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Nintendo Braces For First-Ever Annual Loss

| 27 Oct 2011 15:42
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Nintendo is about to post its first full-year financial loss in 30 years.

It wasn't all that terribly long ago that Nintendo's dominance of the videogame market was absolute. Despite gimmicky motion controls and anemic hardware, the Wii ruled the console playground with an iron fist while the DS went more or less entirely unchallenged in the handheld market. But things started to slow down in 2009 and now Nintendo appears to be almost in full rout.

The company has forecast its first annual loss since it began reporting financials back in 1981 - in other words, for all intents and purposes its first full-year loss ever. Nintendo said yesterday that it expects to suffer a loss of ¥20 billion [$264 million] for the year ending March 2012; coincidentally, in July the company predicted full-year profits of the same amount. Sales for the fiscal year are now expected to come in at ¥790 billion [$10.4 billion], down from an earlier forecast of ¥900 billion [$11.9 billion]. Total sales over the previous fiscal year were ¥1.01 trillion [$13.2 billion].

Despite looking all but unstoppable during the heyday of the Wii, Nintendo is caught in a bit of a perfect storm these days. Falling prices on the Xbox 360 and PlayStation 3 have made the technological gap between them and the Wii harder to ignore, while the DS is being muscled out by increasingly-capable smartphones and the stereotypical "mom gamer" is spending more and more time horsing around with online offerings on Facebook.

The strength of the yen, which is currently riding a post-war high, has also taken a big bite out of Nintendo's profits, a problem compounded by signficantly weaker sales of the 3DS than were expected, which forced the company to drastically cut the price of the unit very shortly after launch.

Sources: The Guardian, Gamasutra

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