Super Mario 3D Land (Nintendo)Last year's decision to slash the price of the 3DS helped the handheld gaming system from falling on its face, but it sure took a toll on Nintendo's bottom line.
For the first time in its history as a publicly traded company, the game maker has reported an annual net loss, today posting figures that were $533 million in the red. That follows a $960 million profit for the previous fiscal year.
There were plenty of reasons for the fall. Top of the list was the 3DS price cut, which has forced Nintendo to do something it had always avoided previously: Sell its hardware at a loss.
Most gaming hardware companies operate on a razor and razor blade model — sell the razor (in this case, the gaming system) at a loss, then make up those losses on high profits from the razors (ie. game software). Nintendo, though, has never been a believer in that strategy, which is how it gathered such a huge cash pile. The company expects to once again make a profit on 3DS sales by the middle of the year.
The sharp dropoff of the Wii in popularity also took its toll on the numbers, as did the strong yen.
On the upside, the loss was a bit better than expected, although that's like saying you only cut off part of your finger. More optimistically, Nintendo says it expects to make a rebound to profitability soon. With the Wii U set to launch later this year, the company says it expects revenues of $10.1 billion and profits of $246.4 million for the fiscal year ending March 31, 2013.
Through the year, the 3DS sold 13.53 million units, said the company. 4.8 million of those were sold in Japan, while the Americas bought 4.7 million. On the software side, the company sold 36 million 3DS games worldwide. The Nintendo DS, meanwhile, boasted hardware sales of 5.1 million, and software sales of 60.82 million.
As for the Wii, it wasn't pretty. Sales of the once mighty console came in at 9.84 million, missing initial expectations by roughly 3 million.