Sections

Nintendo Cuts Fiscal Year Forecast From $527M Profit to $240M Loss

Wii U system sales estimates for the year dropped to 2.8 million units, down from 9 million.

News by Mike Williams, .

Coming out of the 2013 holiday season, Nintendo took a look at their financial situation and they didn't like what they saw. The company has announced drastic cuts to their previous financial forecast for the fiscal year ending on March 31, 2014.

Way back in April 24, 2013, Nintendo gave a total sales estimate of ¥920 billion ($8.8 billion), but now the company is dialing that number back to ¥590 billion ($5.7 billion). Net income was estimated to be ¥55 billion ($527 million) in profit, but is now being projected as a ¥25 billion ($240 million) loss.

In a press release, Nintendo president Satoru Iwata explained that Wii U sales missed estimates "by a large margin." How did Nintendo miss its earlier forecast? Hardware sales below expectations led to software sales below expectations. The Nintendo Wii U's sales forecast was 9 million units for the year, but that number's been knocked down to 2.8 million. This is only a forecast, meaning Nintendo expects to sell that many Wii U's globally by the end of March 2014. That big cut in the hardware estimate led to Wii U software sales estimates dropping from 38 million units down to 19 million units.

"In particular, sales in the U.S. and European markets ... were significantly lower than our original forecasts, with both hardware and software sales experiencing a huge gap from their targets," he stated. "In addition, we did not assume at the beginning of the fiscal year that we would perform a [price cut] for the Wii U hardware in the U.S. and European markets. This was also one of the reasons for lower sales and profit estimates."

Sales estimates for the Nintendo 3DS were lowered as well, but nowhere near as deep as the Wii U. Nintendo now expects the 3DS to sell 13.5 million systems, down from an estimate of 18 million. Software sales will follow, dropping from 80 million down to 66 million. Iwata explained that while the 3DS sales in Japan remained strong, sales in overseas markets did not meet expectations. Recent NPD numbers show US 3DS sales surpassing 11.5 million units, making it the best-selling platform for 2013, but that number is still below Nintendo's own forecast.

"In Europe, while the individual markets showed different results, France was the only market in which we experienced relatively strong sales, and we failed to attain our initial sales levels by a large margin in other countries," said Iwata.

While the Wii estimate was also cut down to 1.2 million units, software sales estimates were tuned upwards to 26 million units.

Nintendo can certainly survive the change in forecast, but the weather is starting to turn cloudy for the company. They need some clear way out of their current predicament, because their current strategy isn't working. Will Mario Kart 8 be the savior they want, or will Nintendo have to try something completely different?

This article may contain links to online retail stores. If you click on one and buy the product we may receive a small commission. For more information, go here.

Comments 13

  • Avatar for The-Fool #1 The-Fool 3 years ago
    Well, this is interesting...

    I wonder what Nintendo is going to do?

    All I know is it won't stop me enjoying my 3DS and Wii U.
    Sign in to Reply
  • Avatar for The-Fool #2 The-Fool 3 years ago
    Because I accidentally posted twice and having a deleted comment looks silly...

    Nintendo does have enough money to weather the Wii U storm... but what do they plan on doing?

    Will they pray, and hope Mario Kart 8 and Super Smash Bros saves them?

    Will they keep the Wii U around until 'next-gen' even with poor sales?

    Will they scrap the Wii U and launch something new relatively soon?

    Will they scrap the Wii U and wait until 'next-gen' to start over?

    Will they scrap the Wii U and exit the home console business entirely?

    Will Iwata's head roll?

    ... Stay tuned to find out!Edited 3 times. Last edited January 2014 by The-Fool
    Sign in to Reply
  • Avatar for alexb #3 alexb 3 years ago
    Hakuna matata, Satoru Iwata.
    Sign in to Reply
  • Avatar for ob1 #4 ob1 3 years ago
    "France was the only market in which we experienced relatively strong sales"
    In France, we LOVE Mario !
    Sign in to Reply
  • Avatar for aros #5 aros 3 years ago
    It's interesting that they say the retail price cut was a reason for lowered hardware sales. You would expect a lower price to boost hardware sales as it did for Vita. Wii U is in big, big trouble.
    Sign in to Reply
  • Avatar for TernBird #6 TernBird 3 years ago
    @Duskblayde I find it highly unlikely that Nintendo will cut their losses on the WiiU and make a new console. Sega did something quite similar with the Sega 32X back in the '90s, and it didn't end well. It'd be a slap to the face to the people who did invest in a Wii U.

    As for simply scrapping it... doubtful. You can't support a company as big as Nintendo on just a handheld console.

    Nintendo is between a rock and a hard place.
    Sign in to Reply
  • Avatar for docexe #7 docexe 3 years ago
    Honestly, it was pretty obvious that they were going to slash their forecasts, because their previous estimates were ridiculously inflated. While the Wii U did have a moderate recovery during the holidays, when you consider its software line up (a remake of the most controversial Zelda in history, an excellent 3D Mario game that was hyped too late before it launched, and some good games that nevertheless were going to be cult hits at best), the current price (they slashed it, but it is still too close to the price of the other next gen consoles when it should be closer to the PS3 and X360), and how much momentum it lost before (they didn’t even sold a million of units globally in six months), there was just no way in hell they were going to sell 9 million units for the fiscal year.

    Even if they somehow had managed to launch Mario Kart 8 and Smash Bros. at the holiday season or shortly afterwards (which didn’t happen and was just not going to happen), such estimates were still extremely unlikely to achieve, particularly considering the effect of the launch of the PS4 and XBOne.

    What truly surprises me (and worries me), is that despite being in a incredibly solid position (the freaking thing was the market leader of dedicated gaming hardware in both Japan and the US during 2013!), the 3DS still didn’t manage to off-set the situation caused by the low Wii U sales, and underperformed compared to their estimates by a large margin. Nintendo really needs to change their strategy soon.

    Now, I don’t expect them to discontinue the Wii U in the short term (it’s not really advisable to do so, honestly), but I do believe they will have to accelerate the development of their next console and release it earlier than they usually do, probably in 2016 at the most.
    Sign in to Reply
  • Avatar for Stealth20k #8 Stealth20k 3 years ago
    I am happy with wii u and 3ds, but they need to fire the forecast people
    Sign in to Reply
  • Avatar for garsh #9 garsh 3 years ago
    I don't understand how such a big company can estimate so poorly. They've been in business long enough to judge better. It's as if they were completely oblivious that the massive success of Wii was an absurd fluke and were too naive to realize Wii U was a dud.

    Honestly, I thought they were playing this all as a strategy, sitting this generation out with a predictable downturn so they'd be ready for another comeback halfway into the PS4/XBOne lifespan.
    Sign in to Reply
  • Avatar for Thusian #10 Thusian 3 years ago
    Some of the things are in progress, some things they are doing, they just don’t seem to be able to do them fast enough or actually correct misconceptions.
    The WiiU has no games – ZombiU, the Superior Version of Rayman Legends, a trio of fun Mario Games, Pikmin 3, Wonderful 101, Nintendoland, Lego Cit are the only real exclusive games to the platform and even when the ports are good with features not found in the other platforms people are just not interested.
    The mistake they made was thinking people would even count Deus Ex, Batman, The Downloadable games toward the library, they don’t the audience that gives crap about those games bought a system capable of playing them years ago. It was a mistake to even think that having cross platform releases would in any way contribute to the library, so it looks lacking to us, but fine to the management. People say they should just release more 1st party games, but I can not think of one single publisher that, when you look across 3DS and WiiU put out as many games last year, and at the level of polish they had.
    Nintendo needs to fix the Virtual Console – the cross buy is a valid complaint and anything first party is a big question mark. The third party back catalog, I would not be at all surprised if they can’t even get the rights because they don’t care about putting that stuff out Square is too focused on iOS.
    Nintendo should have built a system the same as PS4 and XBONE – I’m not sure if they’re structured to even do so and like I said about x-platform stuff above I think that would be a suicide move. Making themselves more like Sony and MS only puts them in a worse position not a better one. People would just say why buy that when I can get a PS4. I also think Nintendo is resisting cutting edge hardware for their own internal software dev costs. They don’t want the next Zelda to cost what GTA did to produce because their margins couldn’t bear it.
    Nintendo needs new IP – X is in development, They are publishing things to flesh out like Wonderful 101 and Beyonetta. I blame us a bit for this what was the last Nintendo new IP to shake things up that we actually bought into, Pikmin didn’t save the Game Cube. Whenever they do a conference if we don’t see Mario or Zelda we bitch, so I think they thought we were getting what we wanted. In fairness despite being an old IP 3D world was pretty great and the last 3DS Zelda was amazing. I personally don’t care if its the same IP if the quality is there, you may be different.
    I think the biggest problem isn’t Sony and MS, I think Nintendo is competing with themselves. The WiiU can play Amazing Mario and Zelda games without using your TV, you know what else can a 3DS, and I say that as a guy who likes his WiiU (playing Deus Ex right now). Thing is people have decided which system to get their Nintendo fix from if they need it and for most of them its the 3DS if they still care about games at all.
    If they still want to go down the road with WiiU they actually need more couch multiplayer party games to get the main stream audience interested, but I don’t think that will work now.
    I think they need to release the successor to the 3DS early and incorporate the WiiU tech. Imagine you hook a little puck up to the TV and when its available you stream your DS out to it and you can sync up other controllers if you want to do multi player on the couch. Sell it with the Puck and without for multiple handheld households. Enable multiple handhelds to sync to the puck for 4 swords type games. One system, portable/console a good value, with BC if possible.
    Finally this allows them to put all of their internal software on one system allowing their first party to carry a lot of the burden of building install base without being spread too thin across two platforms. Also with the Wii U not a hit port the good games available to this handheld as launch titles if its powerful enough and offer WiiU purchasers this software for free if they purchase the Super DS or Super 3DS or whatever you want to call it. I think that would be a hit if the price hit a sweet spot.
    Sign in to Reply
  • Avatar for The-Fool #11 The-Fool 3 years ago
    @TernBird I agree. I expect them to keep releasing their games (which will no doubt be high quality) for the Wii U.

    They will support it, and who knows, maybe it will recover somewhat.

    Saying that, however, I wouldn't be surprised if 'next-gen' for Nintendo does start earlier than the other two.
    Sign in to Reply
  • Avatar for Mega_Matt #12 Mega_Matt 3 years ago
    Sad news. I love my Wii U. I just can't get enough of most of Nintendos first party games.
    Sign in to Reply
  • Avatar for jeffcorry #13 jeffcorry 3 years ago
    I hate seeing Nintendo struggle. I really hope they can salvage what is happening. I own a couple 3DS systems and a Wii U, and I love them. But I am not going to lie...when I am looking for a deep immersive RPG, or other type of game, I am not usually hitting up my Nintendo systems...don't get me wrong, Xenoblade, Zelda, Last Story, and plenty of other games are amazing on the Wii/Wii U/3DS, but a lot of times I am looking at my PS3 and PSP for deeper, more satisfying experiences. Perhaps it is a matter of customization with characters, or figuring out a satisfying gameplay system, but sometimes, Nintendo's simplistic approach is just too...simplistic. I don't really want them to change, and I will continue to support their company, but there is an issue with their image for attracting a gamer who is more interested in a deeper experience. I am not saying there aren't ANY, it is just that Nintendo isn't as well known for it, and they SEEM to be harder to find. Of course at least two of the greatest RPGs of last generation were on the Wii...but many people probably couldn't get past the mini game collections to find them.Edited January 2014 by jeffcorry
    Sign in to Reply

Comments

Close