a revenue of maybe 60% (at worst), whereas hardware could sell max 28 Mill yearly and make a profit of 50% at the very best (DS). Having said that, let's look at the software trend for the past 6 years for the world's most respected and top-selling software publisher. Nintendo SW Yearly since 2006 2006: 65,547,831 2007: 105,243,797 2008: 147,697,295 2009: 131,642,398 2010: 122,473,799 2011: 44,972,022 You can be certain that the Wii will do barely anything aside from Kirby and SS to reverse this. The 3DS on the other hand may very well bring Nintendo back to profit for the year with Huge sellers such as Super Mario 3D Land, Super Mario Kart 7, and now with new bundles for Nintendogs (which is I guess a holiday seller, not a March seller).
As you can see both Wii and DS will have performed largely below previous year values. Again, come holidays the 3DS is probably going to reverse much of the lost preformance of these two old consoles. Hardware In terms of hardware, the trend is also downwards, and drastically so for the DS. For Wii, not only does Nintendo's profit margin reduce dramatically as the years go by (due to price cuts), but the volume pushed to consumers is significantly lower and again I doubt the holidays are enough to push the trend upwards. The 3DS will have a large upwards trend, but it sells at a loss so that is negatively productive when it comes to the subject of profit.
Anyhow, here are the charts:
Clearly, Nintendo is taking a hit from the low DS performance this year, and nothing is going to change this performance, not even the holidays. The wii will rise a bit, but its margins are low at this point (probably 25$ a pop) that the push needs to be really considerable for this to affect profit in an important way. The DS has a higher profit margin but it's caught in a slump.
So, this probably paints a better picture for you. Then you have to take into account the other factors mentioned. And one of those is the fact that Nintendo's sales performance has shifted even more from Japan to Europe and America, even if the market there was low at least a low Yen wasn't as hostile for Nintendo say 2 or 3 years ago.
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good post.
The financial report is worth looking out for then!
