With Pokémon Go being such a massive success, many would have expected Nintendo’s fortunes to have changed for the better. Unfortunately, the company’s recently announced quarterly financial results paint a much different (and uglier) picture for the Japanese electronics company.
Compared to the same quarter last year, Nintendo saw net sales drop 31 percent from 90 billion yen (£651 million, $853 million) to 62 billion yen (£448 million, $587 million, as well as an operating loss of 5.1 billion yen. (£37 million, $48 million. Although the company was quick to lay the blame on “foreign exchange rates” and “significant yen appreciation,” it’s no secret that the company’s hardware and software sales are down across the board. Nintendo only managed to sell 220,000 Wii U consoles, representing a 53% drop year-on-year and even though Wii U software sales were actually up, they only improved three percent to 4.7 million units.
The 3DS has long been Nintendo’s one saving grace ever since the Wii U failed to gain traction, but it’s starting to show signs of slowing down. Hardware sales dropped seven percent to 940,000 units, while software managed to rise seven percent to 8.5 million units thanks to a strong lineup of titles such as Fire Emblem Fates and Kirby: Planet Robobot. Amiibo figures, which have been a huge success for the company ever since they were introduced in 2014, experienced flat sales because of “a lack of new titles that are compatible with Amiibo.” Unsurprisingly, sales of downloadable games was also down.
Nintendo managed to open up another income stream this year with its move to mobile game development, but it hasn’t quite taken off enough to make up for the company’s other shortcomings. The social app Miitomo only managed to bring in 1.6 billion yen (£11 million, $15 million) for the quarter and although Pokémon Go profits are not reflected in this earnings report, they won’t make as much of an impact as many investors had initially thought. Nintendo recently admitted that they only own a 32 percent stake in the Pokemon Company and developer Niantic, so they will only earn a small portion of the game’s profits regardless.
That being said, Nintendo is developing the Pokémon Go Plus accessory, which will alert players to nearby Pokémon without them having to look at their phone, but they just announced today that it has been delayed until September, which means they will have to wait to capitalize on the current hype that may be all but diminished in a few months’ time.
With Pokémon Go not being the goldmine many had expected and its hardware and software divisions hemorrhaging money, is there still hope for Nintendo to turn things around? The company is betting the farm on the Nintendo NX, its new gaming hardware that will reportedly be a portable console hybrid, but it doesn’t arrive until March 2017 at the earliest. For 2016, Nintendo doesn’t have much in the way of big releases, but they are releasing a mini NES later this year that is expected to be one of the hottest toys of the holiday season. So even though Pokémon Go isn’t enough to reverse the company’s fortunes, the hype surrounding it shows that people will go nuts for products that deal in nostalgia the right way. Fortunately, Nintendo is a company that has nostalgia in spades, so it would be foolish to count them out yet.
However, if the NX proves to be a bust, it may be a good time to hit the panic button.
(Source: Ars Technica)