Wii for all wins console battle for Nintendo
Net earnings soar fivefold as "non-core gamers" flock to Nintendo's Wii and DS consoles
Nintendo's first-quarter net profits soared more than five-fold, further vindicating the Japanese group's declared policy of making video games for "people who don't like video games".
The company also sharply raised its full-year forecasts on soaring sales of its Wii console and the continued success of its DS handheld machine. Nintendo's success ratchets up the pressure on Sony, whose PlayStation 3 is being outsold by at least two to one by the Wii.
Nintendo posted net earnings of ¥80.25 billion (£326 million) in the three months to June, up from ¥15.55 billion a year earlier. Revenue was up 160 per cent to ¥340.44 billion as the company sold 3.4 million Wii consoles and 7 million DS machines worldwide over the three months.
Hiroshi Kamide, an analyst at KBC Securities, said: The gaming industry has woken up to the fact that theres a real commercial side to non-core gaming. Nintendos been saying this for the last two or three years. Theyre really reaping the rewards of that strategy now."
At the E3 conference, the annual gathering for the computer games industry, in Santa Monica earlier this month, Nintendo extended its strategy of targeting consumers formerly considered unlikely to play video games when it unveiled Wii Fit, a new game for the Wii console.
In what is becoming a signature Nintendo move, the title will come with a new controller. The Balance Board is a pressure-sensitive mat-like device that is used to regulate physical work-outs, tells users if they are overweight and will even scold users who slouch.
The promotional video aired at the E3 lunch event featured a young woman using it to take her through a yoga routine a target market worlds away from the teenage boys who have driven the games industry's past cycles.
For Nintendo games, the company claims, the ratio of men to women buyers has fallen to two to one from an industry average of four to one.
Meanwhile, Brain Training, the 10-million-selling DS title aimed at older people and billed as a cerebral workout, is still selling 10,000 copies a week two years after its launch.
There have also been signs that Nintendo's strategy has made other games groups rethink their strategy. On the eve of the E3 conference, John Riccitiello, the head of Electronic Arts, the largest games publisher, conceded that a barrage of sequels, shoot-em-ups and driving games was "boring people to death".
He went on to suggest that the economics of producing complex titles for technologically-heavy consoles such as the PS3 are not stacking up. A PS3 game costs up to an estimated $20 million, four times that of a Wii equivalent. EA's profits slumped 70 per cent last year, their third successive decline.
Nintendo now expects a 40.6 per cent rise in net profit to 245 billion yen for the 12 months to March, up from a previous forecast for 175 billion yen. Revenue is seen climbing 44.8 percent to 1.4 trillion yen.
Nintendo shares closed up 1,900 yen or 3.5 per cent at 56,400 on the Tokyo Stock Exchange.
The company recently broke out figures showing that sales of games hardware and software are up more than 40 per cent in the UK so far this year compared with the same period in 2006, and have surged more than 110 per cent in Japan. Nintendo, it is estimated, accounts for two thirds of the growth.
They are super rich thats for sure lol. I heard they made the top 10 list of the richest companies in Japan. I think they will only get richer as more time passes. More people will buy more wii's. Still being sold out for almost a year already its crazy how the demand is so high. Its becoming like the invention like the Levi Jeans. Something new that whips the competition out. Global killer i call it lolNintendo now fifth biggest company in Japan
Nintendo zipped past telecoms giant NTT and a major financial group to become Japan's fifth-biggest company by market value on Thursday, propelled higher by a stellar earnings performance on demand for its Wii and DS game gear.
By mid-afternoon Nintendo's stock had climbed 8.1 percent to 614,000 yen, adding to a 3.5 percent gain made on Wednesday after its earnings announcement.
Nintendo lifted its annual outlook above market expectations after quarterly operating profit more than tripled, as its strategy to expand the gaming population to women and the elderly paid off handsomely.
Offering innovative and easy-to-play games, the company's DS handheld player and Wii console have outsold rival Sony and Microsoft machines in recent months.
Its market value now stands at 8.69 trillion yen ($US72 billion), outstripping Sumitomo Mitsui Financial Group, Nippon Telegraph and Telephone (NTT), and Honda Motor which had placed higher in the rankings only a day before. It shot past Sony last month.
The Kyoto-based company revised up its operating profit forecast by 37 percent to 370 billion yen ($US3.1 billion) for the year to March 2008, topping a consensus of a 305 billion yen profit in a poll of 20 analysts by Reuters Estimates.
It also lifted its annual dividend forecast to 960 yen from an earlier estimate of 700 yen.
Nintendo's DS lets users control play with a stylus instead of manipulating a keypad, while the Wii, which competes with Sony's PlayStation 3 and Microsoft's Xbox 360, comes with an unusual motion-sensing controller that can be swung like a bat or a sword.
The creator of such game characters as Mario, Zelda and Donkey Kong raised its sales forecast for the Wii by 18 percent to 16.5 million units for the current business year, while lifting its DS sales target by 18 percent to 26 million units.