Nintendo profits evaporate as gamers turn to iOS

Posted:
in General Discussion edited January 2014
Japanese gaming giant Nintendo revealed on Thursday that it lost $925 million over the six months ending in September due to a sharp drop off of game and console sales, even as healthy sales of Apple's iPhone and iPad continue to establish iOS as an alternative gaming platform.



The company had previously warned in July that it would lose money during the first half of its fiscal year, but Thursday's results were even worse than it had expected. Net sales for the period were 215.7 billion yen ($2.84 billion), down from 363.2 billion yen ($4.78 billion) in 2010. Net income fell to a loss of 70 billion yen ($925.4 million), much worse than the 35 billion yen loss Nintendo had originally forecast.



"Weaker than expected" sales of Nintendo DS and 3DS software and yen appreciation were cited as the main reasons for the variance.



Looking ahead to the second half of fiscal 2012, Nintendo modified its forecast to reflect continued poor performance. The company expects a net income loss of 20 billion yen ($26.3 million) instead of its July forecast of 20 billion yen in profits.



Sales of the gaming company's new 3DS handheld gaming console were just 3.07 million units during the six-month period, even after a substantial price cut in August brought about improved sales. Though one software title, "The Legend of Zelda: Ocarina of Time 3D," did become a million-unit seller, Nintendo noted that the Nintendo 3DS "has yet to have many hit titles." Total worldwide software sales for the 3DS were 8.13 million units for the period.



Sales of the Wii, which turns five in November, were just 3.35 million units, with software sales of 36.45 million units.



"There's no question that the Wii and the DS are at the end of their life cycles," the L.A. Times reported Arcadia Investment analyst J.T. Taylor as saying. "But there will be a flourish this holiday when Nintendo comes out with promotions and gift bundles. After that, Nintendo's long-term outlook depends on how successful their next console will be."



Nintendo has already provided an early look at the successor to the aging Wii, but the next-generation Wii U won't help the company in the short-term, as it's not due out until late 2012. In the meantime, the company will have to rely on price cuts and bundles to stem losses.







Apple has contributed to the console maker's woes by cannibalizing the casual gaming fan base that Nintendo built up with its Wii and DS devices. For its part, Nintendo blames smartphone makers and the rise of social gaming for diluting the gaming market.



Despite calls from investors to bring popular Nintendo franchises like Super Mario and Zelda to the iPhone and iPad, Nintendo executives have repeatedly refused to port their software to third-party devices.



?This is absolutely not under consideration,? company president Satoru Iwata said in September. ?If we did this, Nintendo would cease to be Nintendo. Having a hardware development team in-house is a major strength. It?s the duty of management to make use of those strengths."



Iwata admitted that releasing games for smartphones might be the "correct decision" in terms of profits, but asserted that he believed his responsibility was to ensure "Nintendo?s mid- and long-term competitive strength.?



The executive has claimed platforms like iOS that offer cheap gaming options are dividing the gaming industry and devaluing development efforts, but Nintendo's plummeting profits and stock price threaten to devalue the company itself.



Also, not every game developer agrees with Iwata. For instance, Peter Vesterbacka, who works for Rovio, the developer that created the smash hit "Angry Birds," credits Apple with changing everything in the mobile gaming industry with the release of the iPhone and the App Store.



"Apple created the distribution for us that we didn't have before. All of a sudden, great games mattered," Vesterbacka said earlier this year.



Last year, Nintendo of America President Reggie Fils-Aime noted Apple as an even bigger threat than Xbox maker Microsoft.



Apple's threat to Nintendo has only continued to grow over the past year. In the most recent quarter, the company announced it had sold 17 million iPhones, 11 million iPads and more than 3 million iPod touches, dwarfing Nintendo's six-month device sales.



In truth, Nintendo's strategy of tightly integrating software with hardware closely resemble's Apple's own tack, but the Japanese company has found itself outpaced by \tits rival's annual upgrades to both the mobile operating system and the hardware.



Apple's iOS devices may even begin to encroach on Nintendo's living room console turf. The AirPlay Mirroring feature in iOS 5, coupled with the performance of the dual-core A5 processor, has allowed game developers to create wireless big screen gaming experiences on iOS. For instance, Firemint has added AirPlay Mirroring to its Real Racing franchise, allowing one A5-equipped device to host a multiplayer game and stream it to an HDTV by way of the Apple TV.



As such, AirPlay Mirroring will directly compete with the Wii U console, which will feature its own iPad-like touchscreen tablet controller.







Nintendo will also face increased competition in the handheld gaming market when Sony releases its PlayStation Vita in Japan later this year and in the U.S. in February. The Vita features a 5-inch OLED touchscreen and front and rear touch pads, as well as dual analog sticks and front and rear cameras.







Finally, a rumored Siri-powered television from Apple could pose an even greater threat to Nintendo. The New York Times reported on Thursday that it's only a matter of time before Apple releases a connected TV. Such a device would likely represent an assault on the living room by the iPhone maker, and would presumably open up gaming possibilities, either natively or in conjunction with iOS devices.



It has been suggested for years that Apple will build its own HDTV, but reports picked up steam recently after a biography on Steve Jobs revealed that he felt he had "finally cracked" the secret to an intuitive user interface for the TV.
«134

Comments

  • Reply 1 of 69
    apple ][apple ][ Posts: 8,591member
    Let's go Nintendo, get your heads out of your asses! I am never going to buy a Nintendo handheld device, but I would definitely buy up some Nintendo iOS games.



    You're losing money and don't let foolish pride stand in the way of keeping your head above water. Bring Nintendo games to iOS and do it sooner rather than later. Millions of people are waiting.
  • Reply 2 of 69
    solipsismsolipsism Posts: 25,726member
    I wouldn't worry about Nintendo because as have a long track record of being on top, then falling to the wayside just to figure it all out again and rise to the top. Of course, with Apple pulling many strengths together into one strong ecosystem I their current hurdle is considerably more difficult than ones in the past.



    Quote:
    Originally Posted by Apple ][ View Post


    Let's go Nintendo, get your heads out of your asses! I am never going to buy a Nintendo handheld device, but I would definitely buy up some Nintendo iOS games.



    You're losing money and don't let foolish pride stand in the way of keeping your head above water. Bring Nintendo games to iOS and do it sooner rather than later. Millions of people are waiting.



    I'd love to see those classics on iOS but that could be s sign of weakness from a Japanese company. I hope that isn't the case.
  • Reply 3 of 69
    Quote:
    Originally Posted by Apple ][ View Post


    Let's go Nintendo, get your heads out of your asses! I am never going to buy a Nintendo handheld device, but I would definitely buy up some Nintendo iOS games.



    You're losing money and don't let foolish pride stand in the way of keeping your head above water. Bring Nintendo games to iOS and do it sooner rather than later. Millions of people are waiting.



    I agree. I was a Nintendo child and I love classics like Mario and Zelda. I would pay for them on iOS. But this is the era of convergence devices. I have an iPhone 4S in my pocket. That's good enough for me. I just wish Apple would make an official button mashing accessory that plugged in the bottom and clipped over the top giving us some buttons and a d-pad or analogue stick. It could fold up in compact form for storage. Come on Nintendo!!!!
  • Reply 4 of 69
    nagrommenagromme Posts: 2,834member
    Instead of a standard button-mashing accessory, I?d like to see a standard FOR button-mashing accessories (even if it evolves from 3rd parties and not directly from Apple). So, for instance, any iOS physical controller would support all or a subset of 4 control axes, a digital D-pad, and 6 buttons. Or whatever. But any game that supported the standard would work with any compatible control hardware.
  • Reply 5 of 69
    tylerk36tylerk36 Posts: 1,037member
    I like Nintendo. Maybe Apple will buy them out and build a new gaming console called Apple Console or iConsole. It will sync effortlessly with your iPhone or iPad and you can....... oh just forget it. Cmon Nintendo get you head out of your ass and do something that even Steve Jobs would grin at.
  • Reply 6 of 69
    apple ][apple ][ Posts: 8,591member
    Quote:
    Originally Posted by solipsism View Post


    I'd love to see those classics on iOS but that could be s sign of weakness from a Japanese company. I hope that isn't the case.



    As some people might know, Nintendo was founded as a cards company. They've completely changed course in the past and they just might have to make some changes in the future too, if they want to stay with the times.
  • Reply 7 of 69
    Quote:
    Originally Posted by tylerk36 View Post


    I like Nintendo. Maybe Apple will buy them out and build a new gaming console called Apple Console or iConsole. It will sync effortlessly with your iPhone or iPad and you can....... oh just forget it. Cmon Nintendo get you head out of your ass and do something that even Steve Jobs would grin at.



    iWiii (perfect)
  • Reply 8 of 69
    apple ][apple ][ Posts: 8,591member
    Quote:
    Originally Posted by urbansprawl View Post


    I just wish Apple would make an official button mashing accessory that plugged in the bottom and clipped over the top giving us some buttons and a d-pad or analogue stick.



    Nintendo could design and release their own controller for iOS! They could sell it for a decent price, and iOS users would snap them up, and they'd also be buying plenty of Nintendo games.



    It would be a win-win situation both for Nintendo and for all iOS users.
  • Reply 9 of 69
    Surely the hundreds of millions of people buying and playing games on Android smartphones has something to do with it.
  • Reply 10 of 69
    tundraboytundraboy Posts: 1,613member
    If you need to maintain exclusive game titles to drive sales of your game consoles, then maybe your unique selling proposition is game software and not game consoles? So why hang on to the console business where your product is, to be honest, mediocre and uninspiring and would not sell at all if not for the exclusive game titles? Why not focus on your strength and sell those very popular games across all platforms? Just wond'rin'.
  • Reply 11 of 69
    Quote:
    Originally Posted by Apple ][ View Post


    Let's go Nintendo, get your heads out of your asses! I am never going to buy a Nintendo handheld device, but I would definitely buy up some Nintendo iOS games.



    You're losing money and don't let foolish pride stand in the way of keeping your head above water. Bring Nintendo games to iOS and do it sooner rather than later. Millions of people are waiting.





    You'll have better luck waiting for Apple to license OS X to Dell. Nintendo wants to control its own destiny, just like Apple does.
  • Reply 12 of 69
    I can't tell if Nintendo is just stubborn and delusional in thinking people are going to revert back to separate handheld gaming systems or if they are thinking of making their own SmartPhone. I think either one is a huge long-shot for Nintendo at this point.
  • Reply 13 of 69
    solipsismsolipsism Posts: 25,726member
    Quote:
    Originally Posted by SinisterJoe View Post


    I can't tell if Nintendo is just stubborn and delusional in thinking people are going to revert back to separate handheld gaming systems or if they are thinking of making their own SmartPhone. I think either one is a huge long-shot for Nintendo at this point.



    It's possible Apple has built too well that Nintendo won't be able to evolve this time, but I have more faith in Nintendo to learn to adapt than I do of pretty much any other tech company on the planet. They have more comebacks in them than Rocky.
  • Reply 14 of 69
    neosumneosum Posts: 111member
    I've always purchased nintendo handhelds for my son in the past. When he was due for a new handheld, I gave him the option to choose. It was either a nintendo ds or an ipod touch and he chose the ipod touch.



    It's almost time for a new gift and he's already requested another ipod touch but with more storage than his current 8gb model.
  • Reply 15 of 69
    Quote:
    Originally Posted by MacVicta View Post


    Surely the hundreds of millions of people buying and playing games on Android smartphones has something to do with it.



    Hundreds of millions of Android users playing on smartphone? If you subtract the 90% who prated it the game, that leave 10% who actually pay. This undercut cuts the premise in this statement.
  • Reply 16 of 69
    solipsismsolipsism Posts: 25,726member
    Quote:
    Originally Posted by neosum View Post


    I've always purchased nintendo handhelds for my son in the past. When he was due for a new handheld, I gave him the option to choose. It was either a nintendo ds or an ipod touch and he chose the ipod touch.



    It's almost time for a new gift and he's already requested another ipod touch but with more storage than his current 8gb model.



    It's too bad they didn't update the Touch with the faster A5. Not so much for the CPU, but for the GPU performance.



    My hypothesis is that with the iPhone 4S being released in the Autumn and the iPad still selling well as we move into the holiday quarter is Apple just couldn't get enough chips to update the device.
  • Reply 17 of 69
    Quote:
    Originally Posted by neosum View Post


    I've always purchased nintendo handhelds for my son in the past. When he was due for a new handheld, I gave him the option to choose. It was either a nintendo ds or an ipod touch and he chose the ipod touch.



    It's almost time for a new gift and he's already requested another ipod touch but with more storage than his current 8gb model.



    When does he graduate to the iPhone?
  • Reply 18 of 69
    Quote:
    Originally Posted by tundraboy View Post


    If you need to maintain exclusive game titles to drive sales of your game consoles, then maybe your unique selling proposition is game software and not game consoles? So why hang on to the console business where your product is, to be honest, mediocre and uninspiring and would not sell at all if not for the exclusive game titles? Why not focus on your strength and sell those very popular games across all platforms? Just wond'rin'.



    Let me help Apple ][ out here, is Nintendo another walled garden? From what I learned in school it would appear to be. But no one harps on them...



    So they could have made up their losses by introducing 'hopefully a graphically updated' Mario Bro's on the iPad. Sell it for $5.99. The Android people might balk, but enough AAPL people might buy it to cover their losses!
  • Reply 19 of 69
    Quote:
    Originally Posted by solipsism View Post


    It's possible Apple has built too well that Nintendo won't be able to evolve this time, but I have more faith in Nintendo to learn to adapt than I do of pretty much any other tech company on the planet. They have more comebacks in them than Rocky.



    I like this post Sol. I hope it's like Rocky! But i think the iPad hit them hard in the rear and knocked them out! I think, if they're smart... they should come out with their own tablet to play their games (which is tough because a tablet has to do more than just play games now...) or, put their games out for sale with todays graphics on the iPads.



    I would love to sit in on a board meeting with these guys!!!
  • Reply 20 of 69
    Gamers are not truning to iOS. Most gamers don't consider iOS a gaming platform. Yeah they have some great GPUs for a mobile device but that is only half the story in games. Most of it is controls. And with all due respect. iOS has nothing on a button controller. You can't beat buttons with Touch. You can see the difference in the depth of the games. Most iOS games are really just arcade Style games and simple racers. While a portable Has more interactive games like God of War which would be a Pain to play on an iOS device.



    And before people get in their heads the Apple TV will also never be a preferred gaming Console. It would cost to much in comparison to current pricing. To place a good gaming GPU, fast multicore custom processor, Harddrive, accessory ports, Optical Drive (some console games are too large to be downloaded. FFXIII took up a full dual layer Blueray~38gbs). and various radios in it for the proprietary controller. Your looking at a REALLY expensive machine. Around 1k for such a device. Apple doesn't like to sell for a lost as most Video game consoles are sold. Which would make many consumers Question why buy a 1000$ console when the *newest generation at the time will be half the price. Sony, Microsoft, and Nintendo traditionally sell their hardware at a lost and make up the difference in proprietary accessories and games. This type of market is not Apple's traditional market.
Sign In or Register to comment.