Theory No. 5 About Why Nintendo Lost Money Last Year

Over at Yahoo (or maybe The Week), some unnamed editor has rounded up the opinions of four other writers to alchemize a theory or four about why Nintendo lost more than $US400 million last year, the company's first annual loss.

I'm not sure how they missed the theory that I dare say is the right one: Nintendo didn't make any phenomenal games last year and hasn't for a while.

The article doesn't include that. Rather, the writers go with:

  1. Smartphones and tablets are taking over
  2. Microsoft and Sony are slowing sales of the Wii
  3. Nintendo doesn't allow other devices to use its brands
  4. Nintendo hasn't linked up its own devices

These are all things that may have hurt Nintendo. Some of them may be things that Nintendo should be doing or at least could be doing in order to make many fistfuls of cash.

None of these things, however, is the thing that made Nintendo a big deal the first time around, the second time around, the third time around nor the fourth. Nope. The things that did were Super Mario Bros. on the Nintendo Entertainment System, Tetris and Pokemon on the Game Boy, Nintendogs, Brain Age, New Super Mario Bros. and Mario Kart DS on the DS and Wii Sports and Wii Fit on the Wii. Nintendo made most of those games. Most of those games were far more interesting to more people than any other games being made at the time. Most of those games were incredibly good.

Last year was not the first year when there were other machines on which people could play video games. Yes, it was a year when it was considerably cheaper to play games on other machines. But it was also — and I believe this is key — a year when no Nintendo games captured the general public's imagination. I may have loved Pushmo. So did a handful of other people. Super Mario 3D Land was great, as was Skyward Sword, but no one will accuse those games of containing the genius of Wii Sports. They're in the midst of a three-year drought of any games that would capture the public's imagination. This is a long time for them.

Nintendo is, as they have been so many times before, in need of an ingenious game this year. That's how the company works.

Even if it was somehow ethical for a reporter to own stock in a company they cover, I doubt I'd own stock in an outfit as terrifyingly dependent on great creative ideas as Nintendo. Very good is seldom enough for them. Even in their quieter years when they weren't the front-runner in the video game race, they were making very good games. That's what they do, and yes, they did turn a profit in previous less creatively-brilliant years. But if you're casting about to figure out what Nintendo did wrong and what they need to do well, it seems obvious to me that only one thing ever "saves" Nintendo: their next great idea.

Nintendo's worst year ever: 4 theories [The Week, via Yahoo News]


    How about, anyone who thought about buying a Wii already has one?

      Sounds like an uncommonly sensible theory to me. Kind of goes with Totilo's theory, too. Everyone who wants a Wii, Wii Fit, Wii Sports or any of Nintendo's other hot sellers from past years has one. It's been too long between blockbuster drinks, and they need the Wii U to go off.

      Agreed, but they should be making money from licensing given the install base, and their not.

      Lets face it, they haven't released much since 2010.

    Call me nostalgia/nintendo fanboy, but as long as nintendo keep bringing out the awesome experiences in the zelda franchise, I will still make nintendo my console of choice. That price drop on the 3ds last year was the best thing they did, people got to buy it cheap after that and people like me that got it before then got 20 free games.

    Nintendo didn’t make any phenomenal games last year and hasn’t for a while.

    Lots of games make incredible amounts of profit without actually being particularly good, quality really doesn't factor into it. But that said, I was disappointed by it personally but I'd have thought Skyward Sword was up there, among others.

    No, the reason that Nintendo lost money is because of the reasons Nintendo themselves stated: They had to drop the price of the 3DS and sell it at a loss. I expect they also sent some hats made out of money to Capcom to secure Monster Hunter in Japan. All very carefully calculated moves to kneecap the Vita and give Nintendo a significant first-mover advantage. And that cost them money short term. Additionally they rely a lot on the US for their profit, and the Yen is very high against the US Dollar while the US market is depressed, so there's less sales potential and each sale earns them less revenue in Yen. There's nothing else to it really.

      (Top line is supposed to be a quote, I'm disagreeing with that statement)

      Good comment. I also wonder how much is poured into R&D? WiiU projects would not have been cheap. Looking forward to more "only on Nintendo" deals ... Could be interesting

    I think they just didn't release enough great games for a long time. Skyward Sword may have been great but I didn't buy it because I haven't had the Wii set up at home for a long time. And the last time I did have it set it it just looked ugly on my new tv.

    How about a theory around why the gaming divisons of Microsoft and Sony have been losing money for like...a decade?

    That's the problem with Yahoo, too many nobodies having their mistitled 'news' stories up and not putting their name where their bullshit is. Yet the people in the comments have to have an account to say anything.

    Erm Nintnedo lost money because

    1) The 3DS is being sold at a loss.
    2) Slowing Wii sales (hardware and software)
    3) DS sales completely dried up -- Nintendo sold less then half what they originally predicted.
    4) Lots of money is being invested in WiiU R&D (Hardware and Software)
    5) The Yen is incredibly strong. The strengthening of the yen probably cost Nintendo a few hundred million on its own.

    Anyway i would expect Nintendo to be profitable again fiscal year (or if the WiiU flops hard enough then in 2013-2014).

      Exactly. Right now Nintendo is in a transitional period. The Wii is slowing down, and the Wii U is on the horizon. Since the Wii U has yet to be released, they haven't recouped the losses from the R&D and manufacturing process.

      And of course the current economic climate in Japan doesn't help at all.

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