In a relatively unsurprising move, Nintendo has slashed its financial forecast into taking a loss for the fiscal year ending in March of 2014. Until 2012, Nintendo was considered an evergreen company: it had not posted an annual loss in over thirty years. However, this year’s forecast will mark the third consecutive year of monetary bleeding for the company, and most analysts are pointing the finger at the Wii U.
From a consumer’s standpoint, the blame is understandable: Nintendo’s latest console has more or less done nothing in its year and change on the market, and third-party developers have fled from the system en masse, leaving only two heavyweights (Activision and Ubi Soft). The latest entry in the Mario series, Super Mario 3D World, barely registered in retail against the one-two punch of the Xbox One and Playstation 4 being released, and the horizon looks grim for any first-party titles, as few have been announced. There have even been rumors circulating that Nintendo has internally given up on the system and is focusing on its successor, after several developers have (anonymously) blasted the machine for being woefully underpowered.
It’s actually kind of amusing to me to hear these reports of doom and gloom come in, because they’re for the most part identical to the ones that came in about the Wii, and the 3DS, and the GameCube, and the Nintendo 64. In a fit of irony, most of the complaints about Nintendo “only releasing rehashes and more of the same Mario baloney” are in fact copy-and-pasted from the last console generation’s whining. What makes things different this time isn’t necessarily that the consumer moaning is omnipresent, but that the fiscal success isn’t there anymore to put the lie to it.
I own a Wii U, I’ll say that much. And I enjoy the machine for what it does, which is at the moment streaming videos and playing Wii discs. I’m not going to pretend that there aren’t some serious problems with the hardware, because there are: the lack of internally-upgradable storage, the lack of quality games for the system, the criminal underuse of the GamePad by other developers, and so on. But do I think that Nintendo is going to fold because of the machine’s lack of adoption and enthusiasm? Not in a million years.
And that is because of the other piece of Nintendo kit that I own, and that I’d wager a lot of people own: the 3DS, or one of its ilk. People tend to forget that during the dark days of the mid-to-late 90’s, Nintendo was kept afloat solely by the sales of its handheld division after its biggest third-party developer of the time, Square, jumped ship for the Playstation. Pokemon is literally the only thing that kept them going through the N64 and GameCube eras, and that’s not a bad thing. But the introduction of smartphones, and the ability for high-quality gaming experiences to be had on those devices, put a serious dent in the forecasts for the 3DS.
Again, it’s easy to think that Pokemon was the sole savior of the 3DS, but Pokemon X and Y only came out this past October. The system gained traction through the support of some very dedicated third-party developers like Atlus, Sega, and even Square-Enix. The handheld has made strides on both sides of the Pacific, and because of this Nintendo’s future looks relatively bright in that arena.
But that still leaves the question of the three consecutive annual losses. On the bright side, the amount of each loss has been dwindling: from a half-billion US dollars in 2012 to just over 300 million USD reported today. Some of this could be attributed to the lousy exchange rate of yen to USD in ’12 and ’13, but certainly not all of it; the rate has hovered around 100 to 1 for about a year now. If I had to guess (from an outsider’s perspective), I would say that the fault lies in the development and rollout of the ill-fated 2DS device, released alongside the Pokemon games in October of 2013. Exactly nobody was excited for the device, Nintendo failed to make a compelling case for its existence, and it honestly should have just been scuttled before they could blow millions on production and distribution on something which stores are having a hard time justifying shelf space for.
Three straight years in the red obviously looks bad for Nintendo, especially after three straight decades of profitability. Things look especially dismal for company president Satoru Iwata, who after last year’s losses made a public commitment to a 1 billion dollar profit for the coming year. To say he has egg on his face is a bit of an understatement at this point, and while there were rumors that he would resign in 2013 as punishment for the previous losses, I imagine several investors will be calling for blood this week. As exits go, Iwata’s would be bittersweet: while he’s run the company into some choppy waters, he also ushered in an era of unprecedented showmanship with the company’s marketing tactics, eschewing big trade events like E3 and CES in favor of more frequent, understated Nintendo Direct events. The company has also moved towards day-and-date global releases and pushed its digital infrastructure (somewhat) into the 21st century through the use of the eShop and full digital releases.
But Nintendo has been dead-last before, and they will be after their next resurgence. This is a company that will not die, no matter how badly their consoles sell, simply because they know how to make good games. Nintendo has always maintained that they will not make the switch to third-party development, and I imagine that’s a promise that their next CEO intends to keep. If that means that they continue to throw money down the “goofy unnecessary project” black hole, it just means that they have to work that much harder with their games. The company has never been one to rest on its laurels nor to wallow in defeat after a few bad steps. We may see a true next-gen system from them make its announcement this year, or we may see an “Ambassador” program similar to that which stimulated 3DS adoption. The form of the recovery is, by and large, irrelevant. What matters is that it’s a good bet that it will happen.
I mean, come on, this is the company that invented the 1-Up Mushroom; do you honestly think that they don’t have a few in reserve for themselves?