Nintendo slides to massive loss as revenue falls off a cliff

The 3DS and Wii could do nothing to save Nintendo during its most recent fiscal year; Nintendo saw its revenue slide steeply, pushing the previous year's profit into a huge loss.

(Credit: Nintendo)

The company has released the results of its fiscal year that ended 31 March (PDF), and revealed that revenue slid 36.2 per cent compared with the previous fiscal year. Nintendo ended its year with revenue of 647.6 billion yen (about US$8 billion), versus over 1 trillion yen in the prior year.

Due to sluggish sales, Nintendo posted a net loss for the year of 43.2 billion yen (US$532.5 million). In the prior year, it had generated a profit of 77.6 billion yen.

Nintendo's troubles over the year were numerous. For one, the company was forced to sell the Nintendo 3DS portable console below cost in order to attract customers. This meant that the iconic game firm took a hit on every unit sold. Meanwhile, sales of Nintendo's Wii console continued to drag, and the company's software franchises were off the mark on the year. Add that to a strong yen, and Nintendo could do little to turn things around.

The disintegration of Nintendo's business is striking. Wii sales hit just 9.84 million units in the just-closed fiscal year, down from 15 million units in the prior year. During the 12-month period, Nintendo sold 102.3 million Wii software titles, down from the 171 million in the previous year. Sales of the DS portable game machine dropped to 5.1 million last year, down from 17.5 million in the previous 12 months.

Nintendo's 13.5 million 3DS unit sales last year were impressive, but considering that the vast majority of those devices were sold at a loss, investors can't find too much comfort in its success.

Still, Nintendo has a plan to turn things around. The company says it will continue its "basic strategy of 'gaming population expansion' by offering compelling products that anyone can enjoy, regardless of age, gender or gaming experience". In addition, it plans to start selling the 3DS for a profit towards the middle of this fiscal year.

But the big revenue generator this year, the company believes, will be its Wii U console. The Wii replacement is scheduled to hit store shelves before the end of the year, and comes with HD graphics and a 6.2-inch LCD touchscreen-equipped controller.

Looking ahead, Nintendo expects its net sales to climb to 820 billion yen during its current fiscal year. It also expects to post a small profit of 20 billion yen.


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