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Nintendo's Difficult Path Forward
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Nintendo's Difficult Path Forward


April 30, 2013 Article Start Previous Page 4 of 4
 

Making an Operating Profit

And where will all of this put Nintendo in a year's time? Nintendo probably needs all, or nearly all, of the pieces to fall into place to reach its ¥100 billion operating profit goal. It needs the Nintendo 3DS business, which is likely very profitable, to increase to 18 million systems and 80 million units of software. It needs to do that without cutting into the system's price too much, but also need to keep consumers interested in the face of increasing attention on mobile platforms.

Nintendo needs to relaunch the Wii U, with a huge push for software, and it probably also needs to do so without a margin-killing price cut. That means that the Wii U will have to stand on its own, in its current state, along with whatever software Nintendo can get out for it. And any money that it puts into promoting the system needs to be effective immediately, even in the face of the impending launches of the PlayStation 4 and next Xbox. It won't help that Nintendo may not have the software to really push the system until July or August, after four out of eight months of the fiscal year have already slipped away.

And Nintendo needs to push its digital initiatives, even if some of that software comes in the form of lower-priced Web Framework and mobile-like software titles. Because these titles may carry a much lower price, Nintendo will have to relinquish some of the licensing fees that it has traditionally relied upon to produce strong annual results. That will be an additional layer of income that Nintendo will want as it also pushes higher sales of retail software through its eShop on the 3DS and Wii U.

It's entirely possible that the Nintendo 3DS will light up the sales charts for the remainder of this year and that the Wii U will make a U-turn and sell extremely well throughout the end of this year. Iwata has made his plans and will no doubt have some surprising unannounced software titles to help him along his way. But just looking at what we know now, I really don't think Nintendo is going to make it.


Article Start Previous Page 4 of 4

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