Nintendo's profit plunges on weak Wii sales

Sinking sales and a price cut for the Wii knocked Nintendo's first-half earnings by 52 percent.

On Thursday, the game maker reported a profit of 69.5 billion yen ($767.8 million) for the six-month period ended September 30, compared with 144.83 billion yen for the same period last year.

Sales for the period also tumbled, falling 34 percent to 548 billion yen.

Nintendo blamed the shortfall on weak sales of its Wii combined with its recent price cut for the game console. In September, the company trimmed the cost of the Wii in the U.S. by $50 to $199.99. Nintendo said it sold 5.75 million Wii machines globally during the first half of its fiscal 2009, a huge decline from the 10 million units that flew off the shelves for the same period last year.

The Wii continues to face competitive pressure from both Sony's PlayStation and Microsoft's Xbox, which have benefited from their own price cuts.

Nintendo was also hurt by a lack of hot new games for the Wii and portable DS game console. For the Wii, the company's only major releases were Wii Sports Resort in July and Wii Fit Plus in early September. As one of the few bright spots, Wii Sports Resort has enjoyed brisk sales.

The weak earnings fell short of Nintendo's earlier estimate of a 100 billion yen profit for the first half and prompted the company to lower its forecast for fiscal 2009. Nintendo now expects annual earnings to fall to 230 billion yen, lower than its May estimate of 300 billion yen, and down from the 279.1 billion yen it earned in 2008. This would mark the first annual earnings decline in six years.

Nintendo also slashed its sales forecast for the full year, now expecting revenue of 1.5 trillion yen, down from its prior estimate of 1.8 trillion yen, an 18.4 percent drop from 2008.

The game maker is hoping for a brighter holiday season when gift-seeking shoppers may take advantage of the Wii's lower price. Nintendo is also eager to see whether its upcoming New Super Mario Bros. Wii game proves to be a hot seller.

Reports have even surfaced that the Wii may follow in the footsteps of Sony's PlayStation 3 by offering a Netflix streaming option.

[CDubber]

I bought a Wii on launch day and my family has loved it, but I finally tired of my HD envy and bought a PS3 after its price drop to $299. Now all the games I'm buying are for the PS3.

Nintendo is going to have to update their hardware (HD, HDMI, real digital surround sound) to be competitive soon, or they're going to see a rapid drop in both hardware and software sales as people transition to the higher-powered consoles.

[Turgeson]

Couldn't agree more. We got a Wii specifically for the Fit and Active. It was fun for a while, but got old. My son got a Transformers game for it and was but a watered down imitation of the same game offered to PS3 and XBox. You couldn't even tranform the robots.

[retnep]

I'm not even sure if it's real HD envy. I can understand not having a non HD console to keep cost low. But no DVD player? When the Wii was selling like hotcakes, everyone championed that it appealed to gamers who weren't hardcore. A lot of us contended that the Wii would flame out rather quickly because of inferior hardware. My seven year old son isn't a hardcore gamer but he would much rather play my 360 over his Wii, even when we have the same game for both. I won't overly knock the Wii because it has led to inovation from both Sony and Microsoft with their forthcoming motion projects, and that's good. But on merits alone, the system sucks.

[tigger5662]

I own a Wii, PS3, and 360, and I rotate playing all of them. I also still play games on my PS2 because that console still has games I like. It's all about the games.

[JimPratt3]

The fact that the Wii does not have HD graphics output on their console dooms it to a slow death. People demand HD today. What's up with that, Nintendo?

[adasha76]

Who is this 'people' you generically speak of? I couldn't give a flying donkey's ass about HD. If a game's good, it's good period.

Nintendo's problem right now is the good games are thin on the ground.

[Thad Boyd]

"People demand HD today."

And that's why Blu-Ray is such a widely-used and successful format!

[weegg]

I finally got rid of my 3DO (yes its been awhile). WII games are just plain too cartoony for my tastes. Just bought the slim PS3 hooked up the HDMI and love the 1080p res games. I avoided Xbox soley for its high crib death mortality (know several people that have gone thru 4 of them in last couple of years). Too bad MS didn't make the Xbox as good as their keyboards or mice.

[gefitz]

Initially the Wii's strength was indeed in game play, and catering to non-gamers in the process. Now that both Sony and Microsoft have learned the lesson and swung in that direction, it does leave one wondering about what Nintendo's next step might be.

[jayhawk73]

just like CDubber we bought the Wii as an upgrade from our PS2. We weren't going to buy the PS3 because it was too expensive at the time. Now that the PS3 dropped we bought the slim on release day. Our Wii has sat idle ever since then. I can't justify spending any money on it when the games for the PS3 are so much better for our gaming tastes even if they are a little more spendy.

The Wii has/had it's place but like so many others have said, it needs HD video and better sound output to stay competitive for the future.

[williambertram]

I don't own any of the 3, but if I were to buy one it would be Wii. My personal opinion, based on playing all 3 at Best Buy briefly, is that the Wii and it's games both look more innovative and imaginative than the competition. That's just my opinion however, which is obviously far from authoritative. I can also appreciate Nintendo's appeal to a market that doesn't want to dump large amounts of time and money into gaming. The simplicity of the controller is also nice.

I could see Wii getting old after several hundred hours of play, but then again, this would hold true for all of them in my case.

I'm not saying there isn't a market for PS3 and 360, just that there is also a market for less complicated, lower priced consoles. The sales numbers up to this point seem to support this as well.

[6stringluke]

Forgive me if I am being presumptuous, but I believe that you fit the demographic that the Wii appeals to most, and has driven their sales so high. While Nintendo have been criticized for catering to casual gamers at the expense of the more hard core community, it definitely has contributed to making the Wii such a behemoth that it has proven to be.

I have a friend who owns the Wii and we all have a blast playing Wii sport, and while I do prefer the games on offer on the 360 as well as the PS3, I can understand the draw amongst people who don't share my interest as deeply as I do.

I do believe that it is inevitable that sales will slow down for the Wii considering how well they have sold so far, but I am sure that the price cuts for the other consoles are also a factor.

[stocklirider]

Why are WII sales sluggish?

Because the selection of games for it are not enticing. A bunch of boring rip off games produced with no imagination or creativity. The upcoming return of Goldeneye looks interesting, but again, its a rehashed version of the old (where is the creativity).

Wii sales should be sluggish because Nintendo is taking too much of a conservative/safe stance with their investment in good games. If you can't give me something fun and interesting, then there is no reason for me to play it.

[crusadex]

That's sad.
Nintendo used to be all about the games.I still play super mario world.......
ARE YOU LISTENING WII???

[Fuddyman]

I have a wii but its games are pretty repetitive, does anybody know any good games for it?

[crusadex]

Zelda,Mario Galaxy and Metriod.....
Once you have played those it dust collection time for your Wii.
Seriously though,get a gamefly acccount so you can try em all out before you buy.

[Don Key]

It's all 100% Nintendo's fault. They brought this on themselves by thinking the Wii was such a mega success that they didn't have to do anything and it would be successful forever. They waited way... WAY to long to drop the price, after three years there hasn't been any new color schemes for the system, and they don't make games for the system anymore. Nintendo is one of the biggest software makers in the world with all the extra money for R&D for new games and they don't release anything of substance?

They have no one to blame but themselves. This is what happens when companies get on top, they stop caring and it eventually comes back to bite them in the ass.

[Hyper_Dude]

As with so many others, I was a Day 1 adopter of the Wii. Waited in line, first and only time I'd ever done that for anything. And it was a lot of fun... for a few months. The novelty wore of very quickly, and it was religated to my closet about a year after. I've since moved onto the PS3, which I bought about a year ago, and I am absolutely loving it. It's not just the graphics, but the compelling games that I can play online. Heck, I even use Home quite a bit for the Poker tables. Judging by some people's bankrolls online, I'd say plenty of people play Home.

I think the up-front cost of the Wii being lower is a falacy. Just add up the cost of a full Wii-mote: $70 per vs $40 for a Sixaxis. So a Wii plus 4 controllers is in fact more expensive than a PS3 with 4 controllers.

[ndsnowman]

While I certainly agree that Nintendo hasn't had a "killer" app this year to drive the same sales as last year and I personally think they are resting a little on their laurels in terms of bringing in games toward the more hardcore gamer market, I think it's very premature to say they need to do anything to "stay competitive" or that the system is dying. Even these so called "weak" sales were still significantly more than either the PS3 or 360 YTD.

The price cuts across the board certainly make the other systems more attractive coming into the holiday season but the Wii is still a massive seller. From a profitability standpoint, Wii remains the system to beat.

[chrisx1]

HD isn't that important when you're selling the cheapest console.
Way, way more people have SD tvs hooked up to SD cable or a converter box than have HD sets with HDMI.

[deverwarner]

Nintendo's growth was doomed as soon as they pursued the strategy they did with the Wii.

http://seedchange.wordpress.com/2009/10/29/the-downside-to-market-expansion-revisited/

The segment of the expanded market they were going after was never going to buy lots of games, accessories, consoles, or handheld devices. That's why they're called casual gamers.

Of course, this wouldn't be a problem if the market wasn't such a "what have you done for me lately?" kind of animal. Nintendo gets rewarded for its ingenuity, then punished for not repeating it the next year.

[Thad Boyd]

Wow, sure pulled down a lot of MS/Sony fanboys with that post. Any bad news about Nintendo and they jump all over it.

Guys, the truth is that ALL the console manufacturers have decreased in sales this year, and it's mostly due to the fact that they haven't had that many blockbuster titles. We're going into November now, and about to have a glut of the things.

I own a Wii, and the game I'm most looking forward to is New Super Mario Bros Wii -- because it looks to be the game I've been wanting to play since I was 6 years old.

I own a PC, too (of course), and I'd like to grab a copy of Arkham Asylum but I'm concerned about DRM and GFW shenanigans.

Not buying a 360 because of the RRoD. The new PS3 price point is attractive, but I don't think I can justify the purchase; I just don't have the time to play games that I used to, and $300 is still too much to shell out for a machine I'm probably not going to use very much.

[iowampb39]

They have charged way too much and gave way too little all this time.. anyone who has ever bought a WII should feel raped and violated...

They even go out of their way to disable perfectly working functions such as DVD Playback for movies. LESS VALUE for your money.. go with a different console.. one who gives you MORE VALUE for your money

Personally I think PS3 gives the most value of all the consoles.

[Pacman33]

Over the past 3 years I bought a Wii for my 7 & 5 year old, an Xbox for my teen and a PS3 for myself. My toddlers lost interest in the Wii after 6-8 months, no matter what games I grabbed for them, they always asked to play my PS3 in my room. Eventually I sold it on craigslist with the 3 controllers and 18 games and got enough to buy another PS3 with 1 game and 2 controllers for them to play in the living room. They even love the cheap PSN network games like PAIN, High Velocity Bowling, Ragdoll Kung Fu, Supersonic Acrobatic Rocket-Powered Battle-Cars and Ratchet and Clank. I've only bought them one disk based game and that was Little Big Planet. I even put a few of their favorite movies on the HDD so they can easily watch them whenever they want. In the end, I actually spend less on shovel ware and I've added a Blu-ray player/ streaming device to the living room. Alot of us got caught up in the early hype and novelty of the Wii, but with out great games, the novelty wore of quickly, even for kids.

[playadel2001]

LOL, so even the Wii's core market of undiscriminating toddlers is abandoning it?

[crusadex]

CONTENT....
Nintendo use to be the king of content.
Now after a few great titles they forget why they were the mount olympus of gaming.
The 360 has more great titles than i can play even though i play 3-4 hours a day everyday.
The Wii has 3 great games. I played until i got sick of them and nada.There isn't even anything on the horizion that would make me take my WII out of it's BOX.
I think in reality nintendo has been in the same palce since launch,the hype hid it.
When the great minds of Nintendo pull their heads out of their mario and put out Zelda quality games once a month they will have no prob holding their own.

[nicoge21]

I had a Wii but I sold it. there just wasn't enough good 3rd party games let alone any good games aside from mario kart. Not only that, but all the games that WERE worth buying were way to expensive even launch titles. And the picture looked horrible on my 1080i HD LCD set.

[Gazbin]

Wii games are too expensive. I cant justify buying any more games. Most Wii games are of poor quality and offer little playability. Nintendo is now building a name for crap titles with no quality control!

They can't sell inferior games for the same price as better versions released for PS3 or Xbox 360. I think Nintendo is burning customers now and they are going to have to earn back respect - which may end up being very expensive...