During the six-month period ended 30 September, Nintendo saw its financial performance decline significantly, the company reported in a financial earnings release.
Nintendo generated 215.7 billion yen (US$2.84 billion) in revenue during the six-month period, representing a whopping 40.6 per cent decline compared to the same period last year. Even more concerning, Nintendo's net loss hit US$926 million, down significantly from the US$26 million that it lost in the six-month period ended 30 September 2010.
Judging by Nintendo's earnings report, the company was hit by two main issues: hardware and software sales were off; and it was contending with an extremely strong yen. In fact, the company was forced to take a 52.4 billion yen (US$690.5 million) foreign exchange loss, due to unfavourable exchange rates between with the American dollar and the euro.
But Nintendo's troubles selling products is arguably most troublesome for the company. During the six-month period, Nintendo was only able to sell 3.3 million Wii units around the world, down significantly from the nearly five million Wiis it sold in the prior year. What's more, the company's Wii software sales, which hit 65 million units last year, were down to just 36 million this year.
On the portable side, things aren't looking much better. Nintendo was only able to sell three million 3DS units and 8.1 million 3DS software units during the six-month period. With just 2.6 million DS units sold, Nintendo actually sold fewer portables this year than it did last year when the DS was the only portable family on store shelves.
Nintendo's troubles in the portable space, especially, have been well documented. Earlier this year, the company launched the 3DS in the hopes that it would take off like its predecessors. But it didn't. And after a disappointing 710,000 unit sales during the second quarter of the year, Nintendo was forced to drop the price of the 3DS to US$169.99 from its initial price of US$249.99. The local pricing for the 3DS dropped 29 per cent to AU$249.99.
Even with that price cut, however, it doesn't appear that Nintendo has had too much success attracting customers to its 3DS. In fact, in the US alone, it sold just 810,000 3DS units over the six-month period ended 30 September.
Looking ahead, Nintendo says that it expects to ship six million Nintendo DS units during the full fiscal year, which is down from the nine million units it initially planned to ship. Nintendo is holding firm to its estimates that it will sell 12 million Wiis and 16 million 3DS units this year. On the software side, Nintendo expects to sell 100 million Wii games and 50 million 3DS titles, down from 110 million units and 70 million units, respectively.