Strong DS Demand Lifts Nintendo’s Fiscal Year Results
Nintendo said Thurs. revenue from strong sales of its DS dual-screen handheld game system “more than offset” declines in sales of its GameCube console and Game Boy Advance (GBA) handheld system, as well as “an unfavorable exchange rate for dollar-based sales” in the fiscal year ended March 31. The company said through March 31 it globally shipped a total of 5.2 million Nintendo DS units -- “far eclipsing initial estimates of 3.5 million.” But it wasn’t clear Thurs. how many DS units sold through to consumers.
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The company said overall sales rose 0.1% to Yen 515.29 billion ($4.8 billion) from a year ago, while operating income grew 3.6% to Yen 111.52 billion and net profit soared 163.3% to Yen 87.42 billion. The substantial increases in net profit and recurring profit (up 190%) were “largely fueled by positive comparisons to exchange rates in the preceding year,” Nintendo said.
For the current year, ending March 31, 2006, Nintendo said it expects to post a “modest sales gain of 1%” and a 3% increase in operating profit to $1.07 billion. The company said DS is “expected to be the key driver” again, with worldwide unit sales expected to rise 135% to 12.4 million systems and software units expected to soar 234% to 35 million games.
The company said overall sales outside of Japan represented 75% of its total revenue in the year. The Japanese economy “showed a pattern of recovery” in the year but “a slowdown in consumer spending during the 2nd half of the fiscal year raised uncertainty for the future,” Nintendo said. Besides a “downward trend” worldwide in hardware sales “due to the saturated installment base,” Nintendo said a “gamer drift” phenomenon seen in Japan on software sales “has become more prominent.” It also said growing software sales overseas centering on sequels, sports games and movie- based titles “caused slower growth of the entire market, leaving the business environment in a difficult situation.”
Despite the challenges, Nintendo said it sold more than 6 million units of GBA games Pokemon FireRed and LeafGreen worldwide and saw “strong” sales of its Famicom Mini GBA series in Japan but didn’t offer specifics. Nintendo said it sold more than one million units worldwide of Super Mario 64 DS.
Nintendo again said its DS title Nintendogs was “selling well in Japan” but didn’t say how many units were sold. The game is expected to ship later this year in Europe and N. America. DS hardware sales soared in Japan after Nintendogs recently shipped there. But analysts and game publishers Consumer Electronics Daily interviewed during E3 Expo in L.A. last week were split on how popular they think the title will be in the U.S.
GameCube hardware sales “suffered a decrease due to intense competition,” Nintendo said. But it said GameCube titles Mario Party 6 and Paper Mario: The Thousand Year Door each sold more than one million units.
New marketing gambits -- “especially in Japan” -- also “contributed to attracting a broad demographic including women and older generations who had previously not played videogames,” Nintendo said. Those efforts included exhibitions in 5 major cities and street events, plus TV ads and retail marketing efforts.
As part of its strategy, Nintendo will “strive to develop software which is easily accessible to anyone even without prior experience or knowledge.” The company said it will “utilize the wide variety of franchise characters” in its stable and take advantage of established in-house development experience but also will “create brand new entertainment in gaming which will enable both console machines and handheld machines to interact together, enhance the R&D frameworks including collaboration with outside developers and seek out new talent through the Nintendo Game Seminar.” Details on the seminar weren’t available by our deadline. Nintendo said it has “dedicated itself to expanding future revenue and profit by not only improving functionality of the current platform, but providing more unique products that cannot be created with extensions of existing concepts.” As an example, it cited the “Revolution” console shipping next year. But of all 3 next-generation consoles discussed last week at E3 Expo in L.A., details were sketchiest on Nintendo’s, which, unlike rivals PS3 and Xbox 360, still goes by its code name. While Microsoft plans to ship 360 later this year in Europe, Japan and N. America, Sony plans to ship PS3 in spring 2006. But Nintendo was silent on when in 2006 it intends to ship Revolution.
Other Nintendo declarations Thurs.: (1) In conformity with a previous board resolution, it repurchased 3.6 million Nintendo shares. (2) Chmn. Atushi Asada announced his retirement from the board, effective June 29. Former Nintendo Pres. Hiroshi Yamauchi already announced he was retiring from the board. But Nintendo said both will act as executive advisers. (3) Cash equivalents grew 8% in the past year to $7.7 billion. (4) Because of “wide variances” in currency exchange rates, shareholder dividends for the current year will be based on operating profit instead of net profit like the past year.
Separately, although Nintendo of America indicated at E3 that its next console won’t be able to play music CDs (CED May 18 p6), the company said Thurs. that detail was actually yet to be determined.