Nintendo Ekes Out $9M Profit As Wii U Sales Cross 10M To Date

29 Jul 2015 | Author: | No comments yet »

Cheap yen, better sales lift Nintendo to quarterly profit in reversal from red ink last year.

It’s earnings day at Nintendo, and the Japanese company surprised watchers by eking out a unexpected, and albeit meagre, $8.9 million profit for its most recent quarter of business. Japanese gaming icon Nintendo posted a profit for the April-June quarter on Wednesday thanks in part to surging sales of a game in which players can squirt ink all over the place and transform into squids. “Splatoon” for the Wii U console launched globally in May and has since sold over 1.62 million units, Nintendo said as it notched a profit of ¥8.3 billion (US$67 million) for the three months to June 30, a reversal of a ¥9.9 billion loss a year earlier.Nintendo Co. returned to profit helped by sales of the new Splatoon game and the weaker yen in the last quarterly results overseen by President Satoru Iwata before his death. Nintendo sold less than half a million Wii U consoles these past three months, but, nevertheless, that was enough to push the near-three-year-old device’s total sales to date past the 10 million mark. Nintendo Co., the Japanese video-game maker of the Super Mario and Pokemon franchises, said Wednesday that April-June sales rose 20 percent to 90.2 billion yen ($729 million).

Sony notched that very figure for the PlayStation 4 in just nine months, which shows the gulf between Nintendo, a beloved company among the gaming community, and the leaders in the consumer console space. The paint-shooting game Splatoon and a weaker yen enabled Nintendo to report a small profit, just after 55-year-old Iwata died from cancer on July 11. Nintendo, which earlier this struck an historic agreement with DeNA to produce mobile games, is sticking to its guns and its original $400 million profit forecast for this financial year. Given the modest start from this quarter and that fact that its mobile games aren’t likely to drop until sometime in 2016, it’s hard to see the company realizing its projection with nothing major in the new release pipeline. The European currency traded at 136.48 yen and the greenback at 123.66 yen on Wednesday, compared with Nintendo’s annual estimate of 125 yen and 120 yen, respectively.

Iwata’s death came only a few months after he announced a tie-up to bring Nintendo characters to smartphone games with mobile gaming giant DeNA, ending years of resistance to phones. Iwata had said the company is working on a new dedicated console code-named NX, with details to be announced next year. “We expect to secure a new source of revenue from a gaming application for smart devices, which will be released by the end of this calendar year,” the company said Wednesday. They have gained 46 percent since March 17, when the company announced the partnership with DeNA, which also will operate membership services that include applications based on Nintendo’s characters. Nintendo resisted turning to smartphones for years, saying its games were designed for its own machines, where players can use a joystick and physical buttons to move through the virtual world. “Everyone seems to be pricing in a smartphone success story for Nintendo,” Eiji Maeda, an analyst at SMBC Nikko Securities Inc., said before the earnings release. With Iwata gone, the responsibility for the larger comeback lies with Super Mario creator Shigeru Miyamoto and hardware architect Genyo Takeda, who are sharing management responsibility in Iwata’s absence.

Part of that strategy includes the launch of the NX game console next year, as well as mobile games being developed in partnership with Japan’s DeNA. Nintendo resisted putting its games on smart devices for years, but it finally admitted defeat on that front in March when it announced the DeNA partnership. Nintendo announced a partnership with Universal Parks & Resorts to offer theme-park attractions based on the Japanese company’s intellectual property.

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