Nintendo Reports Slump in Operating Profits
But net profits up thanks to dollar fluctuations.
Nintendo reports cutting its estimated operating profits by a fairly unnerving third today for the first half of the financial year. Down to 20 billion yen from a projected 30 billion yen, the deficit was blamed by senior MD Yoshihiro Mori on flagging GameCube software sales in North America. It’s certainly no secret that the tragically under-exploited ‘Cube has been looking a little pale and wan for a while now, after seeming to be in robust health with the release of such titles as Resident Evil 4. The machine’s underlying problem has been chiefly its architectural differences from the other two leading consoles, which causes problems when it comes to multi-platform releases. Either the GameCube gets dropped altogether from the SKU list or second rate ports paint it in a somewhat unflattering light. Aside from the enormously attractive Zelda: Twilight Princess there’s little to look forward to on the ‘Cube now, which is especially saddening as in many ways the diminutive powerhouse has never reached its true potential. Mori-san hardly raged against the dying of the light, baldly stating ‘it looks like the product’s life is nearing its end’.
He went on to also attribute the drop in estimated profits to the DS price cuts in the USA and Europe; neither did he miss an opportunity to mention that development costs for the forthcoming Revolution console had eaten into profits.
As Mori-san also pointed out, it’s inevitable that games sales take a dip as we stand on the threshold of a new generation of consoles. But while the GameCube seems to have been hit hard by this, it’s unlikely that its rivals will be as badly affected. The first PlayStation continued to flourish after the launch of the PS2, and this time around the PS2 is in a similar position, with a huge installed userbase who may be in no hurry to upgrade. And the Xbox’s excellent online service alone surely guarantees its lifespan for some time, although it’s been made clear that Microsoft will not be releasing any more first party titles for it after the 360 launches.
But with its dominant position in the handheld market, Nintendo has plenty in the piggybank to tide it over until the Revolution drops. And its net profits for the last six months have actually gone up, due to revaluation of stocks of US dollars, bringing the estimated figure up to 36 billion yen from 19 billion yen, though it must be said this figure is still down by almost a quarter in year-on-year terms. To sum up, then, it’s sad news because it sounds the death knell for the beautiful GameCube, but it’s not a big deal as far as Nintendo’s big picture goes. As is often stated, Nintendo is actually rather better at turning a profit than its rivals. At least that’s how we see it. How do you see it? Leave us in no doubt and post in the forum below.
He went on to also attribute the drop in estimated profits to the DS price cuts in the USA and Europe; neither did he miss an opportunity to mention that development costs for the forthcoming Revolution console had eaten into profits.
As Mori-san also pointed out, it’s inevitable that games sales take a dip as we stand on the threshold of a new generation of consoles. But while the GameCube seems to have been hit hard by this, it’s unlikely that its rivals will be as badly affected. The first PlayStation continued to flourish after the launch of the PS2, and this time around the PS2 is in a similar position, with a huge installed userbase who may be in no hurry to upgrade. And the Xbox’s excellent online service alone surely guarantees its lifespan for some time, although it’s been made clear that Microsoft will not be releasing any more first party titles for it after the 360 launches.
But with its dominant position in the handheld market, Nintendo has plenty in the piggybank to tide it over until the Revolution drops. And its net profits for the last six months have actually gone up, due to revaluation of stocks of US dollars, bringing the estimated figure up to 36 billion yen from 19 billion yen, though it must be said this figure is still down by almost a quarter in year-on-year terms. To sum up, then, it’s sad news because it sounds the death knell for the beautiful GameCube, but it’s not a big deal as far as Nintendo’s big picture goes. As is often stated, Nintendo is actually rather better at turning a profit than its rivals. At least that’s how we see it. How do you see it? Leave us in no doubt and post in the forum below.
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Comments
imnotregret 7 Oct 2005 17:42
1/5
Have nintendo ever said that they'd earned <i>more</i> than expected???
i mean... since the release of the N64...
i mean... since the release of the N64...
Hank 7 Oct 2005 22:36
2/5
While I might agree with you (being I have no knowledge of Nintendo's profit records since the release of the N64), that doesn;t nessecarily mean that Nintendo is losing profits. I do find it shallow of them to report bottom line increases just because of the re-valuing of the yen.
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soanso 8 Oct 2005 01:19
3/5
I don't know where you are getting some of the stuff in this article from.
I totally agree that the GC never hit it's potential but not for that reasons listed in the article.
I don't see the difference in hardware being an obstacle for developers, it's not like the PS2 and Xbox were exactly the same to work on. They aren't. But they do both share the same medium which the GC does not.
I've also don't think the GC was hamstrung by shoddy ports or from a lack of third party support. It had miles more support than the N64 ever did.
No.
The problem with the GC was that Nintendo F**ked up.
They made some really odd choices and messed up the release of far to many.
All that stuff they did with Crystal Chronicals/4 swords was all a great idea but not very practical and never going to be mainstream stuff. Also the Zelda game they should have made on day 1 should have looked like the new one as good and as nice as the cartoon one was, the new one would have sold consoles to more people than the cartoon one.
That's not to mention the thing they were doing of NOT RELEASING GAMES!!!
the animal crossing debacle was one along with winning eleven. I mean why did that never come out in europe? WHYYYY?!
I've always felt that Nintendo did a bad job of supporting both the GC and the GBA. Yet the GBA stuff they made in the last couple of years was genius but the GC stuff was all a bit underwhelming.
So overall I don't think it s right to blame third parties for pulling out or doing a bad job. It is Nintendo's console and people bought it for Nintendo's games. If it underperformed or disappointed then they are the only ones to blame. I hope they have learned the lesson from this and don't repeat it on revolution.
I totally agree that the GC never hit it's potential but not for that reasons listed in the article.
I don't see the difference in hardware being an obstacle for developers, it's not like the PS2 and Xbox were exactly the same to work on. They aren't. But they do both share the same medium which the GC does not.
I've also don't think the GC was hamstrung by shoddy ports or from a lack of third party support. It had miles more support than the N64 ever did.
No.
The problem with the GC was that Nintendo F**ked up.
They made some really odd choices and messed up the release of far to many.
All that stuff they did with Crystal Chronicals/4 swords was all a great idea but not very practical and never going to be mainstream stuff. Also the Zelda game they should have made on day 1 should have looked like the new one as good and as nice as the cartoon one was, the new one would have sold consoles to more people than the cartoon one.
That's not to mention the thing they were doing of NOT RELEASING GAMES!!!
the animal crossing debacle was one along with winning eleven. I mean why did that never come out in europe? WHYYYY?!
I've always felt that Nintendo did a bad job of supporting both the GC and the GBA. Yet the GBA stuff they made in the last couple of years was genius but the GC stuff was all a bit underwhelming.
So overall I don't think it s right to blame third parties for pulling out or doing a bad job. It is Nintendo's console and people bought it for Nintendo's games. If it underperformed or disappointed then they are the only ones to blame. I hope they have learned the lesson from this and don't repeat it on revolution.
OptimusP 8 Oct 2005 12:20
4/5
Well on one side their the ones that actually make a profit (i believe 2 years ago they had one quarter, ONE quarter without a profit in the last 25 years of their company...i wanna see Sony saying that).
GC's failure is indeed partly Nintendo's fault with some small dumb mistakes that add up but also third party mistake because their board listens to some stupid ass marketing idiots.
Example, SEGA made for the Xbox the most exclusives in this generation, they all bombed, the GameCube was actually their strongest console, it received no exclusives.
Viewtifull Joe was a minor succes on the GC, PS2 port bombed and the sequel bombed even harder on the PS2, still Capcom is making ported Killer 7 and is making Okami exclusive on the PS2. Also vert artfull games that probably will sell better on the GC.
Nintendo made mistakes but if the third parties gave them some slack and didn't think like marketing idiots the GC would have trived a bit better.
Though it seems Nintendo is learning from its mistakes with the Revolution. And if it wasn't for all those NDA's we could know if the third party was learning too.
GC's failure is indeed partly Nintendo's fault with some small dumb mistakes that add up but also third party mistake because their board listens to some stupid ass marketing idiots.
Example, SEGA made for the Xbox the most exclusives in this generation, they all bombed, the GameCube was actually their strongest console, it received no exclusives.
Viewtifull Joe was a minor succes on the GC, PS2 port bombed and the sequel bombed even harder on the PS2, still Capcom is making ported Killer 7 and is making Okami exclusive on the PS2. Also vert artfull games that probably will sell better on the GC.
Nintendo made mistakes but if the third parties gave them some slack and didn't think like marketing idiots the GC would have trived a bit better.
Though it seems Nintendo is learning from its mistakes with the Revolution. And if it wasn't for all those NDA's we could know if the third party was learning too.
soanso 8 Oct 2005 20:19
5/5
Yeah good point about Sega.
I remember reading the reaction to Jet Set Radio Future when it came out on Xbox. It sounded like people wouldn't touch it without wearing gloves and a VERY long stick.
And yet everyone has repeated the same mistakes over and over.
Namco are doing it with Soul Calibur, making the new one ps2 exclusive despite the GC one selling best. And as you say, Capcom and Sega too.
I'd really like to see Sega make nothing but multiplatform games.
Like EA only GOOD!!
I remember reading the reaction to Jet Set Radio Future when it came out on Xbox. It sounded like people wouldn't touch it without wearing gloves and a VERY long stick.
And yet everyone has repeated the same mistakes over and over.
Namco are doing it with Soul Calibur, making the new one ps2 exclusive despite the GC one selling best. And as you say, Capcom and Sega too.
I'd really like to see Sega make nothing but multiplatform games.
Like EA only GOOD!!