Nintendo Profitable Again Despite Harsh Christmas

Achieves "impossible" Wii U software tie ratio

Nintendo’s return to profit came amid a bitter sweet earnings report today. The Japanese video game giant seems to have finally gotten its finances under control, but were battered by a harsh Christmas period.

The company managed to pocket over 14 billion Yen (AUD$146 Million) in net profit which is quite meaty compared to its 2011 result of just 48 billion Yen (AUD$503 Million) in loss over the same period.

However, it wasn’t all great news from Kyoto as Nintendo also revealed slower than expected Wii U sales thanks to sluggish performance at retail over Christmas. The company’s latest console, Wii U, sold a global total of 3.06 Million units up until December 31.

This number may not look alarming when you compare it to Wii console sales, which totalled 3.19 million in the same period following its launch, however that console went on to amassing a total of 5.84 million by March 31. Nintendo has conceded recently that high profile Wii U titles have been set back until after March 31 this year, which is why they’re not expecting such strong numbers this time around.

Wii U software sales were healthier, however, with the company booking 11.69 Million game sales worldwide ending December 31, 2012. This means the software-console tie ratio is 3.8:1, a figure not far off Nintendo’s original plan to achieve 4:1 (four games to every one console) which certain video game industry analysts scoffed at back in 2012.

The slower Wii U sales forced Nintendo to decrease their original estimates of 5 Million consoles sold by March 31 to 4 Million.

And while Nintendo 3DS hardware and software was stronger than the same period in the previous year, it wasn’t enough to offset the decrease in Wii and Nintendo DS sales. In a statement released tonight, the company explained:

“While Nintendo saw year-on-year increases in the sales of Nintendo 3DS hardware (up 11% year on year) and software (up 41% year on year), those gains were not enough to offset decreased sales of Wii and Nintendo DS hardware and software. Furthermore, the strength of the yen averaged against the euro in the first nine months of Nintendo’s fiscal year contributed to an overall 2.4% year-on-year decrease in sales.”

Nintendo recently outlined some strong plans for Wii U in 2013, including several high profile titles such as Monster Hunter, Super Mario, The Legend of Zelda: The Wind Waker HD and a new title from the creators of Xenoblade. The handheld console, Nintendo 3DS, will also receive two new Pokemon games by the end of the year.

So while Christmas 2012 let the game industry down, all signs point to a better sales season this year.

Nintendo executives will face investors head on tomorrow for a Q&A, which if history has taught us anything, should be translated into English in the coming days.

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