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Scan for outdated or missing drivers - takes under a minuteDriver Scan →Repair Windows errors before they cause bigger problemsFix Now →Nintendo reported a consolidated net loss of ¥23.2 billion for the fiscal year ended March 31, 2014—about $229 million in the contemporaneous conversion used by GamesBeat. The Wii U struggled to gain momentum, but Nintendo’s loss had several causes, and its net loss was not the same as its operating loss.
What did Nintendo report for FY2014?
Nintendo Co., Ltd.’s fiscal year ran through March 31, 2014; these are not calendar-year results. In its official report, the company recorded ¥571.7 billion in net sales, an operating loss of ¥46.4 billion, ordinary income of ¥6.0 billion, and a net loss of ¥23.2 billion.
| Measure | FY ended March 31, 2014 |
|---|---|
| Net sales | ¥571.7 billion |
| Operating income | ¥46.4 billion loss |
| Ordinary income | ¥6.0 billion |
| Net income | ¥23.2 billion loss |
The figures and fiscal-year period are from Nintendo’s FY2014 operating results. The $229 million headline figure is a contemporaneous conversion; Nintendo’s reported accounting result was in yen.
Why did Nintendo lose money?
The operating and net losses arose at different stages of the accounts. Nintendo said gross profit increased from the prior year, partly because hardware represented a smaller share of sales and 3DS hardware profitability improved. But selling, general and administrative expenses exceeded gross profit, leaving an operating loss.
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Nintendo attributed pressure on operating results to increased research and development expenses and foreign-currency costs. The yen’s depreciation against the U.S. dollar and euro increased the yen value of costs incurred in those currencies. Separately, ¥39.2 billion in foreign-exchange gains helped lift ordinary income to ¥6.0 billion, despite the operating loss.
The final net loss was mainly due to a reduction in deferred tax assets associated with losses carried forward in the United States. That tax-related accounting reduction, rather than the Wii U alone, explains why Nintendo’s net result was a loss even though it reported positive ordinary income.
Rank #2
- The Wii U GamePad breaks down barriers between you and your entertainment with a 6.2" 16:9 LCD touch screen, motion control system, front-facing camera, microphone, stereo speakers, rumble feature
- Console works with most games from the original Wii console, as well as the Wii Remote, Wii Remote Plus, Nunchuk controllers, Balance Board and many other Wii accessories, so you can continue to enjoy your favorite Wii features
- Play using a Wii Remote controller, the Wii U GamePad controller or a Wii U Pro Controller.
- Four USB 2.0 connector slots are included. The new console is backward compatible with Wii games and Wii accessories.
How badly did the Wii U sell?
Nintendo sold 2.72 million Wii U hardware units and 18.86 million Wii U software units during FY2014. The company described the overall Wii U business as showing “slow growth.” It said hardware markdowns in the United States and Europe hurt profitability, while sales of software—which generally carries higher margins—had not grown enough.
The scale of the gap is clearer beside the 3DS results: Nintendo sold 12.24 million 3DS hardware units and 67.89 million 3DS software units in the same fiscal year. Nintendo credited the 3DS lineup, including Pokémon X, Pokémon Y and Animal Crossing: New Leaf, with helping performance.
Rank #3
| Platform | Hardware sold | Software sold |
|---|---|---|
| Wii U | 2.72 million units | 18.86 million units |
| Nintendo 3DS | 12.24 million units | 67.89 million units |
Unit sales are Nintendo’s FY2014 figures, not lifetime totals. The comparison illustrates the Wii U’s weaker performance relative to Nintendo’s handheld; it does not mean the Wii U accounted for the company’s entire loss.
Independent reader supportYour contribution helps us test, update, and keep practical guides available for everyone.Did Nintendo expect a recovery?
For the fiscal year ending March 31, 2015, Nintendo forecast ¥590.0 billion in sales, ¥40.0 billion in operating income, ¥35.0 billion in ordinary income and ¥20.0 billion in net income. It also projected 3.6 million Wii U hardware sales and 20.0 million Wii U software sales. These were management’s forecasts issued in 2014, not realized results or a statement of current performance.
Rank #4
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Nintendo’s plan centered on software intended to make the console more compelling. It highlighted Mario Kart 8 and Super Smash Bros. for Wii U as key titles. President Satoru Iwata described the strategy this way: “the basic idea that consumers reluctantly purchase hardware only because they want to play with appealing software remains unchanged.”
In its investor Q&A, Nintendo said Wii U production costs exceeding trade price had already been accounted for in the prior fiscal year, and it therefore expected almost no loss on sales of the 3.6 million units forecast for FY2015. That expectation addressed hardware profitability on those projected sales; it did not guarantee a broader recovery.
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