Latest Gaming News

Nintendo Report 37 Percent Plunge In Profit

23rd May 2003, 11:10pm
Nintendo Co. reported Thursday a 37 percent plunge in profits for the fiscal year through March as sales of its GameCube console fell short of the Japanese video-game maker's target in a clear defeat to rival Sony PlayStation 2.

Profits at the Kyoto-based company, which makes Pokemon and Super Mario games, totaled 67.3 billion yen (US$572 million) for the fiscal year ended March 31, down from 106 billion yen the previous year.

Sales totaled 504 billion yen (US$4.3 billion), down 9 percent from 555 billion yen, Nintendo said. Nintendo made 75 percent of its sales overseas.

Since going on sale in 2001, GameCube has taken a sound beating from PlayStation 2, the rival machine from Sony Corp, which has emerged the global leader in the sector.

As of March 31, 9.55 million GameCube machines have been sold around the world — short of Nintendo's goal of 10 million and far below the 51.2 million PlayStation 2 consoles shipped worldwide so far.

Now, Nintendo is about to face Sony's competition in portable game machines as well, where its Game Boy has dominated. This month, Sony announced it will introduce its own handheld, the PlayStation Portable, next year. It did not show a prototype or give a price. Nintendo has sold 33.8 million Game Boy Advance machines so far, including 15.7 million in fiscal 2002.

The arrival of a Sony portable is a big threat to Nintendo at a time when it is counting on Game Boy Advance sales and hoping to sell games that link the Game Boy Advance with the GameCube, said Takeshi Tajima, analyst at BNP Paribas in Tokyo.

"Trying to prevent GameCube from dying out is the only strategy left for Nintendo," he said. "When the gap in market share is this great, a rally from behind is virtually impossible."

Nintendo is forecasting even lower profits at 65 billion yen (US$553 million) for the fiscal year ending March 31, 2004. It predicts sales will improve to 550 billion yen (US$4.7 billion).

In fiscal 2002, Nintendo fared better in selling game software than in selling machines.

It sold 59 million games for Game Boy in fiscal 2002, up 26 percent from 47 million a year ago. It sold 46 million games for GameCube, about triple the 14 million in fiscal 2001.

Nintendo officials have said they no longer hope to compete in making more sophisticated machines. They want instead to make fun software, an effort that won't cost as much but can produce profits.

"It is becoming increasingly more difficult to create new and unique games which utilize the full capabilities of new hardware," Nintendo said in a statement Thursday.

"Pocket Monsters Ruby & Sapphire" sold well, proving that Pokemon games remain strong products, it said.

Nintendo stocks, which has slid over the last year, finished up 3 percent at 8,440 yen (US$72) Thursday on the Tokyo Stock Exchange shortly before earnings were announced.

Fellow Japanese game maker Sega Corp. has also suffered from the competition from Sony but managed to turn a profit in fiscal 2002 for the first time in six years. Sega, famous for Sonic the Hedgehog, dumped its Dreamcast console in 2001 and makes games for PlayStation 2, GameCube and Microsoft Corp.'s Xbox.

Sony's game unit is turning solid profits. Sony is also planning to make the game machine a central part of what it envisions as the future network home, where people use mobile phones, Net-linking cars and TVs, as well as the game machine, to watch movies, read the news and exchange e-mail.
by Damien