news The Australian division of Japanese video gaming giant Nintendo has lost a staggering 41 percent of its local revenue in one year, as diminishing interest in the company’s aging Wii platforms and lacklustre launch of its 3DS handset console have slugged the company’s finances hard.
For the year to 31 March 2011, Nintendo Australia booked $339.7 million in revenues, capping off a strong growth period for the company in Australia. The company’s Australian revenues had grown strongly over the past five years as it made money hand over fist from its successful Wii console. To illustrate how strong that growth has been, in 2006, Nintendo Australia made just $71 million in revenue from Australia.
However, financial results filed this month with the Australian Securities and Investments Commission reveal the company’s revenues to 31 March this year sank to $200.1 million — a drop of 41 percent in just one year. For that period, Nintendo Australia said it made an $11.4 million net loss, compared with a $3.6 million net profit the year previously. It also spent dramatically less on marketing — $28.5 million compared with $43.4 million the year previously.
Internationally, Nintendo has also been suffering. In late July, the company posted a sharp drop in quarterly profit and its first full-year loss, Reuters has reported — with the amount lost to be US$575 million. “Nintendo cut its forecast for annual sales of its ageing Wii console to 10 million devices from 12 million, and for the 3DS handheld games device to 14 million from 16 million,” Reuters reported.
Industry speculation about the cause of Nintendo’s financial problems has focused around several key areas. Firstly, the popularity of Apple’s iPhone and similar smartphones running Google’s Android platform has shifted the emphasis of mobile video gaming away from traditional powerhouses such as Nintendo (with its DS and 3DS systems) and Sony (with its handheld PlayStation line) and towards these new players, with major third-party studios now devoting resources to the smartphone platforms.
Secondly, although Nintendo’s own games continue to be popular — for example, the Mario and Zelda franchises — the company has struggled to attract third-party developers to its Wii and 3DS platforms, due to a substantially different development environment compared with major industry players Sony and Microsoft. It is believed that many developers find it a much easier matter to develop platforms jointly for the PlayStation and XBox 360 platforms, and even for Windows PCs, than for Nintendo’s Wii platform.
Major franchises such as Call of Duty, Batman, Darksiders and Assassin’s Creed, for example, have new titles available this year on both Sony and Microsoft platforms — but Wii releases have been much more limited and delayed.
In Australia, Nintendo does, however, have a strong existing install base for its consoles, with over two million Nintendo Wiis having been sold locally as at December 2010, and hundreds of thousands of Nintendo 3DS units. There are also some three million Nintendo DS units in the community. The issue for many Australian gamers has been a lack of fresh content for the Wii since it launched in 2006 — while rival platforms have continually launched new games.
One upcoming positive for Nintendo will be the company’s next-generation Wii U console, which the company said earlier this year it would launch before the end of 2012 in Australia. The console, Nintendo’s sixth console for the home, will feature 1080p high-definition graphics, addressing a common complaint about the Wii, which only supports standard definition graphics. In addition, the Wii U will continue Nintendo’s tradition of innovating in the control systems which users use to control games, adding a new controller with an embedded touchscreen, which will allow players to continue gaming sessions by displaying a game on the controller’s touchscreen — even though their television may be off or being used for another purpose. The Wii U was first revealed in June 2011, and will be backwards compatible with Wii games.
The news will make Nintendo the first of the three major video game console manufacturers to release a new console for some years. Neither Microsoft nor Sony have yet released much information on their next-generation consoles to replace their respective Xbox 360 and PlayStation 3 platforms, although both have released additions to the consoles to tackle specific area such as motion controlled gaming — a feature first introduced in the Nintendo Wii.
Our family owns a Wii, but it’s been gathering dust on our bookshelf for most of the past half-decade. The same can be said of the two Nintendo DS units which we also own. These units just don’t get used — and why? Because there’s no hot new games for the platforms. Content is Nintendo’s key problem right now — and new releases of Zelda and Mario just aren’t going to save the company. Like many people, I’ve played too many Zelda and Mario games over the years to want to play more any time soon. Read my lips, Nintendo: I do not want to play yet another game where I firstly get the boomerang and then gradually proceed to kill Ganon.
In comparison, I play my XBox 360 virtually every day (hello Dark Souls and Batman: Arkham City), and I buy new games at top prices for it regularly. In addition, I also regularly buy new games (Skyrim, StarCraft II, etc) for my high-end gaming PC.
I’m not surprised to see Nintendo’s financial fortunes take a large hit over the past year in Australia. But I do hope the company picks itself up off the floor and gets some great content coming for the Wii U as it launches later this year. Sony and Microsoft are OK corporations, but they’ve often lacked the touch of child-like video game magic which Nintendo seems capable of bringing to so many of its products. It would be a shame to see that touch desert the industry for good.
Image credit: Nintendo