Nintendo stated that they are continuing to follow its rudimentary strategy of “Gaming Population Expansion” by “proposing exciting products to be enjoyed by all ages, genders, or gaming experience”. The following are the results of this strategy consolidated into their financial results for the nine months ending in December 2013. Are these results good? Are they bad? You decide.
Popular first-party titles continued to show steady sales in the Japanese market as depicted in the graph below, while there have also been hit titles from third-party publishers. In the overseas markets, Nintendo released various key first-party titles throughout the year, such as Animal Crossing: New Leaf, Mario & Luigi: Dream Team, and The Legend of Zelda: A Link Between Worlds. As a result, both the hardware and software continued to be prosperous in the Japanese market. Though, while Nintendo 3DS managed to become the best-selling platform of the 2013 in the United States, overseas sales showed limited growth, causing the Nintendo 3DS global hardware and software sales to reach only 11.65 million and 57.25 million units respectively.
Nintendo released key first-party titles between the months of April and December 2013 such as The Legend of Zelda: The Wind Waker HD, Wii Party U, and Super Mario 3D World. While all of these titles surpassed the 1 million mark, it was all thanks to Wii U’s impressive attach rate, not from new business. Wii U as a whole was not able to recover fully, as global sales of the Wii U hardware and software reached only 2.41 million and 15.96 million units respectively (less than what they did last year in the same time frame).
Nintendo DS & Wii
Global sales of the Nintendo DS family of systems hardware and software were 0.11 million units and 8.63 million units respectively. Global sales of the Wii hardware and software were 1.07 million and 23.27 million units respectively.
As a result of the performance of the Wii U, Nintendo 3DS family of systems, Wii, and Nintendo DS, net sales were 499.1 billion yen, or $4.88 billion, (of which overseas sales were 340.0 billion yen or 68.1 percent of the total sales).
The Wii U still has a negative impact on Nintendo’s profits not mainly because it isn’t selling as well as Nintendo would like it to be, but because of its recent markdown in price in the United States and Europe. Software sales, while had high profit margins, did not grow sufficiently, leading to a gross profit of 149.2 billion yen ($1.46 billion). The depreciation of the yen against the U.S. dollar and euro caused expenses to soar when converted into yen. Despite all this, Nintendo managed to gain 10.1 billion yen in net income, an improvement compared to last quarter.
Financial Forecast (Unchanged From Jan. 17, 2014)
Nintendo modified their financial forecast on January 17, 2014 to reflect a lower-than-expected sales outlook from the initial forecast. Nintendo expects Q4 2013 to experience a significant decline in sales due to natural seasonal factors. Nintendo is also still expecting losses. You can read more about the revisions here.