Nintendo Profits Up 72%, Sony's Down 94%

Gamasutra is reporting on reporting, with financial information from some of the large gaming companies becoming available this week. Nintendo, who had already previously raised projections, saw their profits up 72% over last year. This dramatic increase was credited largely to the DS, with 10.9 million units sold in the first six months of this year alone. Sony, on the other hand, dropped profits by 94% over this time last year. The company attributes this largely to the battery recall and PS3 start-up costs. From the article: "The company's games division reported a ¥43.5 billion ($366.6m) loss, from a ¥8.2 million ($69,000) profit in 2005, thanks to research and development, manufacturing and marketing costs related to the launch of the PlayStation 3. Sales and operating revenue were down by 20.5 percent to ¥170.3 billion ($1.43bn). A decrease in hardware sales worldwide was attributed to a drop in price for the PlayStation 2 and PSP. Software sales also decreased overall, although individual PSP sales were up on the previous year. Combined profit from the PS2 and PSP business was described as 'relatively unchanged'."

They are having trouble...

[gQuigs (913879)]

selling their rootkit...

Re:They are having trouble...

[Fozzyuw (950608)]

...and marketing costs related to the launch of the PlayStation 3

Or poor marketing. If it wasn't for /., I'd probably not have read much about the PS3. Less than a month before launch, I've not seen a TV ad or recall seeing other adds. Or maybe I just don't buy and read game mags. much. I only get my one from EBgames.

Re:They are having trouble...

[PygmySurfer (442860)]

I saw a PS3 ad on tv last night, and it was fucking disturbing.

Basically, there's a little baby sitting on the floor. Then it cuts to a PS3. Back to the baby, who's starting to mumble things, then back to the PS3. Back to the baby again, only now his eyes are glowing and shit, then back to the PS3, which has started to levitate.

It made me want to hide in the closet, not buy a PS3.

Re:

[Goblez (928516)]

I saw this as well. I thought to myself if this is what Sony calls advertising, then it is right on par with all the other bad things I've been hearing about them lately. Then I too ran for my closet.

Re:

[WillAffleckUW (858324)]

It's like they're trying to fail or something ...

Sigh.

Look, can someone just drop by their offices and tell Sony something like "It's the games, stupid!" and wake them up?

Re:

[Drooling Iguana (61479)]

For about a decade now, Sony was king of the console market. Taking that into account, that ad makes perfect sense.

Re:They are having trouble...

[schnell (163007)]

Or poor marketing. If it wasn't for /., I'd probably not have read much about the PS3. Less than a month before launch, I've not seen a TV ad or recall seeing other ads.

Actually, any marketing they do at this point is going to be a waste. They already know their initial (and pre-Christmas) shipments will sell out many times over to the people who are already planning on buying one. Spending money trying to get more people to go out to the store and buy something that isn't there is a waste.

So I agree that they haven't ratcheted up the "buzz-meter" like they could have ... but with such a massive shortage already likely, they would just be throwing away any money they spent. Expect their marketing expenditures to go up significantly next year once there are boxes on the shelves for "casual" purchasers to buy.

Re:

[sydsavage (453743)]

Not to mention, if they get somebody all hot and bothered for an expensive console, and that person gets to the store and they only have competitors products in stock, they would basically be paying for advertising for said competitors. Once somebody has committed to another next-gen console, they aren't likely to migrate to the Sony platform anytime in the near future, if ever.

I think they'd like to keep the casual buyers out of the stores until their product is likely to be there for purchase.

It's only going to get worse

[AKAImBatman (238306)]

Nintendo is garnering a great deal of good will (though the one controller in the package is a little bit of a setback) while Sony continues to tick off its customers. With Sony's latest move against Lik-Sang, the movement to boycott Sony is stronger than ever. So even after Sony can no longer claim the PS3 launch as a major cost, their profits are liable to keep dropping. Which will only cause them to make another stupid move (perhaps incarcerate their customers?) which will draw even MORE boycotts. Their profits will drop, and the investors will start getting nervous. And then....

Well, he're hoping for a bright future with the current lot of executives FIRED.

Re:

[EnglishTim (9662)]

Yes! fuck Sony and their litigious ways!

Let us embrace the beloved Nintendo, who would never stoop so low as to sue Lik-Sang! [eurogamer.net]

Re:It's only going to get worse

[AKAImBatman (238306)]

Here we go again.

1. That Lik-Sang is gone. They sold ModChips which were illegal. (Whether you and I believe they should be or not.) The Lik-Sang that Sony sued is a reputable dealer of imported goods, and the ONLY distributor of popular products like the TopGun LCD Light Gun.

2. Sony's lawsuit was only a minor issue. Their tactics were what pissed everyone off. They filed a suit against Lik-Sang in nearly every country in the European Union. Such tactics could only have one outcome: Lik-Sang will close down business to avoid having to fight dozens of costly lawsuits.

So no, I don't particularly care that Nintendo once sued Lik-Sang. I wouldn't even care that Sony sued Lik-Sang to stop the PS3 imports to Europe. I *do* care that Sony forced Lik-Sang out of business thus preventing them from selling hundreds of perfectly legal products for which many of them they are the only distributor.

Re:

[DrXym (126579)]

Come off it. Lik-Sang sold grey imports and was subject European rules governing such things. Sony was entirely within their rights and the law to bring suit. The specifics of the action and the judgement can be read here [bailii.org].

Lik-Sang could have lived on if they so chose, selling peripherals, cables, games and suchlike. I half expect that they probably will, and this winding up is all part of some convoluted ploy to get out of paying Sony any money. Expect to see a mysterious selled called Sik-Lang appear som

Re:It's only going to get worse

[AKAImBatman (238306)]

Lik-Sang sold grey imports and was subject European rules governing such things.

Yes, they are subject to those laws. Of course, they never had a chance to defend themselves. I repeat:

SONY FILED A LAWSUIT IN NEARLY EVERY EUROPEAN UNION MEMBER COUNTRY

Did you get that? Probably not. Let me say it a few more times:

SONY FILED A LAWSUIT IN NEARLY EVERY EUROPEAN UNION MEMBER COUNTRY
SONY FILED A LAWSUIT IN NEARLY EVERY EUROPEAN UNION MEMBER COUNTRY
SONY FILED A LAWSUIT IN NEARLY EVERY EUROPEAN UNION MEMBER COUNTRY
SONY FILED A LAWSUIT IN NEARLY EVERY EUROPEAN UNION MEMBER COUNTRY
SONY FILED A LAWSUIT IN NEARLY EVERY EUROPEAN UNION MEMBER COUNTRY
SONY FILED A LAWSUIT IN NEARLY EVERY EUROPEAN UNION MEMBER COUNTRY

Did you get it that time?

Sony was entirely within their rights and the law to bring suit.

Were they? Were they REALLY within their rights to FILE A LAWSUIT IN NEARLY EVERY EUROPEAN UNION MEMBER COUNTRY?!? Sony exploited the looseness of the EU consolidation to pull a nasty, underhanded, disgusting legal tactic that was intended to make it too expensive to fight.

The specifics of the action and the judgement can be read here.

1. Sony won by default. Lik-Sang didn't show up, they disolved their company due to LAWSUITS IN NEARLY EVERY EUROPEAN UNION MEMBER COUNTRY.

2. I will repeat, I DO NOT CARE whether Sony's lawsuit would have been upheld or not. Had Sony handled this properly, Lik-Sang may have had to stop the imports of Sony Consoles, plus pay Sony damages. Instead, SONY FILED A LAWSUIT IN NEARLY EVERY EUROPEAN UNION MEMBER COUNTRY IN ORDER TO PUT LIK-SANG OUT OF BUSINESS. Then they had the gall to turn around and claim that they had nothing to do with it [gamesindustry.biz].

I've got two words to describe my feelings about their long string of abuses: BOYCOTT SONY!!!

Can I hear an AMEN out there?

Re:It's only going to get worse

[MeanderingMind (884641)]

The point is that Sony didn't have to. Sony could easily have said to Lik-Sang, "We're within ourtlegal rights to request that you not import PS3. We ask that you cease and desist. Legal action will not benefit either of us, but it may become necessary if this can not be resolved between the two of us."

That's a nice, but firm, way of doing things. You're not shaking a legal fist at them, you're giving them the opportunity to talk with you, discuss it, and reach a resolution without expensive court fees.

This is what Sony did. Sony said, "Lik-Sang, here are a dozen or more simultaneous lawsuits in different languages for the same thing. Good luck hiring a team of competent lawyers in every nation in the EU and flying back and forth like crazy between all the hearings, trials, and judgements. We know you can't afford it."

I don't know if you've ever seen the Monty Python skit where they use machine guns and rocket launchers to hunt a mosquito, but that is a good analogy for what Sony did here. They didn't have to put Lik-Sang out of business to stop them from importing PS3s to the EU. They could even have come out of this looking like a decent company that regrettably, but not selfishly, protected their interests.

What they did was unnecessary to stop Lik-Sang from importing. What they did was necessary to put Lik-Sang out of business.

Re:It's only going to get worse

[DrXym (126579)]

The point is that Sony didn't have to. Sony could easily have said to Lik-Sang, "We're within ourtlegal rights to request that you not import PS3. We ask that you cease and desist. Legal action will not benefit either of us, but it may become necessary if this can not be resolved between the two of us."

And that's exactly what they did do [mcvuk.com]. Over a full year ago. Lik-Sang had over a year to cease and desist. It didn't.

Re:It's only going to get worse

[aaronl (43811)]

Sony used a trumped up basis for their lawsuits, basically lying to the judges involved. They claimed that the electrical devices that Lik-Sang was importing were of dubious quality, were untested in the European countries in question, and could cause consumer harm. Sony left out the part where the electronics were tested and certified, and were every bit as tested and safe as the stuff Sony sold, because *they were the same exact product*. Lik-Sang was reselling official Sony gear, and Sony sued them in such a way that Lik-Sang could not afford to fight it without going bankrupt.

Re:It's only going to get worse

[AKAImBatman (238306)]

If you're gonna decry one company for doing something you should at least have the good sense and the balls to decry any other company that did the exact same thing.

Ok, let's say that your argument holds up for a minute. (It doesn't, but we'll pretend, just for your sake.) Then let me ask you:

- Is Nintendo Guilty of distributing Rootkits?
- Is Nintendo Guilty of a massive coverup to hide the fact that they did not recall exploding batteries they knew about?
- Is Nintendo Guilty of arrogently telling its customers to "get a second job"?
- Is Nintendo Guilty of trading on their previous name for quality to produce overpriced, sub-standard electronics?
- Is Nintendo Guilty of giving consumers with defective LCD screens a "will not replace" runaround?
- Is Nintendo Guilty of forcing new firmware upgrades on existing equipment just to lock out the homebrew community?
- Is Nintendo Guilty of ignoring their warranty of fitness on CCD parts they produced?

I could go on and on and on about absuses in recent history that Sony is guilty of. Are you going to tell me that I should boycott Nintendo over the one issue when I'm boycotting Sony for a long string of abuses, with this latest one being the trigger that has pushed me over the edge?

That's inconsistency. Why shouldn't Nintendo get at least part of the slack that Sony has had to date?

------------
BOYCOTT SONY!!!

Re:

[arose (644256)]

Shipping new products with upgraded firmware is some entirely different from forcing firmware upgrades in products already sold.

Re:It's only going to get worse

[SyncNine (532248)]

From YFL (your f*ing link):

"Hong Kong based Lik-Sang, a mail order company which distributes videogame software and hardware worldwide, has lost a crucial court case brought by Nintendo over the sale of devices which could copy Game Boy software."

That's right. OH GNOHS, Nintendo stopped Lik-Sang from selling devices MADE SOLELY TO PIRATE THEIR SOFTWARE (and run homebrew). Sony, on the other hand, has stopped Lik-Sang from selling their *FIRST PARTY* CONSOLES, SOFTWARE, and ACCESSORIES to other markets. These are not anywhere NEAR the same thing, at all.

Next time, read your article before you spam us with it.

Re:Wake up

[by Anonymous Coward]

If you think that the people that Sony have pissed off with their rootkits, lawsuits, and causing Lik-Sang to shut down aren't the same people that they're relying on as early adopters for the expensive ps3, then you need a reality check.

Re:Wake up

[KDR_11k (778916)]

I think those are really the least significant blunders of theirs. The first and foremost problem they're facing is the price of the PS3 along with arrogant comments like "You'll want to get a second job to afford the PS3!" and "Europe loves waiting.".

Re:Wake up

[Swanktastic (109747)]

You guys are both right. Sony has managed to piss off the analysts with their poor performance and information sharing, mainstream customers with the PS3 pricing, and early adopters with their other shenanigans. Taken individually, "people" tend to write these things off as a screw-up. Taken together, people interpret this as a corporate culture that is in serious trouble.

This is one of those (-1) + (-1) + (-1) = (-5) public perception situations.

Re:Wake up

[7Prime (871679)]

Good point. While I agree that Rootkit fiascos, Lik-Sang shut down, and even press blunders are only going to be heard by a very small percentage of their customers (even the public address blunders require that you be constantly tuned into tech news), it DOES reach the press, who starts to get an increasingly negative view of their products. When the press starts rooting against a console (or a politician, or anything), then the console's got problems, because that inherently negative attitude from the press will start to affect the popular consensus. A huge majority of tech news sites online have a very bad impression of the PS3. Hell, I was in GameStop yesterday, and one of the clerks was even voicing his feelings against the system... and when you have the very people who are supposed to be pushing your system's, voicing their opposition, you're SCREWED.

It's all a snowball effect. Maybe I was wrong to overlook the small, geeky concerns of one tiny demographic. Sure, in the end maybe only 0.1% of the population will know what a Root Kit is, but the negativity that trickles down through tech news sites because of that could have a huge impact on the long-term popularity of the system. Now, the people that are suggesting that a Root Kit debacle itself will have any impact on the minds of the masses, need to get their heads out of their collective asses... but it might be a bit short-sided to overlook the larger problems it could cause.

Brain dysfunction

[littleghoti (637230)]

[quote] Nothing Sony has done to anyone has had any effect whatsoever on its profits. If you honestly think .005% impacts their bottom line, you need a reality check. [/quote]

Or to re-phrase
Sony's profits or losses are due to fairies and the movements of the celestial bodies. Nothing the company does affects their bottom line.

Re:

[AKAImBatman (238306)]

Or are you one of those morons who thinks that slashdot has that much of a sway over the consumer market?

No, I'm one of those "morons" who thinks that the LOUD calls for a boycott showing up on every gaming news and technology site carrying the story, is a pretty good indication that the customers have had ENOUGH. I may have led the charge for a boycott here, but that doesn't explain who led the charge over on digg. Or on NeoWin. Or on Kotaku. Or on Eurogamer. Or on Engadget. Or on MacRumors. Or on JoyStik.

Re:

[hudsonhawk (148194)]

While I find it cute that you think the opinions of people on those sites is somehow reflective of those of the general market, you're way off base. The vast, vast majority of the market has never even heard of a rootkit and probably think that Lik-Sang is a euphemism for fellatio.

You're using an extremely biased sample - people who are passionate enough about their consumer goods and electronics that they bother coming onto the internet to discuss them. If you made all market judgements by polling the si

Corporate Governance and Japan

[MBraynard (653724)]

This is not really a bad thing for Sony and Americans are looking at it much differently than the way a Japanese investor does.

Over there, they take a longer term view and do not live and die by the quarter like they do here in the US. This is partially cultural. It's not necessarily a good thing but it is a factually true thing. They are more forgiving for this kind of financial result than investors in the US are.

However, another, and not necessarily helpful reason for this patient view is that the equity owners who normally would jump ship are often also the debt holders of the corporation. This is almost unheard of here in the US and the result in Japan is that corporations are more likely to ignore long term problems with a corporation because the best solution (dumping shares) would hurt their debt value so they tend to stay the course and hope for the best.

Re:Corporate Governance and Japan

[ZombieRoboNinja (905329)]

Yeah, good thing we don't have a GLOBAL ECONOMY, right? Because if we did, we might have Americans investing in Japanese multinationals!

Re:

[MBraynard (653724)]

Sony is unique among Japanese corporations in the percent of it's equity held by foreigners - still, 60% is held by Japanese institutions/individual investors.

No link between the Nintendo and Sony numbers

[TCQuad (537187)]

Sony profits went from 28.4 billion yen last year this quarter to 1.7 billion yen. The battery recall cost 51 billion yen. (via Yahoo!) [yahoo.com] So, had the battery recall not happened, Sony's profits could have increased (up to 85%, depending on the accounting magic with the recall) even given the development costs for the PS3.

Re:

[crazyjeremy (857410)]

There's a link... Nintendo didn't sell faulty batteries. Sony did. Sony's profits are down 94% in part because they sold faulty batteries. It doesn't matter what Sony would've/could've done. The link is they both are selling a gaming system. Sony's sells for $500 - $600 and Nintendo sells for $250. I think it would be better to buy a $250 unit from a profitable company than a $500 unit from a failing one. Sony's recent business history proves they are making some bad decisions from the top down ( *cough* ro

Re:No link between the Nintendo and Sony numbers

[UbuntuDupe (970646)]

think it would be better to buy a $250 unit from a profitable company than a $500 unit from a failing one.

This would be a good time to remind everyone that when GM tries to get its sales going again through offering that great "10 year, 100,000 mile warranty", you need to remind yourself that that really means, "10 year, 100,000 mile, or until we go bankrupt warranty".

Financial analysis by idiots

[NineNine (235196)]

There obviously aren't any Slashdot members who can balance a checkbook. You're comparing apples and oranges. Sony sells a LOT more things that impact their bottom line much more than the PS2/PS3. Nintendo is a one-trick pony. Sony is well-diversified. Completely different companies.

Re:

[NineNine (235196)]

Search slashdot for Sony. How many stories are good ones?

Again. Slashdot members tend to be a group consisting of some of the most mis-informed people on the planet when it comes to business and money. Slashdot is an indicator of the well-being of Sony no more than the contents of a box of Captain Crunch cereal is an indicator of the socio-political climate in the Middle East.

Re:

[Nerdfest (867930)]

The parent is absolutely correct. At a bare minimum, the socio-political climate in the Middle East must be represented by a breakfast cereal that has nuts in it.

Re:

[be-fan (61476)]

Can we add a reality-check here?

First, Sony isn't failing. Sony made way more profit than Nintendo for much of the last six years. Was Nintendo failing when the PS2 was reaping record profits for Sony, and the Gamecube was stagnating? Of course not. Companies go through cycles, and some companies take more risk, and thus go through bigger cycles than others.

You're criticizing Sony for bad decision making "from the top down", but do you realize that the rootkit had nothing to do with top Sony management? It

VG Cats covered this one pretty well already...

[sdaemon (25357)]

http://www.vgcats.com/comics/?strip_id=212 [vgcats.com]

Not much more really needs to be said :)

Why should I care?

[thatguywhoiam (524290)]

Seriously. From a 'gamer' (ugh) perspective, I could give a flying fuck about how well these entities are doing financially. Call me when one of them is about to fold.

(I'm actually surprised Sony hasn't received the Apple treatment - "Beleaguered Sony")

I care that they both have consoles launching and I am interested in trying both. I am interested in the launch lineup. I'm interested in specs. Controllers. Formats. But quarterly reports, do we really care that much?

Anyways, I hope Sony learns from their mistakes and improves. I will vote with my dollars accordingly until they stop behaving badly. I don't want them to "die", as some posters have mentioned; besides being exceedingly unlikely, Sony has made great things in the past. It would be nice to see a return to form, specifically for SCE and Sony Electronics. The media arms I have no use for.

How else will you know if your team is winning?!!?

[hudsonhawk (148194)]

Seriously though, at some point gaming became like sports teams and pickup trucks.

I half expect to start seeing 360 faceplates that say "Sony Sucks" and DS stickers that show Calvin pissing on a PSP. Gamers seem to be so caught up in the rhetoric these days that it's getting harder and harder to find sites where people are actually discussing... what are those things called.... oh yeah, games.

Karma

[OSS_ilation (922367)]

DRM Rootkit Lik Sang Arrogance Emotion Engine Massive Damage

Ctrl Alt Del has a nice thought here

[TLouden (677335)]

http://ctrlaltdel-online.com/comic.php?d=20061011 [ctrlaltdel-online.com]

MS earnings have just come in, and revenues are up

[jchenx (267053)]

Microsoft just posted earnings estimates. There's an article about it here: http://biz.gamedaily.com/industry/feature/?id=1424 0 [gamedaily.com]

Here's a snippet from the article:

Microsoft today announced its first quarter results for the period ended September 30, revealing revenue of $10.81 billion (up 11 percent) and net income of $3.48 billion (up from $3.14 billion last year). More importantly from a gaming perspective, Microsoft revealed that it's now achieved worldwide Xbox 360 sales of 6 million units. The company previously mentioned that it had sold 5 million through June and expects to sell 10 million by the end of 2006.

The company's Entertainment and Devices division, formerly the Home and Entertainment unit, experienced 70 percent revenue growth year-over-year "driven by demand for Xbox 360 consoles, software, peripherals, and Xbox Live." The division posted $1.03 billion in revenue and an operating loss of $96 million, slightly narrowed from last year's loss of $173 million during the same period.

Obviously MS should get a nice sales boost of the 360 over the holiday season, especially from gamers who aren't able to get their hands on the extremely limited PS3. It'll be especially important to see how Japanese sales go, thanks to the new Blue Dragon bundle.

Globalisation is broken...

[Builder (103701)]

What bugs me most about this whole mess with Lik-sang is that it shows how broken globalisation is.

Companies have the right to ship my job to a country where they can get stuff done cheaper. But I don't have a right to buy their products from a country where they are cheaper.

We've seen this with Levis and Tesco and with the BPI and CDWOW. Why can't I ALSO benefit from globalisation ?

Re:

[Chris Pimlott (16212)]

Re-read. They specifically give the numbers of the Sony games devision. It's even quoted in the summary.

Re:Sony is more than just PlayStation...

[by Anonymous Coward]

Corporate shill, or Sony fanboy? You decide!

Re:Sony is more than just PlayStation...

[damiangerous (218679)]

Except that the article specifically refers to the games division.

The company's games division reported a ¥43.5 billion ($366.6m) loss, from a ¥8.2 million ($69,000) profit in 2005, thanks to research and development, manufacturing and marketing costs related to the launch of the PlayStation 3. Sales and operating revenue were down by 20.5 percent to ¥170.3 billion ($1.43bn).

I don't think a $366.6m loss is "exceptional profits" by any accounting method.

Re:

[Cadallin (863437)]

Because the NES days were fucking horrible, god how miserable we were with the poor quality titles that poured out of the development studios. The horrific absence of any innovative, classic titles. Nintendo nigh brought the video games industry to its knees with their steel fisted hegemony! How cruel they were!

Re:

[HappySqurriel (1010623)]

I don't want Microsoft to be utterly dominant in yet another industry without serious competition (which I don't think Nintendo is at this point, even with the Wii).

Just one question, why don't you think Nintendo can be serious competition?

You never really explained that ...

It just seems like a comment that I regularly saw before the PSP was released that people were worried that Sony would dominate the handheld market because Nintendo couldn't be serious competition; and we all know how that is turning out

Re:

[tepples (727027)]

But the PS3 IS a computer!

Only if it allows thorough support for freeware produced by amateurs. The PSP doesn't, and that's one of the reasons that goodwill among enthusiasts favors the Nintendo DS. It remains to be seen whether Linux for PlayStation 3 is a half-hearted port that is quickly dropped (like Linux for PS2, which did not receive an update for the slim model) or if Sony makes an attempt to maintain it right.

Re:

[be-fan (61476)]

The deep irony here is that Nintendo isn't doing anything more than Sony to foster that goodwill (the DS requires signed code as well!), it's just that the DS's hardware is much easier to crack...