Nintendo revenue tumbles, but profit remains
Cost-control practices enable Nintendo to turn a profit, despite revenue sliding 11.3 percent during last 9 months of 2014.
The last nine months of 2014 were a bit of a mixed bag for Nintendo, the company revealed in an earnings release on Wednesday.
During the period, Nintendo's revenue slid 11.3 percent compared to the previous year, reaching 443 billion yen ($3.8 billion), the company reported. While revenue was down, Nintendo was able to reverse its fortunes a bit, boosting its profit by 484 percent year-over-year to 59.5 billion yen.
Nintendo -- which makes gaming hardware, like the Wii U and 3DS, as well as popular software titles, including the Super Mario franchise -- has been competing in an increasingly hostile market. The company's Wii U is in last place in the console space behind Sony's PlayStation 4 and Microsoft's Xbox One. Nintendo also has been negatively affected by a growing contingent of casual gamers migrating from its platforms to smartphones and tablets.
For years, Nintendo has maintained that its strategy of delivering casual games that rely on motion and other concepts would be successful. While that was certainly true with its Wii console, Nintendo's Wii U and 3DS haven't attracted the same level of appeal. That is, perhaps, best reflected in the company's revenue figures, which have fallen off a cliff over the past several years. During the last nine months of 2010, for instance, Nintendo's revenue was 808.8 billion yen -- nearly double what it's generating in sales right now.
Despite its troubles, Nintendo has been able to stabilize its business. The company generated a profit of 59.5 billion yen between April and December 2014, which was actually more than its profit in 2010 when revenue was much higher. Nintendo said that it expects to generate a 30 billion yen profit this fiscal year, which ends in March. During its last fiscal year, Nintendo lost 23.2 billion yen.
A key component in Nintendo preserving its income has been cost-control: The company's expenses in 2014 were significantly lower than they were during the same period in 2013.
Still, Nintendo needs to sell more hardware and software to compete more effectively in the gaming space. While unit sales were up in 2014, the Wii U has reached just 9.2 million unit sales worldwide since its launch in 2012, placing it far behind the PlayStation 4, which has sold more than 18 million units. Nintendo also noted that its 3DS portable has experienced slumping sales, with the company selling 7 million units in the last nine months of 2014, compared to 11.6 million the previous year. Software sales on the 3DS were stagnant.
Nintendo did not immediately respond to a request for comment