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More losses for Nintendo, despite  Mario Kart 8  success
More losses for Nintendo, despite Mario Kart 8 success
July 30, 2014 | By Mike Rose

July 30, 2014 | By Mike Rose
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    15 comments
More: Console/PC, Business/Marketing



Nintendo continued to see decreased profits and notable losses during the last three months, despite the launches of big name titles like Mario Kart 8 and Tomodachi Life.

Mario Kart 8 sold 2.82 million copies through until the end of June, while the Wii U hardware itself saw 510,000 units sold during the three months ended June 30.

Nintendo says a lack of other hit titles for the console is to blame for the low Wii U sales. The company did not reveal sales figures for either Tomodachi Life or Kirby: Triple Deluxe on the 3DS, but said that 3DS hardware sales reached 820,000 sold during these three months.

Notably, video game sales in The Americas and Europe were actually up year-over-year -- however, game sales in Japan were nearly halved, leading to an overall drop in sales.

Where Japan previously made up the majority of game sales for Nintendo, The Americas is now the company's hottest sales region, with 42.0 percent of sales coming from this area during this quarter.

For the three months ended June 30, 2014, Nintendo recorded revenue of 74.7 billion yen ($731.5 million), down 8.4 percent year-over-year, and losses of 9.9 billion yen ($96.9 million), compared to profits of 8.6 billion yen ($84.2 million) year-over-year.

As always, Nintendo was keen to stress that the coming months may prove profitable. Super Smash Bros. is due to launch on the Nintendo 3DS during September and October, while Pokemon Omega Ruby and Alpha Sapphire will both launch in November.

And the company says that Mario Kart 8 has built momentum for the Wii U platform, leaving the door open for titles like Hyrule Warriors, BAYONETTA 2, Captain Toad: Treasure Tracker and Super Smash Bros. for Wii U to boost Wii U sales in the coming months.

The "amiibo" character figures are also on the way soon, Nintendo noted, and the holiday period should prove decent for the company.


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Comments


Daniel Pang
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As someone who worked at a company that spent a decent chunk of time trying to rip off the Skylanders concept, I don't think the amiibo push will see success.

I mean, the tooling on the figures look really nice, and the Samus Arans and the Links are bound to sell out super fast. But the success of Skylanders has meant that competition in the market has become ever more fierce. Disney's Infinity, with its multitude of licensed Disney characters, has carved up what little remains of the figure/toy pie. To say nothing of Japan's Youkai Watch, and the millions of vending machine QR tokens it's sold to coincide and interact with the game.

What matters for the Amiibo is install base. If it is keyed to the Wii U alone, the install base may not be there to support production of a toy (production which is expensive, especially with the technology that they're doing). And in terms of "cold sales", which is a new concept they're trying to introduce in a market that's already mature (by which kids already own Skylanders or Disney Infinity figures), the barrier to entry just became higher.

Think about it. Given the paltry install base of the Wii U at this point, the consumer would need some massive justification to buy a Wii U as well as an amiibo figure and a handful of games it may or may not work with. The strength of Skylanders was that it came out at a point when the seventh generation of video games had solidified platforms and enough people already owned Xboxes/PS3s, so the barrier to entry was just the price of the game and the Portal of Power add-ons.

Rough times are ahead at Nintendo still. What matters is not some abstract 'momentum'. What matters is games that sell the hardware in large numbers. Mario Kart was one, and it helped the Wii U post good numbers for the last month or so. The only upcoming thing that might do the trick in Nintendo's upcoming slate is the Smash Bros for Wii U, and that has the shadow of Melee hanging over itself like a sword of Damocles (most people upgrading to Brawl found it inferior to Melee and thus would not shell out for a new system again). Zelda hasn't been a system-seller since Twilight Princess, and if Nintendo thinks a Captain Toad game is going to sell the system, they're high on acid.

I'll be picking up a Wii U for Bayonetta 2. Then again, I'm not most people.

Sam Stephens
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"The only upcoming thing that might do the trick in Nintendo's upcoming slate is the Smash Bros for Wii U, and that has the shadow of Melee hanging over itself like a sword of Damocles (most people upgrading to Brawl found it inferior to Melee and thus would not shell out for a new system again)."

I think the new Smash Bros. game will sell very well in its own right and push systems. Most of the people who dislike Brawl enough not to buy the new game are tournament level players who disliked how different it's from Melee (slower movement speed, the absence of specific technical exploits, cleaner presentation). Overall though, Brawl is more polished and accessible then Melee and outsold it by four million copies. The amount of players disappointed in Brawl is so small that it's insignificant and probably won't affect the Wii U's sales.

Daniel Pang
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Brawl is more polished and accessible than Melee? I'd debate that but that's semantics.

What I can argue is penetration.

SSB Melee sold seven million copies on an install base of 22 million. Let that sink in for a second. That means that almost a full third of people who bought a Gamecube owned Melee.

SSB Brawl sold fifteen million copies on an install base of A HUNDRED MILLION. Think about that for a second.

Anyone who is arguing Brawl is more successful than Melee is kidding themselves. The tourney scene is irrelevant in this conversation; what this shows is that if people bought the Wii, they didn't do it to play Brawl. They did it to play.... Wii Sports, which sold 82.5 million. To be fair, about half of that can be attributed to it being a pack-in with the console in some markets, but that still leaves a significant percentage of penetration given the install base. It was the "killer app".

Melee was absolutely the Gamecube's "killer app". Brawl is not the Wii's "killer app".

I believe that the upcoming Smash Bros. for Wii U will give it a small boost in sales. What I do not know is by how much.

Jay N
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Everyone keeps nagging on about the weak Wii U install base, but don't forget that it's still the second most-selling console of the generation, and with the Xbox One's lagging sales, this seems like it'll continue to be so, at least into the holiday season. And if Nintendo were to pull a few aces out of their sleeves for that season, they might well hold the spot going into next year, as well.

The amiboo figurines might just be such an ace. There's no doubt that the Skylanders-franchise benefitted from a matured console generation when it debuted in 2011, a luxury the amiboo-franchise won't have, but the amiibo-franchise is built to be able to take advantage of the long tail in that the figurines themselves are cross-game compatible, even across platforms. If the hardware's done right, the only thing stopping them being a success would be the game developers' lack of creativity.

Which is naturally always a concern.

Daniel Pang
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@Jay

I have no problem with the Amiibo figures. There is an opportunity for Nintendo to make a profit on them, depending on cost of production.

Will it increase sales of the Wii U, though? That's the big question. I have no doubt Nintendo's upcoming game slate will do quite well, but whether it will push sales of the hardware is another thing entirely. First-party software exists to sell the hardware. You know you can't get Pokemon anywhere else but on the Nintendo handheld, so you buy the Nintendo handheld. The same is true for the Marios and the Metroids and the Zeldas - franchises Nintendo has either refused to admit sell better in 2D, burned to the ground, and confused respectively. 3D Mario sales bumps compare unfavorably with those driven by 2D Mario games. There is sales data for this. People bought the Gamecube to play Metroid Prime. Nobody bought a Wii for Other M. And there are some Zelda die-hards who will still buy a Wii U to play the latest Zelda, although I hear the best Zelda in years is on 3DS now anyway.

Anyone who thought Pikmin was going to sell the hardware is really on acid - even if you like Pikmin. I see the same thing happening with this Captain Toad game.

The console is just a box you buy to get to Mario. Having another piece of plastic you need to buy - a piece that adds no appreciable added value to the game beyond a fancy character save slot - only adds to the other odds and ends. The price of the console is itself the barrier to entry. Why increase it?

Bob Johnson
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@Daniel

It's going to be much cheaper to get into Amiibo than Skylanders. You just need 1 figure on the Wii U and your figure will work with multiple games on the Wii U. You don't need to buy a $70 starter pack.

And Amiibo benefits from having characters which are already recognizable much like Disney and Infinity.

Is it going to light the world on fire and send Wii U sales to the stratosphere? No.

But it isn't going to hurt. EVery new game and product they release is going to make existing customers a bit happier to own a Wii U and potential customers a bit closer to buying one. That's all they can do. The proof will be in the pudding. What are the prices of the figures. How do the figures look and feel. What creative/interesting ways are the figures used in the games. How many games will support the figures and how soon will support for these figures spread across their game lineup?

Amiibo will also work on the 3ds by the end of the year. You just need a NFC "hockey puck." NO doubt Nintendo will also release new 3ds models with NFC built-in. IT's a Nintendo-ee thing to do.

And rough times aren't ahead for Nintendo. They've been here for a few years now.

Tyler King
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@Bob

The problem with that comparison is that at $70 you don't just get 1 figure. You get the portal, a full game, and 3 characters. A new game on the Wii U is what $60? So for 10 dollars more you pick up a new portal plus you get 3 new figures.

I have all 3 current skylanders games, but have never paid more than $35 for the each of the full portal packs because I grabbed them 6 months to a year after they originally came out. Yes you could get the full portal pack for $35 within 5 months of launch. So now you aren't looking at a $70 dollar entry fee, you are looking at half that. Skylanders is actually very cheap to get into if you can wait 6 months.

Bob Johnson
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@Tyler

Every game is cheaper if you wait. :)

And you don't need to buy a special game for Amiibo. IT will work with the games you already buy.

Obviously in the beginning this won't quite ring true as Amiibo support will be sparse across the game lineup. But as time goes on support will grow across as many 1st party games as possible and become ubiquitous.....at least that sounds like the plan.


So to me it's different than the comparison you're trying to make. You can get in for only ~$10 over and above what you already own a Wii U or 3ds for.

Ujn Hunter
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Heh... I bought a Wii U only for Bayonetta 2 myself.

Daniel Pang
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@Bob

If it works with the games people are already buying, then why will they buy the figure?

Unless they're collectors, that is.

The value of the game is in the game, not the plastic add-on.

Bob Johnson
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@Daniel

They buy the figure to do the fun things Nintendo puts in the games that require the figures.

Matt Matthews
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Nintendo's digital sales are also down 12% from the same 3 month period last year: from 5.7 billion to 5.0 billion. Compare that to most other companies with a digital segment, and you can see just how hard they are struggling to survive in the new reality.

Bob Johnson
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Yes, but no reason to buy digital on NIntendo platforms.

Carts and discs are cheaper than their digital counterparts. And on top of it have trade in value. Some of the best trade-in value in the industry.

Last you can swap carts between 3ds's. YOu can't do that with a digital version. Big advantage to carts if you have a few kids and a few 3ds's in the household.

Robert Carter
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Nintendo have themselves to blame for lackluster digital sales. When you buy a game its not cross platform, it doesnt transfer to other consoles indefinitely (number of transfers are limited) and even then you can only transfer it to the same type of device (3DS->3DSXL), and worst of all they add titles to their store in a random fashion. Why isnt MegaManX on 3DS, why did it take over a year to put out Mario 3 on Wii-U after it was already out on Wii? etc

They are doing digital so wrong it makes my head spin. Im standing here, cash in hand, waiting for a digital system like Sony, but FF9 on PS3, play on Vita and PS4 because you already own it. Lose your device or get a new one? No problem, its tied to your account!

Nintendo needs to learn how things work in the digital age. It took them over a decade to realize Friend Codes were NOT the way to offer online play. They need to be faster than this.

Bob Johnson
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@Robert

Well to be fair how many games can you buy for the PS3 and also play on the Vita and PS4 for free? I have no idea but are there more games than just FF9 that allows this?

And how is that cross-platform service helping Vita sales?

The limit on transfers between Nintendo devices is on a per year basis if I remember correctly.

I don't see the big need to dump all VC games on Wii U and 3ds owners day 1. Nintendo would rather spread out releases to keep up consumer interest and benefit from any free marketing they get from the weekly or monthly release announcements. I don't think this an issue for the average consumer. I don't think VC sales are that big of a business for Nintendo.


They need to improve in some of the areas you talk about. VC games across both Wii U and 3ds. Software accounts probably.

But I think the bigger issue with digital sales is the software selection & pricing, competition with smartphones & tablets and then the lack of incentive to buy digital vs a cart or disc. The only incentive to buy digital vs cart is convenience of not having to carry a few carts with you. But you lose the convenience of sharing between devices or with friends. And you pay more and get $0 trade in value.



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