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Businesses Nintendo Entertainment Games

Nintendo's Profits Fall On Gamecube Sales 66

Posted by Zonk from the purple-cubes-don't-dissolve-well dept.
Gamasutra reports that Nintendo's sales have dropped 21% compared to last year's numbers, largely on sluggish Gamecube sales. From the article: "Although a significant fall, Nintendo remains the most consistently profitable console hardware manufacturer when also factoring in game sales, especially compared to nearest rival Microsoft, which is estimated to have lost around $4 billion on the Xbox in the last five years. Nintendo officials are sticking to full year forecasts of operating profit of ¥90 billion ($758m), net profit of ¥75 billion ($631m) and sales of ¥400 billion ($3.4bn)."
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Nintendo's Profits Fall On Gamecube Sales More

Nintendo's Profits Fall On Gamecube Sales

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  • Long Term Sales? (Score:4, Insightful)

    by Hellad ( 691810 ) on Friday November 25, 2005 @01:41PM (#14114102)
    I would be really curious to know what the long term profit of the GameCube were. I know that MS lost 4 billion over the life of the X-Box, I wonder what the fina take will be on the GameCube. Despite being a disappointment for Nintendo (but not for me, I love my GC), I bet it was still made more than X-Box.. I realize of course this comes from MS's ability to sell them at a loss, but with the reported $171 dollar loss per 360, I would be curious to know how long MS will stay in the market before it needs to make some cash off their machines (maybe never?)...

    I am amused that the "doomed" nintendo always manages to make some money off its machine sales, even when sold for a fraction of the price. Oh well, hopefully revolution will help give them te shot in the arm that they, and the industry, need...
    • Actually, the numbers make me (Nintendo fanboy) a little nervous.

      While Mario Kart DS and the wireless intiative should boost DS sales, I'm not seeing a blockbuster release for the Gamecube for the holidays. If their profits fall too much right before the Revolution's launch, the story may turn to Nintendo's financial woes and make generating buzz about the new system more difficult.

      Really wish the Zelda ship date hadn't slipped. =(

      • Re:Long Term Sales? (Score:4, Insightful)

        by SetupWeasel ( 54062 ) on Friday November 25, 2005 @02:21PM (#14114300) Homepage
        Nintendo is on forcast. This is a 21% drop in profits from the same time the previous year. Game sales overall are lower, so everyone is expected to make less profit. Nintendo lowered their forcast this year 3 months ago based on the delay of Zelda. Other than that everything is going smoothly.

        Last year was a really good year for Nintendo's profits and they are expecting to make about 4/5th of that this fiscal year in a transitional period for their home console business. Not too bad. Also remember that they are considering all the R&D for the Rev that they are paying for.

        So no, there is nothing for a Nintendo fan to worry about. The game media simply loves blowing anything remotely negative for Nintendo out of proportion.

      • Re:Long Term Sales? (Score:5, Insightful)

        by -kertrats- ( 718219 ) on Friday November 25, 2005 @04:15PM (#14114870) Journal
        Really wish the Zelda ship date hadn't slipped.

        You'd prefer an unfinished game rushed to launch a few weeks early, as opposed to a polished and perfected game? Miyamoto has gone on the record stating he's put more into Twilight Princess than any other Zelda. I don't think I'll mind waiting for it, because in a year it won't matter when it came out; the only thing we'll remember is the quality of the game.

        • Re:Long Term Sales? (Score:4, Insightful)

          by SScorpio ( 595836 ) on Friday November 25, 2005 @04:26PM (#14114912)
          As Miyamoto himself said: "A delayed game is eventually good, a bad game is bad forever".
        • "You'd prefer an unfinished game rushed to launch a few weeks early, as opposed to a polished and perfected game?"

          No. If I preferred that, I would have said, "I wish they had just rushed the game out to meet the deadline, rather than polishing and perfecting it." What I did say was "[I] Really wish the Zelda ship date hadn't slipped."

          Saying "I really wish the garbage truck hadn't dinged my fender this morning." does not mean I wish garbage pickup would skip my street. One can lament a situation wi
        • Besides it's not like next year is 6 months away. The game will be out in a few months. That isn't too long to wait (for me atleast). We'll have Metroid on the DS to hold us over until then.

          I read somewhere(maybe on slash? I forget) that they might be making the game a Revolution enhanced GameCube game (Meaning it'll be a GameCube game that can take advantage of the new Revolution controller or other features if it's played on that console).

          That will be pretty sweet if it's true.

    • Re:Long Term Sales? (Score:1, Interesting)

      by Anonymous Coward
      Almost a 1:1 ratio. Microsoft has lost over 5 Billion and nintendo has made over 5 billion in profit, this generation.

      Sony has made about the same as nintendo but sony has to sell serveral times more. Nintendo has a very streamlined setup.

      What Microsoft is doing is borderline illegal. But Bush is in office so the DOJ will do nothing. Microsoft can lose another 5 billion this generation and not be worse off as a company. They will keep taking a lose till sony and nintendo fold. Then they will charge whatever

    • Comment removed (Score:5, Insightful)

      by account_deleted ( 4530225 ) on Friday November 25, 2005 @02:16PM (#14114276)
      Comment removed based on user account deletion

      • Re:Long Term Sales? (Score:3, Insightful)

        by edwdig ( 47888 )
        With the Revolution being estimated at 1/4th the price of both the systems, it doesnt look like Nintendo will be in trouble anytime soon even IF the controller idea doesnt work out.

        That's just people dreaming. Think about it a little. The GameCube is currently $100. Although Nintendo isn't going to support HD resolutions, they have said the Revolution will have comparable graphics to the other next gen systems at non-HD resolutions. That's still significantly more powerful than the GameCube. The system is a

        • Re:Long Term Sales? (Score:2, Informative)

          by BlueHands ( 142945 )
          You know, when I first read the grand-parent post I assumed he was talking about cost to manufacture,not total price. The total price will likely be around $200, if not exactly $199.99. Hell, I doubt they can do anything else. Everyone is expecting the system at that price point.

          But as far as manufacturing goes, it could be anywhere between 1/3 to 1/4 the cost of the most expensive system with the 1/3 being the most likely. Since Nintendo likes to make a profit on their consoles, the Revolution could cost a
      • Nintendo has made more profit than both Sony and Microsoft combined actually.

        I'm a Nintendo fan myself, but I very much doubt that's the case in overall terms. Yes, Nintendo knows how to pack a lot of punch into a little box, and do it cheaply enough to be profitable even at a low price. That being said, there's more than that to making an overall profit in the video game industry. To use the standard cliche, it's giving away the razor to sell the blades. Sony may lose a lot of money on their hardware,

        • Re:Long Term Sales? (Score:5, Insightful)

          by SetupWeasel ( 54062 ) on Friday November 25, 2005 @04:51PM (#14115034) Homepage
          I'm sure the poster is speaking about Sony's and Microsoft's game divisions. Let me put it to you this way. Microsoft has lost so much money on the Xbox that I have made more money than Sony's and Microsoft's game divisions combined over the past four years.

          And no, Sony is not doing as well as you surmise. The GameCube sells a lot of software per console sold. Since they don't subsidize their console, software profit is actual profit. Sony has a 70% stake in the home console business and they regularly report quaterly losses. Nintendo has reported one quarterly loss in fifty years of public trading. The GameCube is profitable. Not super ultra mega profitable, but it makes them money.

          Sony's business model is based on the assumption that they are the far-away leader. Ask yourself this, if Sony does not capture 70% of the market in the next generation, will they turn a profit?

          Sony is the worlds 2nd largest electronics manufacturer. They have movie and music studios and are a major force in the traditional entertainment industry. Nintendo is almost solely a video game company, and they manage to make more than half the profits (overall) of the Sony behemoth.

          Nintendo is a tightly run ship. They know how to make money, and they do it by the truckload.

          Their attempts rebuild their image amongst hardcore gamers has fallen largely on deaf ears, and it's not financially feasible for them to battle it out head to head with the titans like Sony and Microsoft.

          Nintendo keeps more money than Microsoft lost on the Xbox in its entirety liquid. That's right. They have more than 4 billion dollars cash on hand to invest quickly (7.5 billion is the number I could find [contracostatimes.com]). Nintendo could play the game that Sony and Microsoft has started, but what would be the point? Sony and Microsoft might both lose money in the next generation. Nintendo doesn't care to play a game that no one might win.
      • (and the system actually being better capabiliy wise than either the Xbox of PS2)

        Wha-huh? More capability than the Xbox? Or PS2? It can't even play DVDs.
        • Yea, yea, yea. Can't play DVDs. Not a big deal.

          It's wrong to say it's more powerful than the XBox, it's as powerful as the XBox(at least as far as results not theory). I think the best looking cube game I've seen edges out the best looking XBox game I've seen, but the two systems have roughly comparable results in the whiz-bang graphic category, and both have load times drastically better than the PS2(for different reasons). Go fig.

          Both systems are FAR better performing than the PS2 tho.

          Nvidia v. ATI fl

    • Re:Long Term Sales? (Score:2, Insightful)

      by Shadarr ( 11622 )

      "I know that MS lost 4 billion over the life of the X-Box, I wonder what the fina take will be on the GameCube. Despite being a disappointment for Nintendo (but not for me, I love my GC), I bet it was still made more than X-Box.."

      I don't really get what you're wondering about. The XBox lost $4 billion over its life cycle, the Gamecube made money. So yes, it made more than the XBox, because it didn't lose money.

      As such I'm not sure that the GameCube was a disappointment for Nintendo. First of all be

      • According to Iwata, "It [the Revolution] would be a complete failure if we didn't sell more units than the Nintendo GameCube.". If Gamecube's sales were fine with Nintendo why wouldn't they be fine for the succesor system? The reality is the Gamecube underperformed and Nintendo needs to do better this time around. Nintendo understands this but fans seem to have a tough time accepting it.

        • Re:Long Term Sales? (Score:2, Insightful)

          by myster0n ( 216276 )
          I think Iwata would say that even when the gamecube sold as many units as the PS2. If you're creating a system that's supposed to appeal to a lot more people than your current system, in a really big way, then it's a failure if that doesn't happen. Even if, as I said before, your current console sells a metric shitload of units.
      • First of all because they have made a profit every single quarter of its release. Secondly, the Gamecube is only about 5% behind the XBox in worldwide install base.

        No, they lost one quarter, the one that ended Dec 31, 2003. It was their frist and only losing quarter in the fifty years they have been publicly traded.
    • Maybe never. MS lost 6 billions on the first Xbox, but overall they make around 30 billions each year.

      As long as they can keep those 30 billion coming, this is just a small hit to them.

      Another reason to keep supporting Open Source!

  • And remember, folks... (Score:5, Insightful)

    by chrisbtoo ( 41029 ) on Friday November 25, 2005 @01:43PM (#14114119) Journal
    ... that's "profits fell", not "made a loss".

    • Re:And remember, folks... (Score:1, Informative)

      by Anonymous Coward
      Not only that that, they seem to be right on target to meet their profit forcast. FTA:

      Nintendo's net income for the first half of the financial year was ¥36.6 billion

      Nintendo officials are sticking to full year forecasts of operating profit of ¥90 billion ($758m), net profit of ¥75 billion

      (Emphasis mine)

      So they made almost half of the forcasted income in half the year. Keep in mind that the second half of the year has the Christmas season which brings in more money, so achieving the

  • Gasp... (Score:4, Informative)

    by BigDork1001 ( 683341 ) on Friday November 25, 2005 @01:49PM (#14114149) Homepage
    Oh noes... a system that's near the end of its life is not selling as well any more. No kidding. At this point if I didn't have a GC at this point I'd probably be holding off for a Revolution which will have full backward compatability.

    • Re:Gasp... (Score:3, Informative)

      by johnkoer ( 163434 )
      Actually, I just bought a GC and I love it. I wanted a new system since my PS2 died on me and I decided $400 + games was too much to spend on the 360. If the revolution is going to be backward compatible then any games I am buying right now, I will still be able to use. Plus there are a lot of $20 games available for the cube. I can tell people I want these games for X-Mas and they won't balk at the cost.

      I'm glad I got the cube and I plan on using it well into the years of the next generation of console
      • Got a gamecube when Wind Waker came out and will get a revolution when it comes out (should be able to if it is cheaper than the others, will wait for a price drop otherwise).

        And when I get my hands on a revolution I will give my gamecube to my sister who's got a 5-6 years old boy and a 3-4 year old girl with another kid in the oven and lend them some of my gamecube games (lend as I will still play them once every two or three years) and bring some with me when I visit them (those I keep for myself like Mar
      • I just got one myself to, althought I also got a qoob sx, atleast I spent some cash on original accessories aswell.

        Got a used chiped xbox with replaced harddrive when they was quite new, but I didn't played much. Can't say I play much on the cube either but atleast I play more, and there are more games I would consider playing.
      • For about $60 you can get a cube ($60 for a refurb at gamestop you might be able to find used systems for even cheaper) there is almost no reason NOT to get one right now. You can buy a GC now and a Revolution in a year and it would be cheaper than buying even the low end model of 360 right now. You could probably trade the cube in for a Revolution game in a year (if you can it would almost pay for its self) or give it away to a kid in your fam. or something.

        Plus you can find TONS of great games used for th
  • Seems like game sales for the PS2 are still going strong. With recent releases of Soul Calibur III and God of War, they seem to be doing well.
    • Umm, there is the new Zelda coming out which will be huge, Mario Party 7 is sold out most everywhere, and a slew of other titles are selling just fine. Just because it doesn't get much coverage doesn't mean it isn't selling... and once Zelda releases Nintendo's profits will be up again.

  • NEWSFLASH (Score:2, Informative)

    by voice_of_all_reason ( 926702 )
    Technology-based entertainment products decrease in popularity over time.

  • I applaud Nintendo (Score:5, Interesting)

    by NVP_Radical_Dreamer ( 925080 ) on Friday November 25, 2005 @02:15PM (#14114271) Homepage
    I applaud nintendo for being able to pull this off. In an era where console companies are losing money left and right, they are consistantly able to post a profit. I think much of this stems from innovation of their products. Even if they sometimes fail (gb printer, virtual boy, power glove) the times they hit it, and when they do they hit it big. If you remember, they are the ones who pioneered the handheld controller as an alternative to the joy stick. They also pioneered shoulder trigger buttons, analog sticks, rumble feature, OEM wireless, and are now giving a stab at a gyro based contol system.

    You can call them childish or for kids all you like, but there are few people who can say they dont truely enjoy the vast majority of what nintedo has created.

    • Re:I applaud Nintendo (Score:5, Informative)

      by Erioll ( 229536 ) on Friday November 25, 2005 @02:53PM (#14114451)
      To be perfectly fair, the Power Glove wasn't their failure. I believe it was made by Mattel. I could be wrong on the manufacturer, but it was NOT Nintendo that made that. The other failures though, are of course theirs.

      But the point remains that they are a profitable company making systems and games. They do NOT require "side businesses" to keep them afloat.
    • As already mentioned, the Power Glove was made by Mattel, not Nintendo, Nintendo just licensed them to use it with the NES. Also, the Revmote is not a gyro based control system. It does use gyros to detect rotation, but the big deal is that it uses sensors to detect movement in 3d. It uses 2 sensors and some form of triangulation.

  • Once Zelda Releases... (Score:4, Insightful)

    by rAiNsT0rm ( 877553 ) on Friday November 25, 2005 @02:24PM (#14114311) Homepage
    Everyone seems to forget that The Legend of Zelda: The Twilight Princess is yet to debut, which alone will raise profits substantially. Also Mario Party 7 is virtually sold out everywhere right now and is not included in these numbers.

    Nintendo has had a bit of a weak run, but it is ramping up for one hell of a send-off for the console. Profits are just fine, not record-breaking but they are doing just fine compared to some competition. Also, think of current Xbox owners they got barely 4 years and now they have nothing to look forward to without upgrading... at least Nintendo has stuck with the GC till the very end and continues to product top content. I'll take customer loyalty over profit numbers any day.
    • Nintendo may take a games-centric as opposed to platform-centric approach almost all of the time, and that's why a lot of us like what they churn out, but they're still a business. They make sound business decisions, and they almost always make a profit because of that.

      So let's be honest, sending the GCN off with a bang via Twilight Princess is being done as much to up the value-addedness of the rev's backwards compatability as it is being done out of any customer loyalty towards cube purchasers.
      • Yes, I agree it is not all done just to warm their hearts, but it is still a lot more than MS is doing. Sony always does an OK job here too, but this time around they are dropping the ball a bit.

        The nice thing though is that I can buy Mario Party 7 or Twighlight Princess regardless if I buy a Revolution or not. They are giving people options, and most likely they will have some sort of bonus content built into Zelda when played on the Revolution.

        This is where brand loyalty/fanboy's kill me, they are so loya
    • Yes, but Twilight Princess currently has a release date set for April 2006 I believe. Nintendo's fiscal year ends March 2006, so it won't help their profitability estimates for the current fiscal year.

  • Gamecube sales falling? Not surprising... (Score:3, Informative)

    by Fred Or Alive ( 738779 ) on Friday November 25, 2005 @03:52PM (#14114740)
    ...at least from a UK perspective - practically nowhere sells Gamecube stuff anymore. It's been evaporating from retail for over a year, by now it's pretty much specialist games shops (and even some of them appear to be dropping it, the Game in Redditch no longer sells new games[1]). Frankly, I think it's too far gone here for Nintendo to pull the Gamecube out of it's death-dive. Although The Twilight Princess will probably sell well to the people who have bought the Gamecube, but with such a small retail precence, I can't really see Nintendo shifting many more consoles.

    (Isn't the UK on it's own the 3rd biggest market for videogames? )

    Then again Nintendo are good with this money side of things, and they do have the handhelds as a cash-cow. They also have sensible management (who about two years ago had a revaltion that European gamers do tend to notice if a big game is released in the US months / years before a European release, strangley coinciding with the Xbox beginning to get an upper hand in the console race). I'd say they have a fair chance with their weird Revolution thingy, which seems to either be a valiant failure, or the single greatest change in gaming since [Pong / Atari2600 / NES / Megadrive / PlayStation] (or both of course).

    [1] The Game in Redditch is tiny though, I guess bigger stores still sell it.

    • Re:Gamecube sales falling? Not surprising... (Score:1, Insightful)

      by Anonymous Coward
      It's not surprising that GC shelf space is dropping - that's happening to everything. Right now, my local GAME carries stuff for:

      PC
      Xbox
      Xbox 360
      PS2
      PS1 (still has half a shelving unit! plus tons of preowned)
      PSP
      GC
      DS
      GBA

      That's 3 more systems than prior to the DS launch. I almost feel sorry for those guys, having to deal with so many products, they'd be glad to phase some out.
      I think the GC and GBA have had their store areas reduced in size by proportionally more than xbox and PS2, but it's not as bad as it looks
    • As a note on regions, Sony has 29% of its revenue coming from Japan, 26% from the US, 21% from Europe, and 24% from the combined rest of the world. Not sure how this factors into your complaints about Europe, but it's significantly smaller than Japan or the US.
      • Well your figures do show that Europe at least is the 3rd biggest games market. Considering that Nintendo doesn't have any other forms of revenue other than games, they'd surely want to perform as well as possible in as many markets as possible...

        (BTW, do your figures refer to the entirity of Sony, or just Sony Computer Entertainment?)
        • Ehh... I think they'd be best off doing a PAL convert on the US localization for the UK/Australia, while keeping the rest of Europe on the longer schedule. You crazy Europeans and your different standards for everything.

          Simultaneous release outside that simply isn't going to happen w/o significant delays to US/Japanese releases solely to do that. When hitting the US/Japan they only need to localize for 2 cultures/languages. There are how many languages/dialects in Europe? And how many major languages fo
          • I know Nintendo translates into 7 languages for european games: English, French, Spanish, German, Belgian, Italian, and Dutch.
            • Apart from the Belgian language thing, Nintendo don't seem to translate DS games into Dutch either, they claim to be "5 in 1" for languages[1], the DS doesn't even have Dutch as a language option (the Gamecube does).

              As most of my Gamecube games come in UK / English-specific packaging, they don't say what languages they have (ie: Do they bother with Dutch?), and I'm in no hurry to check.

              [1] English, Deutsch, Francais, Espanol, Italiano
        • I believe just the SCEA division, but their financial record was vague on exactly what those figures represented, it may have been everything.

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