Nintendo hit by weak GameCube sales, DS price cuts

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Terpfen

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From Reuters:


Reuters said:
OSAKA (Reuters) - Japan's Nintendo Co. Ltd. (7974.OS: Quote, Profile, Research) cut its first-half operating profit estimate by one third on Friday due to sluggish sales of its GameCube game console and software in the United States, but boosted its net profit estimates due to currency-related gains.

The Kyoto-based company, known for software titles featuring characters such as Mario, Donkey Kong and Pokemon, also cited price cuts to its "DS" portable game machine and high development costs for a new game system as factors weighing on its earnings.

Nintendo said it now expected to book a group operating profit of 20 billion yen for the six months ended September 30, compared to its prior estimate of 30 billion yen.

It lowered its first-half sales estimate by 8 percent to 175 billion yen.
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So Nintendo lowered profit estimates but is still making money. Okay, good. But Reuters, in typical Reuters fashion, has buried the meaningful part of the article:


Margins have also been pinched by hefty development costs for its next-generation "Revolution" console, Mori said.
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Whoa! Say what, now? Hefty development costs? Now, are these hefty costs a relative cost increase compared to GameCube development, or an absolute increase that puts the Revolution on par with the X360 and PS3 in terms of development cost and time? Reuters, of course, doesn't tell us. I bet you Reggie won't tell us either.

Very interesting news.
 
i told you guys nintendo not making games for a broader audience is killing them. im not saying thats the only factor but it is at least one. i think sales of the psp is killing them. they are a good company if they would just get there mind straight i think they could compete better with sony and microsoft.
 
I'd sure like to see evidence that sales of the PSP are killing them.

You know, like numbers, or statistics, or something.
 
knothead34 said:
i told you guys nintendo not making games for a broader audience is killing them. im not saying thats the only factor but it is at least one. i think sales of the psp is killing them. they are a good company if they would just get there mind straight i think they could compete better with sony and microsoft.
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They are outselling the PSP IIRC...the introduction of wifi (November 14th) will boost their sales as well, the day DS drops to 100 I am buying it.
 
finalgt said:
I'd sure like to see evidence that sales of the PSP are killing them.

You know, like numbers, or statistics, or something.
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GamesAreFun posts weekly Japanese software/hardware sales numbers, and lately the monthly NPD US numbers. Add them to your RSS feed.
 
http://www.m-create.com/eng/e_ranking.html - figures for Japan
The figures aren't represented on this site, but the percentage shares of sales are. As you can see, the DS is even outselling the PS2 and the PSP.

If you want actual figures, the most recent I could find are from mid-September, and are represented here (this includes the first week of GB Micro sales):
http://www.dsrevolution.com/article.php?articleid=672

I am having trouble finding actual, recent North American figures, but I'd be willing to bet that for the most part (most months) that the DS is pushing more hardware and software sales. UMD movies are a different story, but as far as games go - the DS simply has more.

So far as the argument that Nintendo doesn't make games for a broad market... I say that the fact that most of their home-developed games have an E or a T rating makes them far more broad. I don't need an M-rating to enjoy a game, of course. As for the DS, I've been borrowing my little brothers playing some awesome games lately, and I think I'm going to wait till the next price drop (likely Christmas) to get one of my own. With the introduction of free Wifi, and games like MarioKart and Animal crossing on the way, it's a no brainer.

Back to the original article, the "large development costs" likely dont' mean that they are going to make the system bigger and increase (by a large sum) it's power - which would constitute a spending increase of this nature. But there have been rumblings that they're looking to support 720p - which could mean that they're looking to compete with X360 visually. Nobody wants to throw out a system that will be as expensive as the PS3, with its (apparently) huge amounts of processing power.

Realistically, though? They're probably just spending oodles of money perfecting their controller technology, and whatever other surprises they have left to showcase (they hinted at having more things that make you go "wow" recently). I just hope they leave some money left over to market the damn thing. Take some notes from Sony - you don't have to have the best system spec-wise to put yourself at the top.
 
Terpfen said:
Whoa! Say what, now? Hefty development costs? Now, are these hefty costs a relative cost increase compared to GameCube development, or an absolute increase that puts the Revolution on par with the X360 and PS3 in terms of development cost and time? Reuters, of course, doesn't tell us. I bet you Reggie won't tell us either.
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Interesting point, but I believe you're just looking too much into it at the moment. "Hefty development costs" could mean any number of things.
1. Maybe that is simply research&development costs spent on finalizing the revolution's hardware technology, from the new controller, to the internals.
2. In a similar note, perhaps the initial game development costs are being spent toward research and design. Perhaps methods to utilizing the new controller?
3. As you pointed out, if in regards to games, maybe Revolution games are only a substantial investment in contrast to GameCube games, which averaged around 250K, compared to Xbox's average of some three times that ammount. Either way, until we get some basis for comparison. "hefty developement costs" means jack shit. It could just as well be the reporter seeing some big numbers and assuming the worst.

If you ask me, it is a combination of 1 and 2, while Nintendo's slow GameCube sales stems from A) Next-gen buz, and B) The new Zelda game's delay to next year. The folks who only want a gamecube for Zelda are going to hold out for another price drop, or maybe just grab a revolution, since it is backwards compatible. Eitherway, all they see Nintendo for are particular franchises, and until games in those franchises are released, there is no sense for them to buy anything.

Nintendo is still pulling money in; however, so whatever the issues I won't sweat it too much. I have to say the past generation was a bit hard on Nintendo, but the next few years seem more promising to me. I'll wait to see how profits/market share looks after the Revolution has been released. Until then, there is a fair bit of change up, particularly over the last year while developers get their hardware platforms fully researched and finalized.
 
If you look at the Japanese hardware sales numbers, the NDS is outselling almost everything else combined every week for the past couple months, save for the recent weeks since the GBA Micro is selling well in Japan.

On the software side (in Japan), NDS games populate most of the top 10 games every week (a PSP game just showed up in the top 10 2 weeks ago, first time in a while).

In the states, the NPD numbers show PSP and NDS in a pretty close sales battle, but NPD numbers don't reflect sales at Walmat, which is, by volume, the largest reseller of video games and game hardware. I have heard that NDS systems and games are selling very well at Walmart, but PSPs aren't doing as hot. Also, and I have nothing to base this on since I don't follow everything involved, but Sony reports units shipped, whereas Nintendo reports units sold at retail, so the numbers could be a little off.

edit: just looked at the Japanese hardware numbers for the past week.

1. NDS - 43,362 (1,809,768)
2. PSP - 31,702 (1,367,702)
3. GBM - 30,065 (246,900)
4. PS2 - 24,638 (1,476,829)
5. GBASP 10,751 (548,938)
6. NGC - 1,958 (161,449)
7. GBA - 397 (20,384)
8. XBX - 112 (10,223)

2005 sales / Overall sales
DS - 1,809,768 / 3,305,364
PSP - 1,367,702 / 1,849,954
DS lead - 442,066 / 1,455,410

So the NDS isn't outselling everything combined this week, and PSP has surged in sales the past couple weeks thanks to some actual new software and a new color. It is nearly tied with the GBM in sales, but as you can see, the PSP has been outsold by around 440K units up to this point in the year, and has a gap of 1.45 million in total sales since launch.
 
You guys are looking way to far into this. I read a similar article yesterday and its all Revolution R&D. Estimates are down because Gamecube sales (in the US) are reaching the end of life. (Zelda might sell more cubes, but thats gonna be the swan song.)

How do you come up with new technology? Research. Last I heard research costs lots of money.
 
knothead34 said:
i told you guys nintendo not making games for a broader audience is killing them. im not saying thats the only factor but it is at least one. i think sales of the psp is killing them. they are a good company if they would just get there mind straight i think they could compete better with sony and microsoft.
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Nintendo cannot compete directly against Sony and microsoft. Who's going to buy "Gamecube 2" when there is a PS3 or X360 sitting opposite it? The only thing nintendo has to its advantage is that unqiue quality in the games they make, if they give up that and "get there mind straight", they are going to be slaughtered.

As for the high development cost, it doesn't surprise me. The revolution will live or die depending on how well that controller works.
 
I walked into Rhino last night, to get a new game for my Xbox.

I didn't get a single thing.

Why? Almost EVERYTHING is an FPS, and they are all cookie cutter, at that. It's pissing me off. What'd I do? Broke out Super Smash Bros Melee and had some fun on the Cube, that's what.

I did see a game, Shaolin Monks - going to look more into that... Co-op fighting? Maybe a new Double Dragon game? Hmm....
 
Doward said:
I walked into Rhino last night, to get a new game for my Xbox.

I didn't get a single thing.

Why? Almost EVERYTHING is an FPS, and they are all cookie cutter, at that. It's pissing me off. What'd I do? Broke out Super Smash Bros Melee and had some fun on the Cube, that's what.

I did see a game, Shaolin Monks - going to look more into that... Co-op fighting? Maybe a new Double Dragon game? Hmm....
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You must've missed Ninja Gaiden Black sitting there on the shelf.
 
There are quality games on the XBOX.. though i have to agree.. that system has a shit load of generic FPS games..

on the other hand.. i think nintedo dones't have enough.. BUT, it doesn't hurt nintendo i think..
 
If I want to play FPS games, I go to where they are usually better: PC. So no, I don't think lack of shooting games are making Nintendo lose any sleep. That said, I'll be looking forward to shooting games with that new controller...

I will agree with Terpfen, though. The X-box, for me, certainly doesn't warrant a purchase because of their library. However, I think if I did buy one, I would certainly pick up the new Ninja Gaiden game - it looks fantastic, and I used to love that series. I haven't played Shaolin Monks, though.
 
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