Nintendo turns back to toys to fix its broken business

May 15th, 2014, 23:50 Posted By: wraggster

There seems to have been two main reactions to Nintendo’s recent annual loss of $456m. The most prominent is that these huge losses suggest Nintendo’s time is up.
‘Nintendo is over,’ was what one prominent business journalist said on Twitter.
It’s not true. For all its financial miscalculations, Nintendo’s main software brands remain robust. Pokémon X and Y sold 12.26m units alone, making it one of the best-selling boxed products of the year across all platforms, while the Mario franchise sold around 15m games over the last financial year. These numbers alone point to a company that remains popular despite the failure of its latest console.
The other reaction is just as inaccurate: the idea that Nintendo has such deep pockets that it can afford to make these financial losses. No company can afford to report numbers like this, and if it carries on in this way it will run out of its cash reserves within the next five to ten years.
The suggestions on how Nintendo can turn around its business have been numerous, and we’re not about to make any here. Yes, launching a new blockbuster IP or console are probably the best options, but Nintendo’s problems are immediate and you cannot comfortably turn around a new killer product in the modern games industry in 12 months.
The same applies to cutting the price of Wii U. Retailers told MCV last week that Wii U’s price is simply too high, and it’s hard to disagree. But cutting the price is not a certain fix, and with the company hemorrhaging money it would take a brave CEO to take such action. Nintendo’s immediate problem is short-term: How does it turn its current losses into a profit using the tools and hardware it has already developed?

For all its financial miscalculations, Nintendo’s
main software brands remain robust. Pokémon
X and Y sold 12.26m units alone, making it one
of the best-selling boxed products of the year
across all platforms, while the Mario franchise
sold around 15m games over the last financial
year. These numbers alone point to a company
that remains popular despite the failure of its
latest console.

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