Slumping Wii, DS sales hit Nintendo's earnings

The games company endures another disappointing six months. Never mind the role of a stronger yen--it's the weakness of the Wii and DS that has to be the real worry.

Nintendo

Nintendo has endured an extremely difficult six months.

The game company lost 2.01 billion yen, or about $24.6 million, during the six months ended on September 30. During the same period last year, it generated a profit of about of about 69.5 billion yen. Revenue for the six-month period just ended was over 363 billion yen, representing a steep decline from the 548 billion yen revenue Nintendo posted during the same period in 2009.

Although sales are slumping, Nintendo said that a key reason for the steep decline in its financials can be attributed to the strength of the yen. According to The Wall Street Journal, the currency's appreciation over the past year has helped slice about 28.1 billion yen from its revenue.

But the Wii and the DS aren't helping matters either. Nintendo says it sold 6.69 million DS units during the six-month period just ended. During the same span in 2009, it sold 11.7 million DS units around the world. The company shipped 4.97 million Wii units between April and September, down from the 5.75 million Wii consoles it shipped last year.

Nintendo's DS software sales declined from 71.15 million units in 2009 to 54.84 million units this year. On the Wii side, the company's software sales dropped from 76.21 million software units to 65.21 million units.

Although the Wii and DS are still leaders in their respective markets, the declining sales have to be a big concern for Nintendo. After all, in the console space, the Xbox 360 is enjoying strong sales. NPD reported earlier this month that so far this year, Xbox 360 sales are up 34 percent compared to 2009. September was the console's "best month of unit sales," while both the Wii and Sony's PlayStation 3 saw sales decline year over year.

On the mobile side, Nintendo has little to worry about, at least in regard to Sony's slumping PSP. But mobile games are quickly becoming worrisome. In a recent interview with Forbes, Nintendo of America president Reggie Fils-Aime said that he believes Apple can hurt Nintendo more than Microsoft " in the near term ."

He might be right. According to Flurry Analytics, Apple's iOS market share in the mobile-gaming space at the end of 2008 was just 5 percent. By the end of 2009, Apple's market share grew to 19 percent. Over the same period, Nintendo's share declined from 75 percent in 2008 to 70 percent in 2009.

 

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