News about the financial failures of Nintendo have been emerging for the last few months, and Nintendo officials were finally forced to admit to having a rough 2013. Throughout 2013, Nintendo has stubbornly claimed to sell a seemingly over-ambitious 9 million Wii U units by the end of its fiscal year in March 2014. The actual numbers are nowhere near being that close, and Nintendo has cut back its forecast from 9 million to 2.8 million units. Until this point, an estimated 3.91 million Wii U units were sold in total, including the 2012 launch period and early 2013 period.
On the premise that software sells consoles, Nintendo was clinging to an optimistic take on the market, but the launch of the Xbox One and Playstation 4 severely affected numbers. Even though the Wii U has seen some great titles launching (such as Super Mario 3D World), this was not enough to considerably alter the downwards course of the Nintendo console.
- Nintendo has dramatically altered projections for sales in the upcoming period, and not only for the Nintendo Wii U:
- Wii U software sales projections were cut in half, from 38 million to 19 million
- 3DS sale projections were also altered, from 18 million units to 13.5 million
- In contrast, the expectation for original Wii software sales is slightly better, going up to 2.6 million from an initial 2 million
- From profit, to loss – financially, the net income of the company has been revised, from an estimated 100 billion yen (roughly $958 million) profit, to a 35 billion yen (roughly $335 million) loss
“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.” stated Nintendo President, Satoru Iwata. “In the year-end sales season which constitutes the highest proportion of the annual sales volume, software sales with a relatively high margin were significantly lower than our original forecasts mainly due to the fact that hardware sales did not reach their expected level.” he also argued.
More exact numbers will be published towards the end of the month. Despite these financial flops, there’s no indication that Satoru Iwata would be resigning. In fact, there’s nothing to indicate that major shifts in Nintendo leadership are planned at this time. Mr. Iwata declared earlier today that he “feels responsibility for the poor business performance at Nintendo, and he is sorry to all shareholders”. His goals are to improve Nintendo’s business model, and will not be stepping down.
Editor’s take
While this news is saddening, I fell it comes as no surprise. Back in December, I’ve wrote about the struggling sales of Nintendo, highlighting the fact that Nintendo officials were overly optimistic about their sales projections at the time. The article was met with huge criticism, and some part of me actually wished critics would be right, and I would be wrong. I now find myself in a situation where I could smirk and insert an “I told you so”, but I find it disheartening that I was not entirely wrong. After all, Nintendo has been an important part of gaming history, and I don’t like to see it struggle.
Perhaps this is reason enough for Nintendo to seriously revise it’s management values. One can only wonder what caused these poor sale results. Was it the fact that there simply weren’t enough games for the Wii U and 3DS to get consumers hyped? Is the gaming market moving away from old legends such as Mario? Is it the fact that the Wii U has weaker hardware specs than the competition, and the Xbox One and PS4 stole the spotlight? Or, perhaps it’s just poor management from Nintendo, and a failure to grasp the direction the gaming industry is moving towards.
In any case, I feel that changes are needed in Nintendo’s top position, if the company is to recover. The company might be heading downhill right now, but there are possibilities that can be taken advantage of, assuming proper management is established. One such example would be the potential opening in the Chinese market, which, exploited correctly, could set Nintendo back on track. But, something definitely has to change, as it’s doubtful the company will recover if it continues down its current path. Mario Kart 8 and Super Smash Bros. alone won’t be enough to greatly alter Nintendo’s current course.