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Nintendo Quarterly Profits Down 80%
mybrainonfire writes "1UP is reporting that Nintendo had a 78.5% reduction in operating profits for the quarter. 'Speculation from the news service on the reason for the drop makes perfect sense - the GameCube doesn't have enough exclusives, first-party and third-party, and sales of GBA SP and GameCube have been declining.' Time to release more Pokemon games, stat!"
Nah, it's just that children the world over have rediscovered the pleasures of the great outdoors, of playing in the street and exploring the neighbourhood. They'd rather play in the real world than a virtual one. oh... wait...
Drag n' Drop DVD Recommendations
http://www.gamasutra.com/php-bin/news_index.php?st ory=6051
re Shacknews: "Gamasutra points out that while Nintendo is suffering from reduced profits, neither Sony nor Microsoft's Xbox division are currently making any profit."
Unfortunately, the next major Pokemon release (Pokemon Diamond and Pearl) isn't due until early 2006 in Japan, and if they follow the same pattern in the US that they have done with earlier Pokemon releases, we won't see it in the US until at least the fall of 2006.
I personally like the Game Boy because of the Pokemon games (I still like Pokemon), and the Game Cube and Nintendo DS sounds nice, but the release of Sony's PSP and the upcoming release of the XBox 360 and Playstation 3 seem to be eating Nintendo's lunch right now, and those consoles aren't even out yet. Nintendo, on the other hand, isn't coming out with their new-generation console for at least another year.
I just hope Netcraft isn't confirming anything yet.
Perhaps it would be appropriate for someone to point out that Sony and Microsoft's gaming divisions have both reported net losses this quarter. Nintendo still profited, just not as much as it expected, and they remain more profitable overall than any other gaming division. Of course, you'll never see that in any gaming publication. It's all about how Nintendo is constantly doomed. Yeah right.
According ot the article, N's profits are down, but they are still operating in the black. Seems that when they're operating at 80% profit less, they still do OK.
They just haven't had a blockbuster game recently.
Even still, unless Nintendo don't do something, they'll fall by the wayside like SEGA did.
READY.
PRINT ""+-0
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But far be it from anyone in the word of investor driven "growth at any cost" to acknowledge that fact.
They're still in the black, they're still making a profit, they're not going out of business.
He tried to kill me with a forklift!
If you look for some hard numbers, it means that Nintendo only got about 3.75 billion yen in profit this quarter.
Sony's also annouced results today. Their game division finished the quarter with an operating loss of 5.9 billion yen. I don't know about Microsoft game division but I'm pretty sure they're not making money.
Nintendo execs. might not be dancing back in the boardroom, but I think they're happier than Sony and Microsoft.
It's a frickin' hundred dollars? WTF!? How cheap do you expect it to be???
"A truly wise man realizes he knows nothing."
"..but how did the other guys do?"
They had losses, of course. Nintendo is financially healthy while Sony's in billions of dollars worth of debt (60billion, IIRC) and Microsoft's gaming division is losing money. But of course it's Nintendo who's doomed!
The posting of the article itself outlines what is perhaps Nintendo's biggest problem: its image. Just from reading the comments already here, you can see people presuming that Nintendo's going to go under or stop making consoles. I honestly have no idea how this crap gets posted everywhere, though I wouldn't put it passed either Sony's or Microsoft's marketing departments.
Nintendo is not a division of an extremely successful multinational corporation: it is a multinational corporation. There is nothing to support it if it fails to show a profit.
The drop in sales must be due to.... piracy... oh, wait..
Seven puppies were harmed during the making of this post.
Well, Nintendo's been on about the overall decline of gaming in Japan for a while now, and they've been promoting their DS as a solution to the problem. I haven't been able to find anything on Nintendo's earnings report to verify, but my traditional sources are US centric.
Without being able to read the fine details, the decline probably revolves around a lot. This quarter was relatively empty on the Gamecube; this is traditional among game makers, their big hits come in the Christmas gift-giving season. The DS really only had one big game for them: Nintendogs. While it did sell quite well, and broke into many non-traditional demographic groups, a single game can't really carry em. And while the DS is supposed to be the 3rd pillar of Nintendo gaming, it seems to truly be the replacement for the GBA, which is in decline and appears to be throwing a last hurrah this Thanksgiving. Another thing is that Nintendo traditionally invests a good part of their short term savings in US dollars, and a lot of their operations work in dollars. So when the price falls, they lose Yen, and everything costs them more. Overall, I think the strategy has helped them overcome the various problems the Yen and Japanese economy had over the past ten years, but it can crop up in times like this.
The good news is that they're on track for an excellent quarter. Twilight Princess should break some records and move some more Cubes. August appears to be the day in which the DS will explode onto the US mainstream with both Nintendogs and DS Wars on the same day. Now that's a back to school special. Jump Superstars is already looking to be a rather big hit in Japan for the DS, judging by preorders. It could also well be that Nintendo is paying forward a lot of money for advertising in the near future for all these big hits. Finally, remember that they're still making money, just not as much as the last quarter, which saw the sale of a couple million Dual Screens and games. Given that the market is up on their stock at the moment, you might expect next quarter to really take off if their plans succeed.
It's just a summer slowdown, probably happens nearly every year, only less pronounced when they aren't also launching a new handheld the previous quarter.
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* Gamecube not competitive enough with PS2
The hardware's superior, where's the software? Looks like Nintendo scared too many developers away with their previous N64 policies, and now they don't have the install base to attract enough anymore.
* Nintendo DS too bulky compared to PSP
This is a load of crap. My husband owns both, he's a professional game reviewer for a major magazine (print, not web). Guess which one fits in his jeans pocket? I'll give you a hint, it's not the one that attracts dust from 20 meters, is so expensive you're constantly nervous about scratching or dropping it, has constant hardware problems (his has a broken UMD latch but no dead pixels fortunately), has almost no titles, has no easy way to find other people to play wireless games with, has been delayed for made up reasons in most of the world, and has "support" in the form of patches that break anything interesting you can do with it.
DSlinux.org and Gamemaker port for the win!
* People are waiting for PS3 (Cell processor + Linux!), not GC3
I think people are waiting for a console they can actually afford that has some games they want. I've seen a good dozen HD trailers of complete or nearly so Xbox 360 games, where's the PS2 titles? Any killer apps yet? I haven't seen any. Maybe developers are having problems dealing with a CPU that has terrible integer performance and a wacky memory system with too little local memory to do a few algorithms like say... collision detection on the SPEs?
Introducing the new Occam Fusion! Now with sqrt(-1) fewer blades!
AC, you raise an interesting point.
Microsoft is still in the video game business only because they have the Windows cash cow to ride in on. Sony rides solely on their name, as best as I can tell. No one I know really wants a PS2 because the games are that much better (Ok, Denny really likes Ys, but aside from that...), but because they know the Sony brand is "King of A/V".
The way I see it, the video game magazines have destroyed N's image. They've been buzzing Sony since the beginning, even though the N64 had clearly superior graphics and games (yes, all three of them). (And yes, I'm familiar with the reasons the N64 did poorly: game prices, developer support, etc.).
Of course, I doubt anyone on Slashdot would actually admit to owning a Gamecube if asked. I mean really. Who here enjoyed Mario Kart: Double Dash LAN Parties? Final Fantasy: Crystal Chronicles? Mario Sunshine? Resident Evil 4? Rogue Squadron? Super Smash Bros. Melee?
Sure, there's only a dozen (give or take) games for the 'cube, but I can't find any really unique games for the other systems. Well... there is that PS2 game where you roll the ball and absorb everything you pass over... what's it called?... oh well.
Deja Vu
n. 1. The sensation that you've read this very article before.
A lot of people I know skipped out on buying a Gamecube simply because it was damn near impossible to pirate the games. IMO, you want an early success for your console? Let the games be copyable. Yeah, it'll hurt sales to begin with, but its probably the best way to stir up some interest (not to mention building up some trust among gamers) early on. If the games are good enough, most people will end up buying them anyway. You want an example, just look at the GC's current competition.
Obviously half of $100 is $50.
More half ass stuff from 1up.They post what they want,so they can bash who they want.
0 5/07/28/ap2162457.html
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Sony=52Million in the Red
"Sony's game unit, which makes the PlayStation 2 and PlayStation Portable gaming consoles, saw a 64 percent sales increase to 105.4 billion yen ($941.1 million). But the division also booked a 5.9 billion yen ($52.7 million) operating loss due to marketing and research expenses. That loss widened from 2.9 billion yen the previous year.
Shipments of the PSP, which went on sale late last year in Japan and earlier this year in the United States, totaled 2.09 million worldwide, while PS2 sales rose nearly fivefold to 3.53 million units. "
http://www.forbes.com/associatedpress/feeds/ap/20
Microsoft=178 Million in the red..
"A 22 percent spike in Xbox sales narrowed the company's losses in its home and entertainment division to $179 million, compared to $340 million a year ago.
"I think that, to some degree, validates Microsoft's business model in getting into the console space in the first place," Rosoff said. "Microsoft is selling more games and fewer consoles, and that's really the business model. They acknowledged it would be expensive to get a foothold in the market."
http://www.forbes.com/associatedpress/feeds/ap/20
Nintendo=In the black with a thing called PROFIT
Read there returns here.
http://www.nintendo.com/corp/annual_report.jsp
Nintendo is not going to be closing up anytime soon.They have made a big profit in seven of the past 8 quarters.Barly red in the 8 to make any diff for the year, which was deep into the black.
Sony has been hit and miss.There game part of there company has been one of the few things making any money, even tho they have to sell 2-3 times as much as nintendo to make even close to same profit.
Microsoft has only had one quater of profit sense the xbox has come out, if it wasn't because they have a big company to back it up, it would have been canned a long time ago.
I never realized Nintendo games were geared towards any particular age range. They are kid-friendly, but hell if I don't find the games just as fun as I did when I was 6. When do you become too 'mature' for Super Mario Brothers, exactly? To me, Mario Party is just so much funner than 'yet another multiplayer frag fest', but I guess that's probably because I feel more thought was put into making the game fun. (They couldn't just give you a choice of 6-10 weapons and have you run around and shoot people.)
Whenever I hear this criticism about "more mature games", it seems more a request for Nintendo to play to gamers' insecurities than anything. When I play a Mario, or Zelda, etc. game, I don't think "geez, Nintendo's treating me like a kid! Where's something that plays to my need for raw violence, bloodletting and gritty realism?" I think - gee, the gameplays really good, the game is huge, and all the best parts aren't cut-scenes. (Unlike most other games out there.) But apparently many gamers don't agree. Games have to be complicated, be badass and 'realistic', or be like movies, to be playable. Not to worry, Sony and Microsoft have got those folks covered. FPSs and sports (i.e. racing) games are flooding those platforms.
Personally, I don't see this as cause for alarm. When Nintendo's in the red, and the other two vendors are making gobs of cash (at least up until recently, MS was bleeding cash on XBox) then let me know. But hey, I'm a Mac user and so I'm quite used to people predicting the imminent death of a profitable company. :)
From a far more informing Gamespot article here
"It also can't be understated that Nintendo saw a profit in its last quarter. By comparison, Sony Computer Entertainment today reported a quarterly loss of 5.9 billion yen ($52.6 million). Last week, Microsoft's Home and Entertainment division, which makes the Xbox, said it lost $179 million during its last quarter.
I'd take a profit over a loss any day of the week. It's also the first time Sony has ever had two back-to-back losses.
Stern Electronics is probably the best example I could give to refute those who think profitability is so bad.
Stern are the only remaining pinball manufacturers in the world. Midway/Williams, Gottlieb, Sega, Atari, you name it - all gone.
How did Stern survive? Well, they never were into the glitsy uber-electronic versions of pinball that Midway and Sega were killing themselves over. They simply did a simple thing: made FUN pinballs modestly.
Eventually, their competitors priced themselves out of the market or found more profitable venues (Midway's arcade division produces gambling machines). With Sony and Microsoft not even close to breaking even after all this time, you know the next generation will be even worse for them. The PS3 is practically a supercomputer in console form, and the 360 will be more powerful than just about any PC you can put together.
The ultimate question is: will they EVER turn a profit? I don't believe they will and in the meantime, Nintendo may experience a loss in sales to older, more demanding gamers, but they will continue to sail on through and IN THE BLACK.
"...Well, there's egg and bacon; egg sausage and bacon; egg and spam; egg bacon and spam; egg bacon sausage and spam..."
Time to release more Pokemon games, stat!
Please STFU. Pokemon RPGs are a lot more indepth then people give them credit for. Each pokemon stats wise have hundreds of varients and tactics, far more then the latest FF menu slogging interactive movie.
When you can tell me what EV, IVs and base stats are relating to pokemon and I might listen to you're opinion. Untill then you're taking cheap shots at a fantastic RPG series which happens to be easy enough to pick up and play it's marketed to kids.
I like muppets.
Let's face it, Nintendo applied the "we'll give consoles at a loss, and overcharge for games" model long before Sony or MS were anywhere near interested in consoles at all.
/. booing MS and cheering a far worse monopolist.
So Nintendo's case in an anti-trust lawsuit would be... what? "Your honour, they did the _exact_ same thing we did, but took a bigger loss"? I think the judge would have to call a recess just to stop laughing.
Plus, it's sorta ironic, that what goes around comes around. And I don't just mean dumping prices on hardware. Nintendo, for all its other merits, was a far nastier monopolist than MS when it was at the top.
Anyone else remember the exclusivity contracts they made developpers sign? No, I don't mean the _nice_ MS way of "we'll give you a big wad of cash if you give one exclusivity on this one game for a year." Nosiree, bob. Nintendo's version was more like signing yourself into exclusive serfdom, for life. Sorta "we're the Big N, we're King. If you want to be allowed to develop for our console, you worthless insignifficant peon, sign there that you're not allowed to _ever_ publish _any_ game for any other system."
Took some desperate lawsuits to get that crap declared illegal.
Remember the anti-competitive behaviour in Europe? Yeah, Nintendo got convicted and fined as a monopolist over here. Not only that, but they cheerfully continued doing it during the trial, on the explicit assumption that they'll make more money out of it than the EU can fine them. Much to their surprise, the EU had a nastier bite than Nintendo estimated. But still, it's the kind of "we know we're breaking the law, but you can't stop us" behaviour that we condemn Microsoft for.
So I find it sorta strange to see much the same gang on
Either way, I'd find it bloody hillarious if Nintendo filed an anti-trust lawsuit. It would be like seeing Microsoft filing anti-trust against someone. _That_ surrealistic.
A polar bear is a cartesian bear after a coordinate transform.
So there, now I've said it, I enjoyed them all, where's the problem? Do I get a prize?
Now, the PS* may have cooler games, but Nintendo is far more superior in making fun toys to play with.
True confidence comes not from realising you are as good as your peers, but that your peers are as bad as you are.
I have owned most the consoles over the past 20 years, so not a fanboy of anyone in particular. But I have had more fun gaming in my past 4 months of GC and 6 months of GBA owning than I have done in the past 3 years of PS2 owning. Its not the quantity of games, it really is the quality, and I think this is where Nintendo excel.
We are not 6 years old any more nintendo!!! And 6 year olds do not have money, 24 year olds have money
No, 24 year olds don't have money. 30-50 year olds have money. And we decide which games our 6 year olds buy. We get the ones that are fun and age appropriate. And Pokemon rules.
More expansive article here If you read the article, it tells you "80% decline," but that's a lie. If you actually do the math, a 3.75 billion yen decline to 13.72 billion yen of operating profit is obviously not an 80% decline, and in fact what actually happened is a decline TO 80%. Likewise, they had a 14% drop in sales, netting 70.7 billion yen.
Now, let's look at Sony and Microsoft's numbers (linked article last paragraph). Microsoft lost more money than Nintendo made in profit. Sony lost about a third as much as Microsoft, but they're still in the red! Where's the front page "Sony's losing money! So's Microsoft!" articles?!
Good lord, no wonder why everyone thinks Nintendo's doomed: the media has it out for them! Why didn't they report on Sony or Microsoft's losses, let alone why didn't they check their numbers/headline/article before posting it?! Seriously, Nintendo has an uphill battle next generation, and it's mostly because the media puts them in a bad light like this.
Source: http://www.businessweek.com/smallbiz/content/mar20 05/sb20050331_4850_sb040.htm
While I'm no expert on the subject, I'm afraid I'm going to have to challenge you on a fact or two....
Stern Electronics, the 80s manufacturer of arcade games (including some pinballs), is not the same thing as Stern Pinball, although Gary Stern was involved with each of them. Stern Pinball is what used to be Sega Pinball, and before that, Data East Pinball. It's a pinball division that's changed hands, and been renamed, a few times. It doesn't make sense to say that they've "survived" all this time; only recently have they become an independent company, bought off Sega by Gary Stern (who had been an employee).
Stern Pinball, in whatever form, has never known for making the best tables. When Williams (who also owned Bally) was in the market, they were king. When they left the market, dismantling their pinball division and firing several star designers including Pat Lawlor (Addams Family, Twilight Zone), that basically meant no one was making pinball games anymore.
Gary Stern saw the opportunity to get into the market. Stern seems to genuinely love pinball, and so has more than a monetary motive in buying the company. Without Williams in the market, he saw that it was possible to make a profit, if he were the only real pinball manufacturer in the world. He's in a very precarious position, however -- if someone else starts making pingames, he could go under easily. Fortunately for him, that seems unlikely.
On to point two:
The PS3 and X-Box 360 will certainly be more powerful than the current generation of machines. But there is an amazing amount of hype flying around concerning them right now. In light of the promises made concerning the PS2 and X-Box back at their release, I'm taking whatever either company says with a three-ton grain of salt until the systems are actually released and the play of their games can be assessed.
Point three:
I'm not certain that neither Sony or Microsoft's game division will not make a profit. I'd put more money on Sony than Microsoft. Nintendo is not in as much trouble as the article seems to suggest -- reading the original article sources makes it clear what happened is that Nintendo had a large R&D charge this year, probably from development work on the Revolution.
Nintendo's profit has dropped $120 million, while the revenue has dropped $102 million. While Nintendo's sales have dropped in the last quarter, that is not why their profits are going down. If you are going to use the argument that they aren't selling as much as they did last year then you should see a larger fall in revenue than profits as you take the unit production/marketing/logistics/etc. costs out of the total revenue costs, leaving you with profit.
What was posted was a 1.2:1 decline for profit:revenue - something that is very bizarre to begin with. You should be seeing things like 0.5:1 decline if sales were the primary cause. Even if you get a 1:1 decline, you're sitting pretty as your investment/production/etc. capital is returning double what you invested. This 1.2:1 decline should indicate only 1 thing, Nintendo is spending more.
They are gearing up for the next console generation, that is all.
On of my family members recently got rid of their X-Box and switched to Nintendo for the very reasons you are citing. She grew up with a bunch of different game systems, but ultimately ended with a Super Nintendo and she was hooked.
Flash forward a few years and she and her husband purchased a new X-Box. They didn't end up playing it much. They found many of the games were just too complex to play casually. They wanted to be able to pop in a game and play for a few hours without having to go through boot camp.
The GameCube ended up being the perfect system. It had updated versions of many of the games they liked from old Nintendo systems (F-Zero, Metroid, Mario Kart), they are pretty easy to learn, and they had more options for playing games together. They weren't really into multiplayer FPS, but they would race each other in Mario Kart any day.
Just a little empirical evidence to support your point. As video gaming becomes more popular, more niches are going to open up; Nintendo is probably smart to stick with the family space. Heck, even hardcore gamers like to play games like Lumines every now and then. Personally, I wish Katamari Damacy was on the GC.
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In X-Windows the client serves YOU!
Grr. So I went and read TFA. Talk about burying the lead! The story here isn't that Nintendo profits are down 80%, it's that Nintendo is PROFITABLE while their competitors are not.
The points I made above still stand, with the added note that Nintendo runs the tightest ship in the industry and never sells anything for a loss. Still, it's anyone's guess how long they can go on bleeding market share and still make money. Like I said, perception is reality. Headlines like this probably do more to hurt Nintendo than any questionable business move they may make because it scares people away from buying their products.
Basically what the article said was while Nintendo reduced its costs, its still in the black and more importantly it said unlike Sony and Microsoft actually making money and not operating in the red, and look to stay that way even when they release the Revolution. Both Sony and Microsoft are looking to take insain hits in the push to release theirs
I dont know about you but the whole point of being in buisness is to make money, and Nintendo does that every year. A lot of the "faiilure" of other makers is not that they dont have superior systems, its that they spent way too much promoting a system that they where selling for a loss... something Nintendo has NEVER done cause they know their limits and know what happens if you dont follow them (Virtual Boy anyone?)
Alreadys the PSP is on its way out with barely a hint at any decent games coming while the DS has a slew of games that have boosted the sales in Japan well past the PSP. The revolution is poised to be a decent 2nd system that /gasp DOESNT SELL FOR A LOSS unlike the 360 and PS3 which will... so every system they sell MAKES money.
Nintendo also has a pretty hefty piggy bank that they havent even touched recently because of the fact they make a profit every year.
Nintendos far from over, they are the Apple of the gamming world, and everyone knows you can make a mint fast, but its the ones who refine what they do and do it day in day out with profit who in the end win. The PS3 and 360 can be awsome machines, but if they produce too much loss for their respective companys they will be cut loose no mater how many games they can sell and how much money their parent companys have. Losses are losses and this who game is about profits.
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