Nintendo Posts First Annual Loss
The phrase “it prints money” has long been used in reference to almost every device or game Nintendo has produced. The publisher (and symbol of classic gaming) has been profitable for the entirety of its existence in the field, year after year beating the odds due to high sales of both hardware and first-party titles, while keeping their production costs down. Whereas the Sony method has been to sell hardware at a loss, initially, Nintendo has always sold its devices at a profit.
Enter the 3DS and its drastic price cut, dropping by almost $100 mere months after launch. For the first time, Nintendo has been selling one of its consoles at less than cost, losing money with each unit they produce. The final effect? A $455.9 million operating loss for the 2011 fiscal year. Nintendo is optimistic, though, predicting that the cost to manufacture the 3DS will come down below the sale price within the next year and that its strong sales, combined with sales of the Wii U, will result in a $429 million operating profit for the 2012 fiscal year.
Analyst Michael Pachter, though, is wary of whether Nintendo can truly bring down the 3DS’ manufacturing costs by so much. Further, he worries that, with competition from the Vita, the company’s handheld sales will decline. Regardless, this is a dubious milestone in history: the first time Nintendo has ever posted an annual loss.
By Shelby Reiches