Nintendo: “Sales will fail to meet forecast by a large margin”, $336m loss expected

Friday, 17 January 2014 08:00 GMT By Matt Martin

Company slashes global Wii U sales forecast for the business year by almost 70 percent, to 2.8 million units from 9 million, and its 3DS sales forecast to 13.5 million units from 18 million units.

Nintendo has warned it make a full year operating loss of around 35 billion yen ($336m) due to weaker than expected sales of the Wii U and 3DS. It now expects to sell only 2.8 million Wii U units during the fiscal year – down from its 9 million targets, with 3DS sales of 13.5 million rather than 18 million.

“Sales in the U.S. and European markets in which we entered the year-end sales season with a hardware markdown were significantly lower than our original forecasts, with both hardware and software sales experiencing a huge gap from their targets.”

Software projections have also been revised down from 38 million Wii U games to 19 million, and 66 million 3DS games rather than 80 million.

It had originally expected to make a profit of 100 billion yen ($958.2m). It now predicts a net loss of 25 billion yen ($239.5m) rather than a net profit of 55 billion yen (527m) and net sales of 590 billion yen ($5.6bn) instead of the previous forecasts of 920 billion yen ($8.8bn).

It said: “Giving a detailed explanation on our sales performance in and leading up to the year-end sales season by platform, Nintendo 3DS continued to show strong sales in the Japanese market. The unit sales for Nintendo 3DS in the previous calendar year amounted to approximately 4.9 million units, falling short of our aim of five million units by a small margin. However, as I explained before, given that every gaming device from the year 2000 onwards apart from Nintendo DS and Nintendo 3DS did not reach sales of four million units even in their peak years, we can say that the sales figure for Nintendo 3DS in the last calendar year was indeed very high. However, outside Japan, while its market share increased as we continued to release compelling titles throughout the year, Nintendo 3DS did not reach our sales targets in the overseas markets, and we were ultimately unable to achieve our goal of providing a massive sales boost to Nintendo 3DS in the year-end sales season.

“Using the U.S. market as an example, Nintendo 3DS became the top-selling platform in the last calendar year, according to NPD, an independent market research company, with its cumulative sales exceeding 11.5 million units; however, the estimated annual sales of the Nintendo 3DS hardware remain significantly lower than our initial forecast at the beginning of the fiscal year. In Europe, while the individual markets showed different results, France was the only market in which we experienced relatively strong sales, and we failed to attain our initial sales levels by a large margin in other countries.

“Wii U sales, on the other hand, showed some progress in the year-end sales season as we released various compelling titles from the summer onwards, launched hardware bundles at affordable price points and also performed a markdown of the hardware in the U.S. and European markets; however, they fell short of our targeted recovery by a large margin. In particular, sales in the U.S. and European markets in which we entered the year-end sales season with a hardware markdown were significantly lower than our original forecasts, with both hardware and software sales experiencing a huge gap from their targets. In addition, we did not assume at the beginning of the fiscal year that we would perform a markdown for the Wii U hardware in the U.S. and European markets. This was also one of the reasons for lower sales and profit estimates.”

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