Nintendo's Profits Fall On Gamecube Sales

Gamasutra reports that Nintendo's sales have dropped 21% compared to last year's numbers, largely on sluggish Gamecube sales. From the article: "Although a significant fall, Nintendo remains the most consistently profitable console hardware manufacturer when also factoring in game sales, especially compared to nearest rival Microsoft, which is estimated to have lost around $4 billion on the Xbox in the last five years. Nintendo officials are sticking to full year forecasts of operating profit of ¥90 billion ($758m), net profit of ¥75 billion ($631m) and sales of ¥400 billion ($3.4bn)."

Comments

Long Term Sales?

[Hellad]

I would be really curious to know what the long term profit of the GameCube were. I know that MS lost 4 billion over the life of the X-Box, I wonder what the fina take will be on the GameCube. Despite being a disappointment for Nintendo (but not for me, I love my GC), I bet it was still made more than X-Box.. I realize of course this comes from MS's ability to sell them at a loss, but with the reported $171 dollar loss per 360, I would be curious to know how long MS will stay in the market before it needs to make some cash off their machines (maybe never?)...

I am amused that the "doomed" nintendo always manages to make some money off its machine sales, even when sold for a fraction of the price. Oh well, hopefully revolution will help give them te shot in the arm that they, and the industry, need...

Re:Long Term Sales?

[falcon5768]

Nintendo has made more profit than both Sony and Microsoft combined actually. Even on release, the Gamecube was sold at a profit, which considering its price being half of what the other systems where (and the system actually being better capabiliy wise than either the Xbox of PS2) was amazing. Add that plus the profit from the games and they have a really large warchest.

Sony and Microsoft have the money to throw at their machines, BUT they are also taking huge hits whenever they release a system. Nintendo never takes a loss, everything is profit for them. They might not in the end make AS much as the other two, but they dont nearly have the bills either. With the Revolution being estimated at 1/4th the price of both the systems, it doesnt look like Nintendo will be in trouble anytime soon even IF the controller idea doesnt work out.

Nintendo and Apple very much have the same philosophy toward their systems and it works very well for both of them. People can kick and scream that both are dying, but the sheer amount of money they have in the bank proves that those who say they are are cluless as to how to run a buisness.

Re:Long Term Sales?

[SetupWeasel]

Nintendo is on forcast. This is a 21% drop in profits from the same time the previous year. Game sales overall are lower, so everyone is expected to make less profit. Nintendo lowered their forcast this year 3 months ago based on the delay of Zelda. Other than that everything is going smoothly.

Last year was a really good year for Nintendo's profits and they are expecting to make about 4/5th of that this fiscal year in a transitional period for their home console business. Not too bad. Also remember that they are considering all the R&D for the Rev that they are paying for.

So no, there is nothing for a Nintendo fan to worry about. The game media simply loves blowing anything remotely negative for Nintendo out of proportion.

Re:Long Term Sales?

[Shadarr]

"I know that MS lost 4 billion over the life of the X-Box, I wonder what the fina take will be on the GameCube. Despite being a disappointment for Nintendo (but not for me, I love my GC), I bet it was still made more than X-Box.."

I don't really get what you're wondering about. The XBox lost $4 billion over its life cycle, the Gamecube made money. So yes, it made more than the XBox, because it didn't lose money.

As such I'm not sure that the GameCube was a disappointment for Nintendo. First of all because they have made a profit every single quarter of its release. Secondly, the Gamecube is only about 5% behind the XBox in worldwide install base. XBox is way ahead in North America, but Nintendo is a Japanese company. They are in no way irrelevant or niche, like a NeoGeo or nGage.

Re:Long Term Sales?

[edwdig]

With the Revolution being estimated at 1/4th the price of both the systems, it doesnt look like Nintendo will be in trouble anytime soon even IF the controller idea doesnt work out.

That's just people dreaming. Think about it a little. The GameCube is currently $100. Although Nintendo isn't going to support HD resolutions, they have said the Revolution will have comparable graphics to the other next gen systems at non-HD resolutions. That's still significantly more powerful than the GameCube. The system is also going to have 512 MB of flash memory built in, which will add a bit to the cost. Realisticlly, you'll talking about launching at Nintendo's traditional $200 point.

Re:Long Term Sales?

[buffer-overflowed]

Yea, yea, yea. Can't play DVDs. Not a big deal.

It's wrong to say it's more powerful than the XBox, it's as powerful as the XBox(at least as far as results not theory). I think the best looking cube game I've seen edges out the best looking XBox game I've seen, but the two systems have roughly comparable results in the whiz-bang graphic category, and both have load times drastically better than the PS2(for different reasons). Go fig.

Both systems are FAR better performing than the PS2 tho.

Nvidia v. ATI flameware ensure. Since each company does different things better that's basically what you're doing when you stack the XBox's graphics up against the Cube's.

Re:Long Term Sales?

[buffer-overflowed]

Uhh no. You are VERY, VERY wrong. The differences in net profit(the figure that matters) between Nintendo(as a company) and Sony(as a company, all divisions) have been within 10-20 billion yen(within around $100 million at today's exchange rates) for this entire generation. Sony's operation isn't nearly as streamlined as Nintendo's, they make more money, but they spend a lot more money as well.

At that difference, it would take sony several decades to out-profit Nintendo's multi-billion dollar warchest.

Re:Long Term Sales?

[-kertrats-]

Really wish the Zelda ship date hadn't slipped.

You'd prefer an unfinished game rushed to launch a few weeks early, as opposed to a polished and perfected game? Miyamoto has gone on the record stating he's put more into Twilight Princess than any other Zelda. I don't think I'll mind waiting for it, because in a year it won't matter when it came out; the only thing we'll remember is the quality of the game.

Re:Long Term Sales?

[SScorpio]

As Miyamoto himself said: "A delayed game is eventually good, a bad game is bad forever".

Re:Long Term Sales?

[SetupWeasel]

I'm sure the poster is speaking about Sony's and Microsoft's game divisions. Let me put it to you this way. Microsoft has lost so much money on the Xbox that I have made more money than Sony's and Microsoft's game divisions combined over the past four years.

And no, Sony is not doing as well as you surmise. The GameCube sells a lot of software per console sold. Since they don't subsidize their console, software profit is actual profit. Sony has a 70% stake in the home console business and they regularly report quaterly losses. Nintendo has reported one quarterly loss in fifty years of public trading. The GameCube is profitable. Not super ultra mega profitable, but it makes them money.

Sony's business model is based on the assumption that they are the far-away leader. Ask yourself this, if Sony does not capture 70% of the market in the next generation, will they turn a profit?

Sony is the worlds 2nd largest electronics manufacturer. They have movie and music studios and are a major force in the traditional entertainment industry. Nintendo is almost solely a video game company, and they manage to make more than half the profits (overall) of the Sony behemoth.

Nintendo is a tightly run ship. They know how to make money, and they do it by the truckload.

Their attempts rebuild their image amongst hardcore gamers has fallen largely on deaf ears, and it's not financially feasible for them to battle it out head to head with the titans like Sony and Microsoft.

Nintendo keeps more money than Microsoft lost on the Xbox in its entirety liquid. That's right. They have more than 4 billion dollars cash on hand to invest quickly (7.5 billion is the number I could find). Nintendo could play the game that Sony and Microsoft has started, but what would be the point? Sony and Microsoft might both lose money in the next generation. Nintendo doesn't care to play a game that no one might win.

Re:Long Term Sales?

[myster0n]

I think Iwata would say that even when the gamecube sold as many units as the PS2. If you're creating a system that's supposed to appeal to a lot more people than your current system, in a really big way, then it's a failure if that doesn't happen. Even if, as I said before, your current console sells a metric shitload of units.

Re:Long Term Sales?

[BlueHands]

You know, when I first read the grand-parent post I assumed he was talking about cost to manufacture,not total price. The total price will likely be around $200, if not exactly $199.99. Hell, I doubt they can do anything else. Everyone is expecting the system at that price point.

But as far as manufacturing goes, it could be anywhere between 1/3 to 1/4 the cost of the most expensive system with the 1/3 being the most likely. Since Nintendo likes to make a profit on their consoles, the Revolution could cost as little as $150 to make, maybe as "high" as $180. Most people seem to agree that even if the 360 is not a loss leader the PS3 will be which means that the ps3 to make will cost over $400. Here is just one example estimating a production cost on the PS3 at $500.

And remember, folks...

[chrisbtoo]

... that's "profits fell", not "made a loss".

Gasp...

[BigDork1001]

Oh noes... a system that's near the end of its life is not selling as well any more. No kidding. At this point if I didn't have a GC at this point I'd probably be holding off for a Revolution which will have full backward compatability.

Re:Gasp...

[johnkoer]

Actually, I just bought a GC and I love it. I wanted a new system since my PS2 died on me and I decided $400 + games was too much to spend on the 360. If the revolution is going to be backward compatible then any games I am buying right now, I will still be able to use. Plus there are a lot of $20 games available for the cube. I can tell people I want these games for X-Mas and they won't balk at the cost.

I'm glad I got the cube and I plan on using it well into the years of the next generation of consoles. I'll probably end up getting a revolution after the first price drop.

NEWSFLASH

[voice_of_all_reason]

Technology-based entertainment products decrease in popularity over time.

I applaud Nintendo

[NVP_Radical_Dreamer]

I applaud nintendo for being able to pull this off. In an era where console companies are losing money left and right, they are consistantly able to post a profit. I think much of this stems from innovation of their products. Even if they sometimes fail (gb printer, virtual boy, power glove) the times they hit it, and when they do they hit it big. If you remember, they are the ones who pioneered the handheld controller as an alternative to the joy stick. They also pioneered shoulder trigger buttons, analog sticks, rumble feature, OEM wireless, and are now giving a stab at a gyro based contol system.

You can call them childish or for kids all you like, but there are few people who can say they dont truely enjoy the vast majority of what nintedo has created.

Re:I applaud Nintendo

[Erioll]

To be perfectly fair, the Power Glove wasn't their failure. I believe it was made by Mattel. I could be wrong on the manufacturer, but it was NOT Nintendo that made that. The other failures though, are of course theirs.

But the point remains that they are a profitable company making systems and games. They do NOT require "side businesses" to keep them afloat.

Once Zelda Releases...

[rAiNsT0rm]

Everyone seems to forget that The Legend of Zelda: The Twilight Princess is yet to debut, which alone will raise profits substantially. Also Mario Party 7 is virtually sold out everywhere right now and is not included in these numbers.

Nintendo has had a bit of a weak run, but it is ramping up for one hell of a send-off for the console. Profits are just fine, not record-breaking but they are doing just fine compared to some competition. Also, think of current Xbox owners they got barely 4 years and now they have nothing to look forward to without upgrading... at least Nintendo has stuck with the GC till the very end and continues to product top content. I'll take customer loyalty over profit numbers any day.

Gamecube sales falling? Not surprising...

[Fred Or Alive]

...at least from a UK perspective - practically nowhere sells Gamecube stuff anymore. It's been evaporating from retail for over a year, by now it's pretty much specialist games shops (and even some of them appear to be dropping it, the Game in Redditch no longer sells new games[1]). Frankly, I think it's too far gone here for Nintendo to pull the Gamecube out of it's death-dive. Although The Twilight Princess will probably sell well to the people who have bought the Gamecube, but with such a small retail precence, I can't really see Nintendo shifting many more consoles.

(Isn't the UK on it's own the 3rd biggest market for videogames? )

Then again Nintendo are good with this money side of things, and they do have the handhelds as a cash-cow. They also have sensible management (who about two years ago had a revaltion that European gamers do tend to notice if a big game is released in the US months / years before a European release, strangley coinciding with the Xbox beginning to get an upper hand in the console race). I'd say they have a fair chance with their weird Revolution thingy, which seems to either be a valiant failure, or the single greatest change in gaming since [Pong / Atari2600 / NES / Megadrive / PlayStation] (or both of course).

[1] The Game in Redditch is tiny though, I guess bigger stores still sell it.