padib said:
Dr.Grass said:
padib said:
Dr.Grass said:
KillerMan said:
I just don't know how they can make that much loss? That is PS3/X360 early day days level of loss. Yes exchange rate is pretty bad and they probably sell 3DS with slight loss but still they sell tons of Wiis and DSs with profit and they also still sell most 1st software with high profit margins. Could it be that R&D costs for Wii U are that high? I remember Sony losing tons of money even before PS3 launch because of high R&D costs for PS3.
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I'm waiting for someone to answer this.
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These have been mentioned before, but I'll add some of my own to the mix:
Japan Earthquake
R&D costs for 3DS and WiiU (hardware and software)
Manufacturing costs for WiiU dev kits
Exchange rates
Launch marketing campaigns for 3DS
Low 3DS software sales performance
Software development costs for yet unreleased games
No big hitters lately (the 25Mills of games like NSMB or Mario Kart) -> this is a big one that should be reversed very soon.
Huge moneyhats: MH for 3DS and Dragon Quest Wii
3DS selling at a loss
Low Wii sales hardware and software
It's hard to tell which one is the most considerable, and the main thing to keep in mind is that these compound... e.g. Expensive 3DS marketing + low 3DS software sales + low Yen exchange
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Point is that they seem to have lost a helluva lot of money even though;
Wii is still selling fantastically,
DS is still selling fantastically,
3DS is selling respectably.
If only a small amount of that is due to the tsunami, then I'm not sure how this is possible.
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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).
To get an idea of what happened at the software level this year (which console caused this), here is the trend for the consoles, of which we know Nintendo holds a large share of sales volume percentage:
| DS |
Wii |
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2006: 76,377,067
2007: 111,960,799
2008: 158,758,144
2009: 145,955,687
2010: 122,451,979
2011: 50,132,271 + 8,874,659
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2006: 8,454,554
2007: 74,679,166
2008: 177,536,517
2009: 183,258,198
2010: 184,476,703
2011: 73,685,619
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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:
| DS |
Wii |
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2006: 20,556,898
2007: 29,275,557
2008: 29,928,819
2009: 28,179,762
2010: 20,912,980
2011: 6,084,418 + 5,904,330
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2006: 2,932,010
2007: 16,385,967
2008: 24,288,177
2009: 21,208,768
2010: 17,641,592
2011: 6,151,173
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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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