Nintendo hopes to rebound with alternative strategy
For decades, Nintendo has been one of the most successful video game companies in the world. But in terms of annual revenue, this year is turning out to be one of Nintendoâs worst.
Last Thursday, Nintendo announced its staggering $925 million net loss for the first half of the fiscal year. Its total net loss â the companyâs first annual loss in 30 years â is projected to be $264 million.
With a combination of disadvantageous factors, such as underwhelming hardware and software sales, price cuts and an unbalanced exchange rate, Nintendo is facing the consequences of poorly executed business moves.
Is this the end to the companyâs impressive legacy?
Thereâs no denying the enormity of the situation. Nintendo has relied heavily on Japanese clientele, but the Japanese yen has recently appreciated, contributing to losses in international profit, from which Nintendo collects 80 percent of its revenue.
In addition, several financial problems surfaced after the March launch of the Nintendo 3DS system. Last August, in an attempt to increase sales, Nintendo dropped the price of the 3DS from $250 to $170. Though this move might have enticed some customers to purchase the unit, it has done little except contribute to overall revenue loss.
With all of these factors deterring Nintendoâs usual success, itâs difficult not to assume the worst looms around the corner. But Nintendoâs plans prove this market tragedy is not by any means an end to the companyâs reign.
First off, to attempt to lessen the impact of this projected net loss, Nintendo hopes to increase sales with two of its most highly anticipated holiday releases for the 3DS. The company expects Super Mario 3D Land and Mario Kart 7,Â the first original franchise-based games for the 3DS, to re-hook the gaming community and to spark more positive word of mouth, ultimately leading to increased sales of 3DS systems.
Nintendo president Satoru Iwataâs recognition of past mistakes suggests this yearâs market loss might not be a complete failure in the end. If anything, this misstep has given Nintendo more incentive to improve the 3DS systemâs capabilities.
âThe company will aim to develop and launch products that can provide meaningful surprises to the public by taking advantage of the companyâs position of being able to make new proposals that integrate both hardware and software, and of its ability to develop products that can be accepted by a wide variety of consumers, irrespective of age, gender or past gaming experience,â Iwata said in a semi-annual financial results briefing with Nintendo on Friday.
Nintendo is hinting at making the 3DS a more mobile device, similar to an iPad or a smart phone.
But can the 3DS really compete on the same terrain?
Judging by the ambitious nature of Nintendoâs plans, the answer is yes.
Since the launch of the Wii in 2006, Nintendo has developed a reputation as a go-to brand for casual gamers. This audience is the same audience that mobile devices, such as the iPad, target with their collection of fun, affordable games available for download.
Nintendo plans to improve its 3DSâ eShop in the near future by adding more downloadable content support as well as a bigger supply of demo versions of downloadable games. The company will also provide recording capability to the 3DS and allow the system to download eShop content while in sleep mode.
In addition, Netflix, which launched as a service for the 3DS in July, has been downloaded on more than 400,000 3DS units.
Itâs a bit alarming that it took a market tragedy for Nintendo to realize that big-name, original software is a must-have when launching a gaudy piece of hardware as overpriced as the 3DS. Marketing the 3DS as an alternative to mobile devices is clearly one of the best moves Nintendo can make to redeem itself from this yearâs stumble. Though Nintendo will have to accept a disappointing net loss come March, one bad year doesnât necessarily mean an end to the Roman Empire of gaming. Nintendo has definitely had its share of disappointment, but bouncing back is just one of its many talents.
Hannah Muniz is a junior majoring in East Asian languages and cultures and creative writing. Her column âGame Overâ runs Wednesdays.