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Report: Component Makers Hit By Wii Production Decrease
by Leigh Alexander [PC, Console/PC]
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December 2, 2009
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Japanese component manufacturers Mitsumi and Hosiden, who provide parts for Nintendo's Wii, are blaming the console's declines this year for major hits to their finances -- and the companies say Nintendo is scaling back Wii production.
The company could see revenues decline as much as 50 percent this year, which would represent something of a reversal of fortune for companies acclimated to the days of Nintendo's annual warnings of supply constraints for its popular hardware.
The news comes from a Nikkei report picked up by widespread media outlets including VG247, which reports parts orders for Wii are down 30 percent so far this fiscal year.
Nintendo president Satoru Iwata recently said Wii unit sales in Japan "cannot be defined as healthy," and described the console's loss of momentum as "urgent."
However, the company recently revealed that Wii's late September price cut to $199 drove up console sales 85 percent on a weekly basis in the U.S.
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Instead of Wii putting up the ridiculous numbers it did in 2008 it is now only "just" selling at PS2 levels. The Wii isn't dominating anymore but it is outselling the competition by a fair margin.
The real question in my opinion is how exactly the industry will try to put a negative spin on Wii being up YoY in 2010 - because I fully expect it to be.
Who do you mean by "the industry"? In my experience, "the industry" usually tries to spin any sales news as positively as it can.
Whether it's in the form of a Wii HD, or a new control scheme that makes motion-controls look traditional, or simply the unveiling of the next Zelda with WiiMotionPlus precision, I'm very sure Nintendo is working on something new and good for 2010 that will bring the Wii sales back to "healthy".
This sentiment is industry wide.
Aside from Zelda Wii, which you mentioned, we should expect the Vitality Sensor to arrive. The question though, is when (within 2010) and with what type of software?
"Several Wii articles I see from the majority of publications on the interwebs have a decidedly negative slant. I notice that Nintendo is always doomed, no matter how well the Wii is doing in comparison to the competition. Outselling the competition isn't good enough so now the Wii is a failure for not beating it's prior year incarnation - the FUD machine is on overdrive.
This sentiment is industry wide."
Yep. Pretty much. And it turns out that a recent story about Ubisoft allegedly blaming the Wii for poor software sales was incorrectly reported. It turns out the company was rather pleased with its sales in 2009 and felt that "the Wii has a high penetration and can be very profitable with quality software."
I wasn't going to say anything about this, but the part in the Gamasutra article that stated "the instability of the Wii software market in particular has harmed [Ubisoft]" seemed to be Leigh Alexander's OWN commentary - NOT Ubisoft's.
Can you give me the link where that exact Ubisoft quote is listed and where they say they are pleased with their 2009 Wii game sales? Because if that's true and yet it was still reported negatively...
http://www.gonintendo.com/viewstory.php?id=106324
Even with a lackluster line-up for the first half, Ubisoft's Wii sales were up 100% - higher than all other consoles besides the DS.
I would love to see this breakdown straight from Ubisoft instead of GAF, but if this info is legit, this just proves my point.
And this is the second time I've seen a journalist spew misinformation purposely.
". I notice that Nintendo is always doomed, no matter how well the Wii is doing in comparison to the competition. "
I don't see that at all.
The press have been shilling for the Wii since 2006. Not so much this year after Wii sales started falling, but still a lot of pro-Nintendo press out there.
"Outselling the competition isn't good enough so now the Wii is a failure for not beating it's prior year incarnation - the FUD machine is on overdrive."
You don't get it do you?
For an investment site like Bloomberg, its all about year on year growth. It's growth in sales and profits that drive share prices.
So therfore, if Wii sales are down over 30% from last year's levels in the past 3 months, and PS3 sales are up close to 100% in the past 3 months, and the Wii's profits are down, while the PS3 is making less losses than they were making before, then as far as investors are concerned, Sony may very well be a "buy" while Nintendo may be a "sell".
Its more complex than that obvioulsy, because Sony makes lots of other stuff as well, but these are some of the factors that the Wall Street and the Nikkei are looking at, when financial publications write articles that appear not to be pro-Nintendo.
You really gotta forget about this imaginary "vandetta" against Nintendo, and accept the realities of the financial markets. As far as stock tarders/investors are concerned, all they care about is making money. They don't care about hating on company A or company B.
For an investment site like Bloomberg, its all about year on year growth. It's growth in sales and profits that drive share prices.
So therfore, if Wii sales are down over 30% from last year's levels in the past 3 months, and PS3 sales are up close to 100% in the past 3 months, and the Wii's profits are down, while the PS3 is making less losses than they were making before, then as far as investors are concerned, Sony may very well be a "buy" while Nintendo may be a "sell".
Its more complex than that obvioulsy, because Sony makes lots of other stuff as well, but these are some of the factors that the Wall Street and the Nikkei are looking at, when financial publications write articles that appear not to be pro-Nintendo.
You really gotta forget about this imaginary "vandetta" against Nintendo, and accept the realities of the financial markets. As far as stock tarders/investors are concerned, all they care about is making money. They don't care about hating on company A or company B."
If what you are saying is in fact correct, then why did Bloomberg keep reporting negatively on Nintendo in 2006, 2007 and 2008 when sales were rising? Why was it somehow doomed every year while the PS3 was always poised for a comeback?
And more importantly, why did Bloomberg recently release a hit piece instead of proper journalism? It used a quote from a disgruntled analyst about Nintendo, then used a quote from Sony about... Sony!
That's not neutral reporting. That's shoddy.
Where is this pro-Nintendo press that you speak of? Even before it's release analysts and journalists were predicting doom. Take a look at this:
http://www.gamespot.com/news/6146958.html?page=4
"If what you are saying is in fact correct, then why did Bloomberg keep reporting negatively on Nintendo in 2006, 2007 and 2008 when sales were rising?"
They didn't.
That's just the point.
Go back to 2006 and 2007, and Bloomberg had plenty of great things to say about Wii sales and Nintendo, and Nintendo's stock price rose quite a bit between 2006 and 2007 as Wii sales kept hitting new sales records through to 2008.
But then you don't excpect investors to be too excited about Nintendo stock now that Wii sales are down over 50% year on year in Japan so far this year, and have been down over 30% year on year in the US as well in the last 6 months do you?
Like I said, its all about growth. If your unit sales are gowing down, your revenues are going down, and most of all your profits are gowing down (Nintendo's HI profits fell by a massive 59%), then you are not going to get very favorable write ups in the financial press are you?
Reuters on Nintendo's H1(first half) earings report:
Nintendo's H1 profit falls 59 pct, cuts forecast:
http://www.reuters.com/article/marketsNews/idCNT30590220091029?rpc=44
FACT: Nintendo's sales and profits are down A LOT.
Write ups from financial publications, even even wire services like Reuters are not going to be exactly gushing with enthusiasm.
"Where is this pro-Nintendo press that you speak of?"
Sure.
Forbes - Nov 13, 2006 : Nintendo's Wii Is A Revolution
http://www.forbes.com/2006/11/13/wii-review-ps3-tech-media-cx_de_1113wii.html
BBC - May 11, 2006 :Having a Wii good time
http://news.bbc.co.uk/2/hi/technology/4760473.stm
Foxnews May 12, 2006: Nintendo's Wii Surprise Hit Among Video Game Expo.
http://www.foxnews.com/story/0,2933,195292,00.html
Businessweek - Nov 22, 2006: Nintendo Wii: One Ferocious Underdog
http://www.businessweek.com/technology/content/nov2006/tc20061122_339692.htm?cha
n=technology_game+reviews_game+reviews
FOXnews again - Nov 30, 2006: Nintendo's Wii Perfect for Video-Game Novice
Telegraph.co.uk - Nov 25, 2006 : Nintendo Wii, the can't-have Christmas gadget
And these are all just from 2006 when the Wii was launched.
Yiou want more examples?
None of those articles you linked to are from sites around the game industry. You should read what I say a bit more closely - Fox, BBC, Forbes, nor Business Week are GAMING publications or game journalist sites like Gamasutra, Edge, IGN, or Kotaku.
Second, you wrote: "FACT: Nintendo's sales and profits are down A LOT."
That is absolutely true, but I'm curious: what's your take on Sony never-ending menstrual cycle then? How do you feel about them hemorrhaging cash by the billions? You sing the praises of Sony in the comments section of nearly every Sony or Wii related topic, yet you bash Nintendo and the Wii every chance you get depsite the fact that their insanley profitable? Yes, profits are down by a lot, but they're still making billions.
So if financial soundness is the basis for your Nintendo bashing I'm very confused by your admiration for all things Sony.
"None of those articles you linked to are from sites around the game industry"
I never said anything about gaming industry. his is exactly what I said, and quote: "The press have been shilling for the Wii since 2006. "
The word I used was "the press".
In any case, far more people read the BBC, Foxnews, Buisinessweek, Forbes and the other publications I quoted, than read game publications or sites. The publications I quoted are exactly the kinds of publications that the "non-gamers" that Nintendo went after with the Wii, read. So the Wii was getting great press from the media when it was launched, from where it needed it most.
You can't turn round today and complain wen the Wii is now getting not so great press from these same financial and general interest news outfits.
You take the good with the bad like everyone else.
"You should read what I say a bit more closely - Fox, BBC, Forbes, nor Business Week are GAMING publications or game journalist sites like Gamasutra, Edge, IGN, or Kotaku."
Youn should read what I said even more closely. Again I never said anything about gaming press. I talked about the press. Your post was in answer to my post, so your post was wrong to start off with. Don't change my quoes to suit your agenda.
"but I'm curious: what's your take on Sony never-ending menstrual cycle then? How do you feel about them hemorrhaging cash by the billions?"
Read my frst post again.
With the financial markets, its not a matter of how good you did last year or the year before, it's how good you are doing in your latest quarter or right now, and how good you are likely to do in the coming quarters and the coming year/s.
Nintendo will never sell as many Wii's as they did in 2008 again..ever. The Wii already had its best year by far last year.
This year, Wii sales will be down year on year by at least 35% worldwide. Furthermore, Nintendo is now selling the Wii at $50 less than they did last year, so not only are they selling a lower number of Wii's they are selling those lower number of Wii's at a lower price as well. The net effect of all that is that their profits and sales are going to continue to go down this year and well into next year. So Nintendio is not a very attractive investment option.
Meanwhile lets look at the PS3. Since the PS3 Slim came out, the PS3 has outsold the Wii every single week in Japan. In the US, since they had a price cut, PS3 sales are running at double what they were selling last year. In November NPD, the PS3 will sell at least double what they wold last year's November. So the PS3 is going to have their best year ever in Japan this year, and probably their best year ever in nthe US as well, and keep regsitering big year on year sales increases well into next year.
Meanwhile, the PS3 Slim has slashed Sony's production costs for the PS3 so much so that they are close to breaking even on harware, even if they are not there yet.
So we have 2 companies, one company is increasing sales, and making less losses, the other one is losing sales and making less profits. Which one will the market consider a better investment? Probably the one that is increasing sales, and cutting their losses, the PS3.