That’s right guys, the ever-famous producer of video games has recorded its first ever annual loss. The article (http://www.cbsnews.com/8301-501465_162-57421806-501465/nintendo-reports-first-ever-annual-loss/?tag=contentMain;contentBody) never says how long that profit streak lasted, but the company was founded in 1889, so this could potentially be the company’s first annual loss in 123 years!
This Japan-based company posted $533 million in net losses for the 2011 fiscal year. The primary factors driving this loss are weak sales of the Wii console as well as well as the strength of the yen, which eroded the Japanese manufacturers’ value of earnings overseas. During 2011, Nintendo cut the price of the 3DS, which they said had a very negative effect on sales.
Nintendo posted a $965.3 million profit for the 2010 fiscal year and said they were upbeat about “Wii U” the upgrade for the current Wii consoles, which was supposed to be released at the end of last year. In addition to further working on the release of Wii U, Nintendo will also continue to push its online service, Nintendo Network, which will link Wii U players with the players of Nintendo’s 3DS, which offers three-dimensional imagery. The Wii U will also offer a touch screen controller, which is quite innovative for the gaming consoles.
Nintendo does not believe that smartphones present an explanation for this sudden downturn in profits. Satoru Iwata, the president of Nintendo, believes that Nintendo’s success is linked to their products’ appeal to those who are not hard-core gamers. Nintendo also plans to incorporate some of the lessons they learned with the 3DS launch to the launch of Wii U.
Nintendo recorded only $8 billion in sales for the 2011 fiscal year, considerably worse than both the company’s earlier forecast ($8.1 billion) and the analysts at FactSet’s forecast ($8.3 billion). In 2010, Nintendo sold 15 million Wii consoles. They projected 13 million consoles for 2011, but only sold 9.8 million.
Nintendo forecasts 10.5 million Wii consoles for the next fiscal year, a very optimistic projection considering the past year. They also plan to be $247 million in the black by the end of next year.
This story was unbelievable to me. I have been hearing of Nintendo’s success since I initially became interested in video games, which was at a very young age. The XBOX and Playstation consoles really do appeal to the “hard-core gamers,” which allowed the Wii to create a very unique niche in the industry. The Wii’s easy-to-use features and motion sensing controllers appeal to anyone that enjoyed a good time. The Wii is something that entire families can enjoy with nobody feeling left out. With this unique niche in the market, I am very surprised to see Nintendo record a loss. I personally do not prefer Nintendo products, but I do respect the company and would like to see them become profitable again.