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Nintendo records GBP 143-million loss but profitability is increasing

By: Moses Abaortae

  |   July 31st, 2012   |  
News, Uncategorized
17th Electronic Entertainment Expo - Los Angeles

Nintendo has announced over a 100-million in losses for the quarter but believes it is making comeback as the 3DS continues to sell well.

Microsoft’s console, the Xbox 360, is aimed at the core gamer market with a greater emphasis on North America and Sony’s aim is to have a global appeal with a plethora of titles that cater to everyone’s needs. Nintendo on the other hand has branded itself as the family friendly, casual gamer oriented console maker with the Nintendo Wii and the 3DS.

While the Nintendo Wii was the most successful console of the current generation in terms of sales, both at the start and during the console’s maturity, the same cannot be said about the Nintendo 3DS. The portable gaming console struggled on release as the lack of content and high price deterred more consumers than Nintendo had expected.

However, the company took drastic action and slashed the prices of the 3DS while at the same time it reforecast its targets and the company’s executives also took a major pay cut as Nintendo reorganised itself.

The move has paid off as Nintendo managed to cut losses as the 3DS has remained the top selling console in Japan for more than six months. The console has also been supported by strong software sales with the latest Pokémon game for the 3DS having sold near 2.5-million units since its release last month.

Nintendo released the latest financial statements, which showed that despite showing an increase in revenue for the three month period, the expenses and costs of sales resulted in the company posting a loss of GBP 143-million.

A statement from the company read: “The profitability of the Nintendo 3DS hardware is improving, but the hardware has been in negative margin.”

The loss was to be expected as the price cut itself had a part to play in the losses recorded, however, the plan for Nintendo was to sell more units at the lower price and bring down production costs at the same time.

It seems that Nintendo’s plan is set to bear fruit as the company expects to turn a profit by March 2013 as long as the 3DS manages to sell around 18.5-million units by that time. The console has already sold 19-million units since its release and the release of the Nintendo Wii U set for later this year, Nintendo could reap the rewards of being first to the next-gen console party.

But what does the reader think; will Nintendo be able to turn a profit by March 2013 or will the poor start of the 3DS prove to be too much to recover from? Let us know your thoughts in the comments section below.