What Nintendo's Financials Probably Actually Mean

So Nintendo posted a loss. Nintendo hasn't been advertising the Wii U. Nintendo has been taking it slow and laid back. But was there a bigger plan here from the start? Remember that statement Microsoft made that this generation is a marathon and not a sprint? Perhaps Nintendo was onto something...

Nintendo released their financial report, and part of that report was that the Wii U IS NO LONGER SELLING AT A LOSS. Why is that important? Because up until now, every console sold meant money lost for Nintendo. And that's the thing: what if Nintendo has been holding back advertising and marketing for that very reason? Wait, hear me out.

Nintendo has stated in the past that Nintendo system owners don't buy very many games for their system. In fact, if my memory serves correctly, Wii owners only purchased 3.7 games per year on average! Think about it, if the Wii U is sold at a loss, the profit then has to be made on the games. But what if Wii U owners, like Wii owners, don't buy a lot of games? That's right, that's purely a loss for every console sold because not enough games are being sold to make up for it (in fact, I remember that the statement that the Wii U becomes profitable after one game sale being not true!). Now you MIGHT try to say "but that's because there weren't a lot of games to buy!". That's a "catch 22", because if Nintendo released a bunch of games (just look at the Wii, it had TONS of games until its late-cycle life), that doesn't mean people will buy them up. Release a bunch of games, and no one buys them = even bigger losses; or don't release a bunch of games, no games to buy = losses. However, by not releasing the games, there are less sales of Wii U consoles, meaning less losses from the system itself.

So what am I getting at here? I'm getting at the idea that Nintendo has been PURPOSELY holding back marketing and advertising on the Wii U. Nintendo has willingly kept the sales of the Wii U low in an attempt to minimize their losses UNTIL the Wii U itself could become profitable sold as hardware. Did anyone else notice the absolutely crazy ramp-up in marketing and advertising for Mario Kart 8? Is it coincidence that the system is no longer being sold at a loss, either? Think about all of this, it DOES make sense, and I know that it does! If the only source of profit for the Wii U up until now was software sales, and they based their plans off the performance of the Wii's software sales ratio against its install base, then they might have chosen to push all of their games back until the Wii U could be sold without losses.

While Nintendo hasn't met the goals they set forth, and ended up selling WAY below initial projections, and even still barely below their revised projections, there's also the chance that the people running Nintendo are long-term strategists. These aren't amateurs running the company like many armchair CEOs might believe, they might not have cared about the losses for the short-term because they were looking at a longer-term plan to begin with. Perhaps Nintendo is smarter than all of us at running a business... Oh wait, that's right, because they ARE running a business, and one of the most renowned in the world at that!

That could very well be their strategy, or maybe Mario Kart 8 is the one trump card they have to ride on until Smash Bros. is released later during the holiday sales.

im waiting for jasonguy to tear this thread apart...

That is one screwy marketing strategy....so their strategy were to piss off early adopters?....ok... >_<

Over positive thinking.

Nintendo is obviously in the dark and are no longer the innovators they once were, so they'll flounder about for a while yet before they make a profit again. I wouldn't be surprised if their stock hit $9 a share this gen. That'll be the time to buy, heh.

Now they're hopping on the disgusting skylanders bandwagon, but it's too late. Nintendo's going to try everything they can to make money with stuff like that, and fitness junk but since none of it will be new to compulsive consumers it won't catch their eyes, so it'll just be even more loss. Which is what the idiot shareholders breathing down iwata's neck don't understand.

Believe me things are going to get worse and worse for them, until they massively shake things up and make quality goods their #1 priority again.

Nintendo makes their real money on software, not hardware. The profit margin on hardware is tiny in comparison to software. And their marketing strategy has been all about the games (PLAY. THE GAME.). If their strategy really was to limit sales of their console, then they're REALLY bad at what they do.

I think the real story is that people just aren't enthusiastic about the WiiU. The idea that Nintendo has somehow suppressed consumer interest in their own product is kind of ridiculous.

I'll have what you're smoking.

I don't really know about that. I'll give you the argument that Nintendo is probably looking at the long-term, and isn't as interested in the short-term. That could be true, I have no idea.

But I don't think that everything going on with the company lately has been a desired result. I think it's really just Nintendo's problems catching up with them. A struggling Wii-U, slow game development and an inability to give the consumer that hot, new thing that they're looking for are all examples of real issues. The company is trying to adjust to a changing landscape, and simultaneously train a new team of developers as their original staff grows older.

I still think the Wii-U will come out of this mess okay, if just by the skin of its teeth. But I still don't think they've made enough changes so far that show me they're on the right track to making improvements for the long-term.

See, there's one small issue in your logic, friend. Waiting to advertise and market the WiiU isn't what's holding the WiiU back. Wanna know what is?

The WiiU.

Nintendo is a large enough company that it doesn't need ridiculous marketing measures to move an acceptable number of units. Maybe your logic would apply if the console, despite poor sales, had a lot going for it, but it has NOTHING going for it. No games, no graphics, sub-par online features, and.... have you seen the controller?

You seriously think that Nintendo would hold back on advertising a BRAND NEW CONSOLE and let its other 2 competitors get a drastic leap on it? What, do you think that the WiiU is going to be popular in 2 years if it isn't cool now? LOL....Okay...

Yeah, they're going to let the console flounder for 3 years and then all of a sudden reverse fortunes with a slew of games and advertising that would have picked up more customers to begin with.... Because that's happened.....Never.

Sorry buddy, but Nintendo lost this generation. Let's not ignore reality for nostalgia. Time to move on buckaroo'.

A first step to increasing sales would be to stop being so "Disney" about copyrights and getting every video about your games/systems shut down on Youtube.

Hell Nintendo, let people do your marketing for you! Im sure sales will go up if you just let people TALK ABOUT YOUR DAMN GAMES ONLINE. Word of mouth from gamer to gamer is a very powerful thing.

Oh God, just, seriously?

Congrats on the worst conspiracy theory this year.

Here's the thing, if you're correct Nintendo is the worst company on the planet when it comes to operating, sadly they're much closer to the bottom than they are to the top already.

Here's the thing, companies lose money on consoles when they're released, know what they're trying for? Market share.

After reading your post I'm going to need to explain that....

A company makes a new console and they make it nifty and awesome and because of that it sells for a loss. They're ok with that because they hope it's so nifty and awesome that people will grab it up and it'll become the dominant console that gets the most games. The other thing that happens is that they claim market share, that means that everyone goes out and gets one and when it's time for new buyers to get a console they say "well all my friends have this console and I want to play with them so I better buy it too".

What you're thinking Nintendo did is insane.

You honestly thought that Nintendo's plan was to release ahead of everyone else. Lose the lead they had with consumers and developers, allow the next gen consoles elsewhere to release and outpace it, allow them to establish relationships with devs and publishers, allow them to develop fanbases with software libraries and THEN start trying to sell the console?

In other words you're trying to sell us one of two choices.

1. Nintendo has ruined it's image this generation trying to portray themselves as the worst gaming company

2. Nintendo really is the worst gaming comapny

Bravo

Well that didn't take long lol

Remember, this thread is created from the guy that did a false advertising of a Wii U Giveaway.

You've piqued my curiosity, go on.....

Watch this

Not cool, really not cool

Holy crap, seriously take someone on to do public relations because that's awful

Yeah. He really left a bad taste in people's mouths and it's going to be hard for people to take him seriously after doing something like that to them.

He goes from bad to worse by saying that he's offering a 20 dollar eshop card.

Garbage, pure garbage.

I would add more but it would just be hurtful

Can we all just agree that Nintendo is fucked? It's like we're trying to convince ourselves of something we already know. Damn...

Exactly lol Who wants a $20 gift card after being lied to like that? If anything, the winner (if there was one even) probably threw it in the trash lol

Yeah not worth yours or my time

Oh I know they missed their predictions, but I think people assume that if they don't meet or exceed expectations, they had no idea what they were doing. Just because you say and do everything right, it doesn't mean she'll say "yes" to a date, right? ;)

Eh? Have you looked at my signature? Nintendo isn't shutting down anything on YouTube... It was YouTube's newly implemented copyright system that auto-matched and auto-pulled many videos that matched data they create from the "Official" channels of companies/publishers/music labels, musicians, etc.

As I said above, failure to meet goals doesn't equate to having a lack of planning. They expected their brand name and IPs to sell, but it didn't sell as much as they had hoped. They most likely DID hold back advertising and spending expecting just the name alone and word of mouth to do better, but word of mouth was negative from individuals such as yourself that clearly troll anything Nintendo does if it doesn't result in a total shut out of the competition. Even then, I predict you're the type that says "the Wii wasn't a real gaming system anyway", despite its exceptional performance on the market. Nintendo cannot win against you, because you will spend the time to sit there and find a reason to naysay the company or anyone who defends it, regardless of their actual intentions. The indirect implication of my post is a real lack of perception, that if Nintendo is not doing as well as they could be, that everyone and their grandma behind a PC can do better. I don't know what Nintendo's real plans are, you don't know what Nintendo's real plans are. Neither of us is actually any more correct than the other about what Nintendo is trying to do. And does what I think of Nintendo's plans really seem that insane? This is NINTENDO, they just announced a Quality of Life platform, invested $100 million in some mystery tech, and are starting a physical multi-game DLC plan with figurines. Still think Nintendo doesn't do things that we don't fully understand?!

HAHAHA, so YOU'RE one of the people who fell for my April Fool's joke? :D Nice to finally meet one of them, and if calling it "false advertising" helps you sleep at night a month after you fell for the prank, then go for it! The people who can't take a joke have either already left or have been spending time trolling the Report Spam button on my comment sections, so I don't think I'm the guy with a problem here ;) In all seriousness as one human being to another, if you can't get over a prank that cost you nothing, didn't injure you or cause you any harm, nor publicly embarrassed/emotionally damaged you, then I think you really need to re-evaluate your ability to perceive the world. There's a time to be angry and hold a grudge, and there's a time to just get over it the instant it's all said and done. This is one of the second situations. The fact that you cannot concerns me on a number of levels, because it's not normal to still be this bitter over a month later given the nature of the matter.

Actually, the prior winner made a video on it, hahaha...

Edit: Fixed the video embedding (I did it wrong, lol)

Guys, I just wanted to say that I tried to go the high road.....

Bad dog, bad &*@!&^&@@ dog!

You're a sleeze.

That wasn't an April Fool's joke you moron that was a desperate ploy to get more views.

You're a fraud, you're a &*@!&^&@@ YouTube fraud. Your audience isn't organic it's fake, just like you and whatever crap you spew out of your mouth.

You have to bribe people for subscriptions. You make promises, get some subs and then backtrack saying April Fool's then buy off some subs with eshop cards.

I've looked at you with pity on this forum like "awwww, well he's trying"

Well I guess trying just jumped ship and you're all out to "being a total dirtbag trying to get an audience"

Not only do you not know the basics of the game industry you know nothing when it comes to presenting yourself to the public.

Take a bow, you are completely void of any redeemable trait so far.

OP's theory is pure fiction. Like really, you honestly think a company is going to shoot the shit for over a year? Really?

Bingo Lol Nail on the head Jay.

Funny how he says "There's a time to hold a grudge". There's never a time to hold a grudge lol That stuff will mess ya up if you hold those lol

So while he's trying to make me look like a fool, I've enjoyed myself quite thoroughly today lol

no company says let us sell the least amount of units until we can reduce productions costs. Nintendo was relying on the Wii crowd to return for Wii U. That did not happen. The system is selling worse than Gamecube. Mario Kart will sell units, but will it make systems fly off shelves for months? The short answer is no. Nintendo has 2 Mario games out now that did not push hardware. Mario Bros Wii sold insanely well, but Mario Bros U did not. Mario Galaxy moved Wii's but 3D World did nothing for the console. It sold like half a million out of the gate and then slowly declined. It has only sold two million in 6 months. Those are weak sales for Mario adventure title. Smash probably will not save the system either. It will sell a good bit, but the 3DS version is going to sell a ton more. With Nintendo releasing the 3DS Smash Bros months before the Wii U version, it is shooting itself in the foot.

Nintendo's other problem is that the software on Wii U mimics that of the 3DS. The 3DS has Mario 3D Land, Donkey Kong Country Returns (the better game), and New Mario Bros 2, Smash Bros, and Mario Kart 7. Granted Mario Kart 8 looks to be a lot different than 7. One could argue that games like Bayonetta 2, The Wonderful 101, and Pikmin 3 are not on 3DS. That is true, but the 3DS has titles like Professor Layton, Bravely Default, Luigi's Mansion 2 and more. Nintendo made the Wii U too much like the 3DS so why is Joe shmoe going to buy a console that is $300+ dollars when he can pick up a handheld for less than half of that amount and get very similar titles at cheaper prices? Why should Joe Shmoe get a Wii U for $330 when for less than $100 more he can pick up a PS4 that has game announcements for it every week? Even the "big" titles like Watch Dogs that are coming to Wii U are an afterthought. Ubisoft is just now concentrating on the Wii U version after every other version of the game is done. WOW. Way to go

I am not trying to compare consoles, I am just pointing out the fact that development on Wii U is not seen as a priority by third parties or by Nintendo itself.

Since I know that anyone with half a brain that peruses my channel (and doesn't have coping issues with my April Fool's prank) will immediately see the fallacy in your words, I won't bother with that part.

What DOES concern me is that watching you lose your cool was a bit saddening. I'd ask if you're okay, because resorting to namecalling and slander to someone who has done nothing to you is usually a projection of personal issues. I don't know what you're going through or if everything is okay, but your adamant focus and fixation on trying to make me look sad and desperate over you falling for an April Fool's prank is not a pretty image right now...

I did respond earlier, I didn't say they did nothing, I said they held back on advertising/marketing in the hopes that the "Wii" brand name and IPs would sell better through word of mouth. Clearly they didn't meet what they expected, but that doesn't mean they didn't have this planned out. The fact that Nintendo's advertising spending massively spiked in Q4 (and it takes months before this spending shows up) and that at the end of Q4 the Wii U is announced to be sold without a loss is something that can be potentially more than coincidental.

Something I didn't share in this thread is that there is also a factor in the whole "software profit" thing that Nintendo most likely took into consideration. The Wii has a 9:1 ratio of software to hardware over a 7.5 year lifespan, this only equates to 1.2 games per year purchased on average. Since the Wii U was sold at a loss, and it was disproven that a single game sale turned it profitable, it most likely took TWO games purchased to make it profitable. Looking at the Wii, they probably figured that there wasn't much of a chance of selling 2 of their own games per console. As I mentioned above, none of us actually knows what they were thinking, but it's far from the level of stupidity people love to believe. My thread title isn't the same as it is in another forum because of the 60 character limit, but the thread title was actually "What Nintendo's Financials Actually ACTUALLY Mean... Probably". It was a bit more clear I was conjecturing for the sake of positivity, but more implying that a company like Nintendo always has a plan, and even if the results aren't as expected, it doesn't mean it's a bunch of idiots are running the company that need to be fired...

I'm glad that, despite your attempt to mask your bitterness up until now by dramatically changing your tone, you finally understand what I'm telling you and are ready to move on. Some part of you must finally realize that holding a grudge over an April Fool's prank that brought no harm to you in any way is absolutely ridiculous.

I never said they tried to sell the least amount of units, I'm implying they tried to balance the hardware losses by cutting back on marketing/advertising by relying on the brand name "Wii" and IPs to sell the console. Obviously we all know that didn't go as far as they'd hoped it would.

The attach rate for SM3DW is rather good, however, and the glowing reviews mean it will remain a system title with legs, so I'm not really all that worried about it. Joe Shmoe would spend $460 to get a PS4 with a game, and pay a yearly subscription (given that you want to use the the $330 MK8 bundle price) to play online. So going the PS4 route is $130 more plus monthly online fees. The reality is that Nintendo DOES play close to the chest with game announcements, but it seems they're poised to go all out now that the hardware can be sold at a profit.

You say "no company", but Nintendo is not just another company. As mentioned above in bold, Nintendo isn't exactly your run of the mill company. I have no doubt that they figured "why sell a system seller now, and have the hardware impact profits, let's just delay a portion of the games in order to ensure they sell at a time when everything means profits". Nintendo could be following the "marathon" method rather than the "sprint" method. Some companies don't care about rushing off trying to get first place, they'll gladly bide their time while their competition gets ahead, and then go for the marathon sprint when the luster of their competition begins to wear down. In essence, let the competition have their time, let them have their spotlight, and when the time is right, you shine when it matters. This could very well be Nintendo's plan with the way the news is shaping up about Nintendo's E3 plans! ;)

lol I'm a nintendo optimist and I think that this is probably a stretch. I think what halted Wii U adoption was the console name and the shape of the console. In todays society you gotta make your product stand out at a glance. When you look at any Nintendo console before Wii U you can just glance at the console and immediately know what it was. When Nintendo gave the Wii U a shape that resembled the Wii and put the gamepad in the forefront, it made the it appear that the gamepad was the star and the console itself was an afterthought. Or even worse, that the gamepad was a add on for the Wii. Nintendo would have been tickled pink if they were at 10-12 million consoles sold right now, even if it meant that they had losses over hardware sales.

I'm sure that Nintendo is pleased that they no longer suffer losses over Wii U sales. And if it helps them claw their way into a profitable year then more power to them.

Nintendo's losses for the year were like $220 million, $100 million of which was reported to be some new technology that they acquired that's still on the down low. So losses on Wii U aren't as bad as initially thought. It was also reported recently that Nintendo's cost for producing Wii U have lowered to the point it's profitable once again. Though they lost money this year, they're set to do a lot better this current fiscal year. The 3DS helped negate Wii U losses this last year, hopefully now they'll help in raising their profits.

Even if Nintendo were to lose $100 million a year, they can ride that out another 2 or 3 years before launching their next console and handheld, which isn't that big of a sacrifice considering if they dropped support for their devices early people (including loyal Nintendo fans) may be pissed and it'd do considerable harm to their name and reputation. This isn't the first time Nintendo has had to deal with a low selling system with little support, and I imagine they'll continue to stick it out like champs.

Hopefully Mario Kart 8 gives the Wii U a nice bump it needs. People who get that can also take advantage of the deal that if they get Mario Kart 8 and register it to their Club Nintendo account within a month of its release they get a download code for like Super Mario/Luigi U, Wind Waker HD, or Pikmin 3, which is a pretty good deal (unfortunate for me I already have those). The Mario Kart 8 bundle looks like a hot ticket $330 Deluxe that comes with the game, a red steering wheel and Wii-Plus remote, and of course the tablet, plus the extra free game Nintendo promotion.

But yeah, Nintendo doesn't advertise much unfortunately, that takes lots of money, so I guess its for people that know of it to spread the good word.

@zyroxz2:

Why would a company to wait to lower the cost of making a system before it profits? The Wii U selling more at in the first year would would have helped Nintendo become profitable faster. You make it sound as if Nintendo already had Smash Bros and Mario Kart 8 completed and sat back and ate the production costs on the system and just decided to release games because now it can no longer sells the system at a loss. Nintendo is not stashing software that has been completed and waiting to release it. Yes, companies do push back games when there is a tight schedule of releases. Companies might push back software because it does not want its own games to compete with one another. Nintendo does not face either of these two issues. What has come out for Wii U this year? Wii Fit U, Donkey Kong Country, The Hobbit Lego game, NES Remix 2, and Mario Kart 8. Five games in roughly 6 months is not good for a console in its second year. Hopefully E3 will bring us more than just Yoshi Yarn, and Smash Bros for Wii U. I am also hoping for more than just release dates for 2015 games such as Fire Emblem, Zelda, and possibly X.

@zyroxz2:

Why would a company to wait to lower the cost of making a system before it profits? The Wii U selling more at in the first year would would have helped Nintendo become profitable faster. You make it sound as if Nintendo already had Smash Bros and Mario Kart 8 completed and sat back and ate the production costs on the system and just decided to release games because now it can no longer sells the system at a loss. Nintendo is not stashing software that has been completed and waiting to release it. Yes, companies do push back games when there is a tight schedule of releases. Companies might push back software because it does not want its own games to compete with one another. Nintendo does not face either of these two issues. What has come out for Wii U this year? Wii Fit U, Donkey Kong Country, The Hobbit Lego game, NES Remix 2, and Mario Kart 8. Five games in roughly 6 months is not good for a console in its second year. Hopefully E3 will bring us more than just Yoshi Yarn, and Smash Bros for Wii U. I am also hoping for more than just release dates for 2015 games such as Fire Emblem, Zelda, and possibly X.

Nonsense. At the very beginning, Wii U was profitable after users bought just one game with the system. Problem is, they made a ton of inventory that didn't sell for a variety of reasons and slashed the price, taking away whatever profit advantage they had by selling a game. Nintendo didn't want the system to sell like shit, which is obvious given their original sales forecast. If they wanted the "laid back" approach, they would have delayed the launch, worked on that shitty operating system, worked on getting interesting launch games ready, got more developers interested, and launched at the same time as its competitors. Losing nearly half a billion dollars for some borderline insane business strategy doesn't make sense for Nintendo, nor any other company.

Well this thread got out of control in a hurry...

Lol why would I be bitter when I own a WiiU already? I've owned a basic model since release.

You can check if you'd like lol Angel_Shiranui is my NNID.