Is this the beginning of the end for Nintendo?
|NEWS - VIDEOGAME NEWS|
After a failed launch for the 3DS and outcry at the Wii-U's design, Nintendo are losing money for the first time in almost 30 years...
Some of you might remember that back in June of last year we ran this piece on the loss of confidence in Nintendo shares after the Wii-U was unveiled. Well, it looks like this trend continued, because this year Nintendo isn't posting its usual high profits; it is, in fact, making a huge loss instead.
Companies making a loss in this economic climate may not seem very much like news, but for Nintendo, this will be their first annual loss in 30 years, and is sure to worry the investors. In fact, last week Nintendo stock dipped to the same point it was at in 2004, back before the DS and the Wii sent it sky-rocketing.
The reason for this big fall in stock value is these huge losses they are posting this year. Nintendo always knew it was going to be a bad year, they predicted a loss of 4.2 billion yen (34.5 million pounds), which was pretty large for a company that was used to sky-high profits. But now they are stating that the actual losses for the year are more like 45 billion yen (369.7 million pounds) which is an awful lot more, and enough to scare even the most die-hard investor away.
But why the losses? The simple answer is that people are not buying as many hand-held's as they used to. With the seemingly endless rise of the smartphone and the tablet PC, the market for hand-held gaming is becoming pretty crowded. This was already clear back in July, when Nintendo president Satoru Iwata took a 50% pay cut to compensate for the terrible sales of the 3DS.
It would seem that Nintendo's decision to move into casual and family gaming is backfiring, as online and mobile games are dominating the market, and customers are unwilling to purchase another console when their phone or tablet is already more than enough to keep them satisfied.
So what's next for Nintendo now? The company still plans to launch the Wii-U at the end of 2012, in a launch that will be make or break for the company's consoles. The losses this year are big, but Nintendo can still swallow them and come out on top, but if the trend continues through the coming year, then investors are going to lose faith, and we will see the stock plummet even further... It looks like it is going to be an interesting year for Nintendo...
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