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darkknightkryta on 15 July 2012
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Aielyn said:
darkknightkryta said:
And how are the Wii and DS absorbing the 3DS' losses when Nintendo is posting losses?  They wouldn't be losing money if the Wii and DS are currently generating enough money.  They were very profitable before, they're not now.

An examination of their financial reports reveals that Nintendo was actually in the black in the last two quarters of the last financial year. Here's their net income for the 2011-2012 financial year, shown as at each quarter within that year.

Q1: -25,516,000,000 yen

Q1 and Q2: -70,273,000,000 yen

Q1 to Q3: -48,351,000,000 yen

Full year: -43,204,000,000 yen

Now, looking at this, it becomes rather clear - in Q1 there was a relatively modest 25 billion yen loss. In Q2, the loss was nearly 45 billion yen. Then in Q3 (Oct-Dec), they regained about 22 billion yen, and then another 5 billion yen in Q4.

OK, with that in mind, now consider that they've spent the last 24 months in heavy development of the Wii U. The Wii and DS are more than absorbing the loss due to the 3DS. It looks like what drove them into loss was actually Wii U development (research, prototyping, creation of the manufacturing machines, things like that) - that's now effectively finished (I'd assume that the console is up to the manufacturing stage, now), and their main expenditures now, other than manufacturing, would be game development (and marketing), which they'd be doing anyway.

In fact, I wonder if the release of NSMB2 in August might not be to compensate for the high manufacturing cost of Wii U relative to console sales (Wii sales being so low), so that they don't have another quarter loss in Q2 FY2012, purely for the sake of image (otherwise, I'd have thought they would delay it until October, and use it as the start of the holiday schedule).

Fair enough.  Didn't look directly at the figures, Iwata cutting his pay check, and news of Nintendo loosing money 2 quarters in a row made it seem worse.  Though this is still the first time this has happened to Nintendo, they've gone between console/handheld generations without losses.  Wii and DS can't cover the cost of the Wii-U's R&D as you said.  I wouldn't even be surprised if the losses on the 3DS aren't fully being absorbed either, console R&D would have been spread throughout the years, even during when Nintendo was making mad profits.  it's going to get worse for Nintendo's once the console hits full manufacturing too.  Nintendo might not see a return to profit for another year and it will be longer if the Wii-U doesn't sell well.