Nintendo is having a rough time of things as of late, despite the 3DS enjoying record breaking sales in the US and strong sales in the UK. The Wii U continues to struggle against competitors Microsoft and Sony, selling under 500,000 units in the past six months. In comparison, the PS4 has sold 4.2 million consoles since releasing in November 2013 and in a similar time-frame the Xbox One has sold over 3 million units. Originally Nintendo was forecasting selling 9 million Wii Us by the end of its fiscal year in March 2014, and projected sales of 18 million units for the 3DS. Recently the company has been forced to revise those projections, lowering the Wii U to 2.8 million consoles and lowering the 3DS to 13.5 million.
This means that the company is now expecting a loss for its fiscal year, rather than gaining a profit. Originally the forecast was for 55 billion yen to be gained in net profits. The revisions will now have Nintendo operating at a net loss of 25 billion yen. Despite the failure to meet forecasts, president Satoru Iwata is refusing to resign. About the losses, Iwata explained that despite bundles and price drops in western markets, the company still fell short “by a large margin.” He continues:
“In particular, sales in the US and European markets in which we entered the year-end sales season with a hardware markdown were significantly lower than our original forecasts, with both hardware and software sales experiencing a huge gap from their targets. In addition, we did not assume at the beginning of the fiscal year that we would perform a markdown for the Wii U hardware in the US and European markets. This was also one of the reasons for lower sales and profit estimates.”
While it may not be surprising that the Wii U underperformed, especially in the light of the competition from Sony and Microsoft and not getting enough 3rd party support for its software titles, it is surprising that the 3DS has fallen short, with the handheld’s only competition being from the PlayStation Vita, which consumers often complain isn’t strongly supported by Sony. It may simply be that Nintendo set its sights too high for the handheld console.
“Nintendo 3DS did not reach our sales targets in the overseas markets, and we were ultimately unable to achieve our goal of providing a massive sales boost to Nintendo 3DS in the year-end sales season. Using the US market as an example, Nintendo 3DS became the top-selling platform in the last calendar year…however, the estimated annual sales of the Nintendo 3DS hardware remain significantly lower than our initial forecast at the beginning of the fiscal year.”
In light of the lowered projections, it should be no surprise that Nintendo’s stock price has fallen, down to $14.89 a share where it had been at $19 a share less than a week ago. The lowest the stock has hit recently was $11.39 early in 2013, which was the lowest the company’s stock price had been since 2003. The lowered stock prices have caused Iwata to issue an apology to investors ahead of the company’s scheduled financial briefing for later this month. Despite this, Iwata has said he won’t be resigning, planning for now to keep the company’s management intact, including himself. According to a report by Reuters, Iwata said, “There will be no major management shake-up in the short term.”
Iwata became CEO and president of Nintendo in 2002, previously having worked at HAL Laboratory, the developer behind EarthBound and Super Smash Bros. He assumed additional responsibilities when he was appointed CEO of Nintendo of America last year in an effort to streamline international business.
Time will tell what this means for the company, and if the Wii U can ever hope to compete with its stronger brethren. Changes obviously need to be made at the company to help them compete better and gain more 3rd party support for their platforms. What do you think, readers? Can Nintendo turn things around? Or should they just let the Wii U die a quiet death? Sound off in the comments below.
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