Strong Yen Sees Nintendo Suffer First Quarter Loss

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Nintendo has suffered a 24.5 billion yen (£177 million) net loss in the first quarter of the fiscal year.

That has been attributed to a stronger yen and dwindling hardware sales. While software sales were up for Wii U and Nintendo 3DS, revenue from hardware sales fell from 44.6 billion yen (£322 million) to 25.1 billion yen (£181 million).

The Wii U can continue to be blamed for such poor performance, with just 220,000 consoles shifted in the quarter. That’s a drop in comparison to the prior year, when 470,000 units were sold in the same quarter. Whereas the Nintendo 3DS sold 940,000 units worldwide in the first quarter, compared to 1.01 million units the year before.

Software sales grew, with Nintendo 3DS selling 7.9 million copies – a climb compared to the 8.5 million copies that they had achieved the year before. While Wii U saw limited growth, shifting 4.7 million copies compared to 4.6 million copies last year.

Surprisingly, software revenue still saw a decline. Nintendo secured 34.9 billion (£252 million), which was lower than the 44.4 billion yen (£321 million) revenue earned last year.

“During the three-month period ended June 30, 2016, for Nintendo 3DS, Kirby: Planet Robobot, which was released globally, showed steady sales. In the U.S., Bravely Second: End Layer was released, and in Europe, Fire Emblem Fates: Birthright/Conquest was released and both titles got off to a good start,” the earnings release states. “As a result, the worldwide sales of Nintendo 3DS hardware and software were 0.94 million (7% decrease on a year-on-year basis) and 8.47 million units (7% increase on a year-on-year basis) respectively.

“With respect to Wii U, in addition to titles such as Star Fox Zero/Guard and Mario & Sonic at the Rio 2016 Olympic Games, which were released globally, Splatoon and Super Mario Maker which were released during the prior fiscal year showed steady sales. The global sales of Wii U hardware and software were 0.22 million (53% decrease on a year-on-year basis) and 4.68 million units (3% increase on a year-on-year basis) respectively.

“For amiibo, the figure-type and the card-type sales remained at approximately 1.70 million units and 1.30 million units respectively mainly due to a lack of new titles that are compatible with amiibo. Download sales decreased year on year because sales of in-game downloadable content were down.

“In addition to these results, due to foreign exchange rates being impacted by significant yen appreciation, net sales were 61.9 billion yen (of which overseas sales were 44.8 billion yen or 72.3% of the total sales) and operating loss was 5.1 billion yen. As a result of exchange losses totaling 35.0 billion yen due to the appreciation of the yen, ordinary loss was 38.6 billion yen and loss attributable to owners of parent was 24.5 billion yen.”

In forecasting the remainder of the fiscal year, Nintendo look to Pokémon Sun, Pokémon Moon, and Mario Party: Star Rush to “re-energise” the Nintendo 3DS business. While Nintendo NX is still locked in for a worldwide release in March 2017, and their Fire Emblem and Animal Crossing apps will see release.

The earnings release continues: “For Nintendo 3DS, we will release Pokémon Sun/Pokémon Moon globally in November. These are the latest titles from the Pokémon series, which has sold 200 million units worldwide since the first title from the series released 20 years ago. We will also release Mario Party Star Rush this fall. Furthermore, multiple titles from third-party publishers are also scheduled for release. With the release of these titles, we will re-energize our Nintendo 3DS business and aim to expand our reach globally to a broad audience, including female and younger consumer demographics.

“The dedicated gaming platform, code-named NX, which is currently under development and incorporates a brand-new concept, is scheduled for launch in March 2017 globally.

“Furthermore, Nintendo will release Pokémon GO Plus, a peripheral for the mobile game app Pokémon GO developed and distributed by U.S.-based company Niantic, Inc. Pokémon GO Plus interacts with the app and lets players know when Pokémon are detected. In addition, Nintendo plans to launch a miniature replica of the Nintendo Entertainment System, which was a phenomenon in the 1980s, with 30 classic software titles pre-installed in overseas markets this November.

“For our smart-device business, following Miitomo, which launched in March this year, we will release new apps such as Fire Emblem and Animal Crossing. By continuously introducing apps for smart devices, we aim to maximize the population that has access to Nintendo IP. Alongside creating new demand, we aim to increase the synergistic effect on Nintendo’s dedicated game system business.”

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