DailyTech - Nintendo Profits Slump 23% in Q3

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Blog: Gadgets Nintendo Profits Slump 23% in Q3
Shane McGlaun (Blog) - January 28, 2010 7:28 AM

4 comment(s) - last by SilthDraeth.. on Jan 29 at 1:28 PM

Nintendo maintains forecast for profit decline

The gaming market is vast and top game titles can make as much money as leading Hollywood movies. The gaming market also thrives on hardware sales of consoles and accessories. For the last several years, Nintendo has been at the top of the gaming hierarchy with its Wii and DS game systems.

In October 2009, Nintendo reported that sales of the Wii were down 43% compared to 2008. The reduced sales of the Wii forced Nintendo to cut its sales forecasts for the year. Sales of the DS portable console were also down 15% over the same period. Nintendo has now announced its Q3 financials and profits are down 23%.

The gaming company is also sticking to its forecast for the first annual profit decline in four years. Nintendo still maintains that the operating profit forecast for the year through March will be 370 billion yen. That number will be much less than the 555.26 billion yen profit that it posted a year earlier.

In the quarter spanning October to December, Nintendo moved 11.3 million Wii consoles, up 8% from the same quarter of the previous year. The DS sold 11.7 million units compared to an almost identical 11.9 million the previous year. Nintendo shares have declined 17% over the last year.

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Nintendo's longevity

By inperfectdarkness on 1/28/2010 3:10:35 PM , Rating: 3

The numbers suggest that some market saturation has been happening--yet Nintendo is still selling consoles in droves.

Personally, I'd interpret this as ebb & flow. Nintendo's profits tend to rise and fall just like any of its competitors. The boons tend to be caused by blockbuster game releases. Nintendo seems to have more of these which are 1st party than anyone else; and that directly translates into higher profits for Nintendo as a whole.

RE: Nintendo's longevity

By Flunk on 1/29/2010 12:30:06 PM , Rating: 2

You also have to remember that Nintendo didn't plan for Wii to be a big success. They expected it to sell a few units while they were working on their next big system, which is why all their initial plans only looked up to a year ahead. This is also why they built in a healthy profit margin so that even if it didn't sell millions they would be able to recoup development costs.

Once Wii becomes less popular Nintendo will just release a new system. It's not like they have been sitting on their hands this whole time. If they wanted a new system out in a few months they could get one out there. Nintendo is always building new prototypes and only a very select few ever make production.

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Difference between Wii and DS

By 225commander on 1/28/2010 5:00:14 PM , Rating: 2

I definitely think that most everyone who wants a Wii has one, also there is a pretty large secondary market for used consoles that are now collecting dust on people's shelves which negatively effects new console sales. The DS on the other hand continues to enjoy near identical sales year after year, this seems to be due to the fact that many people buy more than one(they break) and it has a low entry point($) so its not a huge investment to add one to the stable, say VS PSP.

~les