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Nintendo misses its fiscal forecasts as the Wii U struggles to sell
Nintendo misses its fiscal forecasts as the Wii U struggles to sell
April 24, 2013 | By Mike Rose

April 24, 2013 | By Mike Rose
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    23 comments
More: Console/PC, Business/Marketing



Although Nintendo was able to swing back to profits for the 2012 fiscal year ended March 31, the company ended up recording only half of its previously forecasted income.

Nintendo says that while its games were popular in the Japanese market, it is struggling to hit targets overseas, where it is not generating sufficient sales momentum.

While the company was able to record a net profit thanks to a favorable exchange rate, operating loss -- which is a better indicator of a company's core operations -- was 36.4 billion yen ($366.0 million) as a result of the negative impact of the Nintendo Wii U launch.

New Super Mario Bros. 2, released for the Nintendo 3DS last August, has sold 6.42 million copies worldwide, says Nintendo, while the new Animal Crossing on 3DS has sold 3 million units in Japan alone since launching in November.

Overall, the Nintendo 3DS sold 13.95 million hardware units worldwide during the 2012 fiscal year, meaning that the total number of 3DS handhelds sold is now 31.09 million, and that the handheld sold 1.24 million units in the fourth and final quarter.

This also means that Nintendo failed to miss its sales projection of 15 million for the console, despite cutting the estimate down earlier this year.

As for the Nintendo Wii U, the publisher says that New Super Mario Bros. U and Nintendo Land have sold 2.15 million units and 2.6 million units respectively.

The Wii U console has sold 3.45 million hardware units worldwide -- again missing its previous forecast of 4 million units sold for this fiscal year, and down significantly from its original forecast of 5.5 million units sold. This means that just 390,000 Wii U units were sold in the last quarter.

The Nintendo DS saw 2.35 million hardware units sold (now 153.87 million units sold to date), with Pokemon Black & White 2 bringing in a total of 7.81 million sales worldwide between them.

For the fiscal year ended March 31, 2013, the company posted revenues of 635.4 billion yen ($6.4 billion), down 1.9 percent year-over-year, and profits of 7.1 billion yen ($71.4 million), compared to losses of 43.2 billion yen ($434.5 million) year-over-year. Nintendo said a favorable exchange rate from a depreciated yen helped the company out of the red, as the Japanese company exported goods to regions with stronger currency.

Notably, these figures missed Nintendo's previous forecast for the year, with revenue down 5.2 percent compared to what the company had estimated, and profits down 49.3 percent, from the previously projected 14 billion yen ($140.7 million).

Fiscal 2013

Looking to the next fiscal year, Nintendo says that it aims to break the overseas market by concentrating on proactively releasing key Nintendo titles.

As part of this effort, Nintendo plans to more actively support Japanese studios in bringing their games overseas. The company will also aim to boost digital sales of packaged software, in order to increase the number of new sales opportunities.

Looking to the Wii U, Nintendo notes that a number of the most notable titles for the console were delayed, and that it plans to make sure this happens less often.

The company says that it will continue to communicate the features of the hardware to as many people as possible, especially through the Miiverse channel.

Nintendo estimates that it will see revenues of 920 billion yen ($9.2 billion) for the next fiscal year and profits of 55 billion yen ($553.2 million), with 9 million Wii U hardware units sold, and 18 million 3DS handhelds sold.


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Comments


Phil Maxey
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The path back is very very simple. Cut the price of the Wii U, get their major games out there asap.

But I just never saw how it was a good thing to release a console that would be perceived to be underpowered (compared to the PS4/720) a year before the new consoles arrived. And release a device which hints at being a tablet but actually isn't one. Strange decisions.

They could of released a true console/tablet which I'm sure would of been a success. They would of shifted their competitors from being Sony/MS who had more powerful machines, to Apple who they would of been on par with. Everyones always wanted Nintendo games on the smartphones, if Nintendo had released a console/tablet this would of happened on their own tablet.

Merc Hoffner
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Huh? Wasn't the Wii underpowered relative to competition? the 3DS? the DS? The GBA? the GB? even the PS2? If you take even the most basic history into account it's absolutely clear that NOT creating an underpowered console is dangerous. We say the WiiU suffers in the face of PS4 and 720 as a given, but is anyone even considering the very real concern as to the sustainability of either of those systems? What if PS4 loses $150 a pop and sells even more poorly? And how would making a powerful machine help them on the market anyway? It certainly wouldn't attract more 3rd party support - they're intent on isolating this company. What's the alternative? You're suggesting it's for a company with 5000 employees to chase down the Apple and Google behemoths and challenge them to a battle for integration. As much as I'd LOVE a Nintendo phone or a Nintendo tablet, are you serious? Is the whole internet serious? Are the analysts serious?

Typically alternatively suggested is to give up on hardware. I can't state more emphatically how much; a) the loss of vertical integration would limit Nintendo's ability to create new gameplay, and as a consequence show others new ways to play; b) their potential revenue would be compressed : N.B., in a terrible year Nintendo posted more than twice the revenue of the entirety of iOS; c) how shockingly unproven the profitability or sustainability of the mobile market is - the facebook bubble is effectively bursting as we speak for cripes sake; d) Sega is dead.

The only option I see is to try and create unique and diversified hardware out of inexpensive components and tailoring your games to suit, such that you create games that are unique, easy to understand and universally enjoyable. Which is basically what Nintendo's been trying to do, only they're foundering under their perennial problem: throughput. This is where I absolutely agree with you. Again, there are untenable delays in their software, again 3rd parties failed to fill in the gaps. If I have one real gripe with Iwata's stance, it's been a failure to rapidly expand capacity and buy up and reform good but failing studios like cing, clover etc. from 2008 to present.

Dear Mr Iwata. Don't listen to the analysts. They haven't been right yet. But get a move on.

Phil Maxey
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@Merc

People will buy the PS4/720 because they will want the latest and greatest AAA games.

The Wii did as well a it did because it introduced a different kind of audience to console gaming, but that audience soon moved on to Facebook and now mobile.

So the Wii U can't compete along the lines of cutting edge visuals, and it can't rely on the casual market either.

The Wii U is expensive compared to current gen consoles, so people are sticking with their current gen consoles.

People know the next gen of consoles are around the corner so I'm sure most are saving their pennies to spend on one of them.

I'm a big fan of Nintendo, both it's software and games, but for the reasons in my original post I don't understand the reasoning behind the Wii U. The only answer is to cut the price and get it's main games out as soon as it can.

Looking further down the road, it would be great if they released a successor to the Wii U that was a true console/tablet.

warren blyth
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Agree heartily with Merc.
I thought it was clear that nintendo has always looked at what components they can get cheap -first - and then found innovative ways to make games with that. (I thought some dude retired from Nintendo and wrote a book about this strategy. yeah? can anyone give me a title?).
So, assuming this is true, I'm baffled every time someone suggests they needed a more expensive hardware component to compete. That isn't who they are.

* methinks the problem with the WiiU is just that they made a list of innovative solutions, and this confused everyone. 10 different rad things is worse that 1 clear rad thing.
(ie : it's a tablet that can play current gen games. it is a more personal tv in your lap. it is a DS that uses your HDtv. it offers asymmetrical games with 4 wiimotes. its a second TV when your main tv is busy. and on and on).

I think they should have just called it the TVii (tv 2) and focused on the 1 idea that it's better than having an HDtv in the corner of one room in your house. No idea how they can change the widespread confusion over the product without picking one clear message. (I'm assuming they can't change the name?)

* No idea how they'll pull out of current consumer disinterest without games. In the end, i think most people end up buying a new console "to play game X." thus that becomes the 1 message: "this is a device for playing game X," so I want it.

But they seem to be going after indie games scene to try and generate an influx of interesting titles? Ignoring the big time third parties who keep pissing on them, and going after the small timers who might actually use the system in a novel way? I assume this is thier stopgap until their polished 1st party titles start dropping.

Eric Geer
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I believe one of the major problems that has effected the console, outside of lack of games, is the name. There are many people out there that don't understand that it is a New console. I'm not exactly sure why they thought it would be a good idea. Yes, Xbox and Playstation have held the same name for years, but there is a numerical value to differentiate the systems which is definitive and needs no explanation. The U in WiiU is ambiguous, and doesn't tell the whole story--people just mistake it for the same system with a new controller.

As for everything else, it's about games. Only reason there aren't more 1st party games out is that Nintendo has held off for 3rd parties both on the 3DS and on WiiU. Nintendo has tried with the 3DS and again with the WiiU to give 3rd Parties the priority in selling their games right off the bat for their new consoles, yet only a few publishers will step forward. The only thing that is holding 3rd parties from selling well on Nintendo hardware is 3rd parties...they discount Nintendo right out of the gate because it's Nintendo and then provide half-assed ports of year old games onto the system and say that it isn't working, they they won't even bring any new 3rd party games to the console. Its the chicken and the egg discussion, just with games and consoles. Personally I would rather play many of the games on my Wii U, but they just aren't bringing them, so I have to get them for PS3 or PC.

Dane MacMahon
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I keep seeing this repeated, and I am sure it does have an effect, but I know from speaking to many friends and relations that "more Wii" is not something they want period, be it an add-on or a whole new machine. They're done.

Would have been smarter to call it something else entirely, in my opinion.

warren blyth
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I'd agree the name hurt them by confusing potential customers. (I still talk to relatives who didn't realize wiiU was a new console. they thought it was just a gamepad option for the wii, which they could skip)

I hope someday we'll get a behind the scenes peek at how they generated the name.

I'd guess they hired some wizards who told them:
"wee sounds like fun. WeeOoh sounds like more fun."
"we implies a group. WeYou implies an individual alongside the group. (which fits with the one user limitation of the gamepad, and the new focus on asymmetrical multiplayer) "
"the ipad dropped numbers altogether. so if you want to continue to riff on Apple's genius, then you should focus on the idea of selling upgrades of the same hardware."
"people want a wiiHD or a Wii2, but those are too obvious. WiiU sounds similar to both"

... I'm terribly curious if there were other arguments for WiiU. and who they came from (external consultants? internal geniuses?).

* personally, in hindsight, i think TVii would have a been a much better name.

Ryan Christensen
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Agreed. They should have called it the Nintendo Revolution (the codename for the Wii before the name). It is not clear it is different and gets back to the Nintendo brand. Wii U sounds like a tutorial school for your Nintendo. I graduated from Wii U.

They were the first tablet/TV (kinda) console experience, early actually. Maybe not the best but it was a bit of a revolution.

What I am wondering on a side note is if Apple is going to blow their lead in gaming and not take it to the Apple TV before Sony, Xbox and new consoles arrive.

Nintendo is at least quick enough to know that you have to release subpar hardware before the next big wave or it looks really bad.

Eric Geer
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@Jef---"Epic Mickey 2 as it was a rushed version (from what I gathered, any version of the game is buggy, but if you are going to get it or rent it, get the Wii version just for the pointing ability that makes battles easier). However, I played Tank! Tank! Tank!, Batman: Arkham City - Armored Edition and Monster Hunter 3 Ultimate, "

I agree that there are some 3rd parties really trying with the WiiU--mainly Ubisoft and WB--

but there are games out there that would succeed on the WiiU, but publishers just seem sidestep it. Even moves like Rayman Legends delay and exclusivity ---it just shows that publishers don't even want to take a leap of faith with the console.

The only one out of the 3 that you have mentioned that I purchased was Monster Hunter 3 Ultimate---because my wife and I are super fans---actually bought a WiiU just for the game. It is definitely a major win for Nintendo. But Batman Arkham city wasn't worth it--old enough/not enough new content--already own it on PS3, same story with ME3(and EA not really backing WiiU any more)--and TTT is a 3 year old port. It's just sad...I really want the WiiU succeed---I think there are many great experiences to be had, but lots of publisher/dev are just shoving Nintendo off as the 2 headed step child because it's Nintendo...and that's what happens...even though they continue to succeed and be successful.

Wylie Garvin
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"Yes, Xbox and Playstation have held the same name for years, but there is a numerical value to differentiate the systems which is definitive and needs no explanation. The U in WiiU is ambiguous, and doesn't tell the whole story--people just mistake it for the same system with a new controller. "


Even the "Wii 2" would have been clearer.

A W
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Eh... Nintendo keeps it's shirt. Good start into another long season. Don't know about the 9 million number, seems like some games are going to be announced that we don't know about but have been talking about.

Michael Pianta
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If they expect to sell that many Wii-Us in the next fiscal year they must know something I don't know about upcoming games. As it is now they have basically nothing until August, and while I expect Wind Waker HD and the next 3D Mario title to both release this year, still I don't see those titles alone driving that many hardware sales. There are some other games that are expected to release this year, but it's not clear to me that those games will be system sellers either. Is Nintendo being outrageously optimistic or do they have a card up their sleeve?

Bob Johnson
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WEll 9 million Wii Us isn't really that much. The Wii U sold 3.5 million units in a half a year. And sales have been abysmal since the initial launch month.

By the time xmas season rolls around you will have Pikmin 3, Zelda:WW HD update, Game and Wario, and probably a bigger major franchise title around xmas time. In addition you will still have Nintendoland and Super Mario Bros. Plus Lego City Undercover. Oh and WiiFit will likely be released from the sound of it.

and then I'm sure by xmas you will see a price drop and/or promotions.

Sales should pick up.

And yes I would bet that Nintendo knows quite a bit more about their future lineup and plans and chances of executing their plan than you do. ;)

Jonathan Murphy
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Most parents still don't know what the Wii U is. I see the occasional, "I bought a Wii U game by mistake. So I returned it." That price point is murdering them. It's multiplied when they put the Wii right next to it for $129, 2 games. Nintendo you're using your old console to kill your new console sales! Drop it down to $250 with a game, a good game! Otherwise rename it the Gamecube U. Because that sold better.

Jonathan Murphy
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Look at the past if you want a proper road map on success and failure. The GC, Xbox both cancelled production of their units while Sony kept pumping out PS2's during the current gen cycle. We sell games, and the console companies should recognize that software is more important than hardware. Atari, Nintendo, Sony and Sega realized this back in the day. Stop treating hardware as a sports car. It's a $200 toy. That's how consumers see consoles. In business you adapt or die. You don't serve smaller and smaller crowds of the rich(referring to the world).

It's a market shift, and it's not going to stop till the new ideas trample the old.

Mike Griffin
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I just hope they don't rush development on first-party Wii U titles in desperation to harness key franchises as a recovery anchor going forward. That would be fairly un-Nintendo-like, but given the situation the console is in, it may need to happen.

kevin Koos
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9M Wii U sold. Yeah right. you don't typically go from 390k per quarter to 9M for the year.

wes bogdan
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Never has start,select been placed so badly on a gamepad to the point i map select as zl and start as zr in vc games.

+,- should've remained around home....with only nsmb u and Lego city as EXCLUSIVES purchasing Wii u on 18-11-12 hasn't noted many rewards outside .32 classics.

I still consider the gamepad duke and am awaiting the dualshock infused controller s replacement with both dpad and face buttons above the analog sticks where they belong.

Almost as bad as no real games is the n64 like delay between releases

Jorge Ramos
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First thing Nintendo can do is drop the "new smb" line and actually make a NEW Mario. NSMB's problem is that we already know going into it that many elements are recycled. Couple that with the measurable fact that all the games share the same audio soundtrack (compared to the original SMB line having unique soundtracks to individual games), further reinforces the feeling that "you played one, you played them all." I literally have no incentive to play any NSMB game after the original for the DS... made however many years ago it has been now. And pay a proper audio guy (or three) for a proper and unique score for their game(s). The WiiU should have more than enough guts to pump out a wonderful musical score... it's time they had a game that uses it and realizes that part of the machine.

Second thing is they need to realize that not everyone cares about Pikmin or Zelda. Metroid Fans (including myself) would like a real one to make up for the insult that was Other M. Simple mantra there is "More Ellen Ripley, less Team Ninja;" in fact, I'd even go as far as to say that Team Ninja should be banned from doing any more Nintendo titles after what they gave us with Other M... then again, this is also the same studio that hasn't treated female characters seriously since they learned to digitally render breasts.

Third thing I would have to ask is... what's taking so long for the next Smash Brothers to come forth? Pretty much everyone I know among my circle of contacts will almost always buy a new Nintendo console when that game comes out, because it's already built a strong and well-earned reputation of being a wonderful game that couldn't be done on a competitor. And if you're reading this, Sony, No... your "all starts battle royale" is not ever going to catch on at this level. Kindly step aside and let the experts show you how it's done. :)

Fourth thing... Price. To get "the good one" (read: with enough storage to be useful) is still too much for most. And it might help if they provided a way for users to upgrade the internal storage of this machine so one doesn't have to buy a whole new console to then have enough internal storage to start really doing more with it, for both vWii and WiiU gaming. Or otherwise, drop the "base" one there is now, make the existing deluxe one the new "base", and put out a "premium" model that expands further, while not entirely alienating those that might only be able to afford the 'base model' price.

Fifth thing... I can't be the only one that finds these arbitrary copy-protected saves to be a pain in the butt, and the limitations the WiiU has regarding external storage are rather awful, especially considering that the system already has something over the PS4 and 720 in the form of not requiring always-online and not actively trying to block used games. The system update that is meant to improve its responsiveness by such a measurable difference is nice, but how about some more freedom in how we use the storage we provide of our own?

Finally... I get that it's a 'thing' for console makers to want us to buy full games via download... I get partly why they would prefer if we did that, and some of the reasons are rather helpful (such as less wear and tear on the optical drives). But considering it then automatically costs you $10~15 less to offer it as a download over a physical copy, why not pass the savings onto consumers? I can safely say I'd be more willing to purchase games digitally if I caught a significant break in pricing more frequently... My Steam account would concur. And Steam has more than willingly documented that games that get discounted over 50% off their retail price end up seeing better profits than leaving them at MSRP. So, why the heck not? Consumers feel they got a win for getting a great deal, and you win for getting more sales. It certainly seems like a win-win for all involved, right?

Jorge Ramos
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@Jeferson Soler,

I get that Iwata was quite the brilliant programmer in his day, but I don't exactly trust Iwata with some of his business decisions... considering he is one of the reasons that America never got a Metroid on the Nintendo64, or why we never got Mother 3 officially. I will admit that the entire reason I bought a GBA Flash cart was so I could play the fan-translation of this game the way it was meant to be played... and that if the game were made as a real GBA game way back when, I'd have certainly done more to keep a GBA-compatible DS with me so I could keep playing the game now. Some of these decisions of which games to bring states-side certainly come off as non-sensical. It is my understanding that the reason it took this long for EarthBound to finally show up on Wii/U Virtual Console is because of Iwata, which goes to say a lot in my opinion.

fred tam
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I'm sure an argument can be made that being too japanese is in some way to blame. Because typing japanese is harder they were both slower to adopt pc's, the internet and smart phones, so they kind of missed the ball on changes in the world, and it shows on their consoles.

I dunno, nintendo seems to have abandoned gamers over the age of 16 for so long that they left themselves very vulnerable. The wii u just looks fragile, a screen in the hands of a child, an expensive screen, I think nintendo mostly skated by because parents bought it for their young kid as their safest choice, but now it doesn't look that safe, esp with todays economy, what parent wants their kid to possible smash a screen every time they drop it, whether this is true or not doesn't matter, it looks like it might break.

Never mind the games and the rest of the issues with that poorly thought out machine. I've just been wondering for a while now when nintendo would finally pay the price for relying on gimmicks rather than good gameplay. Motion control is horrible for anyone serious about games, but it might entertain small children for a while, I'm just surprised its taken this long for things to stop working out for nintendo.

Eric Geer
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WiiU Gamepad Droptest---4 foot drop on concrete--survives!

http://www.youtube.com/watch?v=SIQpKh9ma88

John Flush
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I know why I haven't bought one - games. Hardware is great and all, but if there aren't any games worth buying who really cares about the hardware. That said, I also agree with the posts that mention, maybe everyone is just waiting on the next generation of consoles to come out... I'm also in a holding pattern waiting on the next set of consoles.

I don't see myself buying anything that doesn't have exclusives I really care about. The PS3 showed me that I should have picked that over xbox with the number of exclusives that eventually came out for it. The Wii showed me that there just aren't that many exclusives I want more of (NSMB for instance...), the Xbox showed me they only really offer XLive which I don't have any interest in either - everything else of note except Halo and Gears went multiplayform or got a PC release. Who knows, my next console might just as well be a PC upgrade.

Until I see them all and make a comparison no point buying a Wii U. Its not like I don't have a ton of games to play right now. I don't need another gaming gadget competing with my limited game playing time - especially if the games are not 'must haves'.


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