Nintendo posts first-ever annual loss

Selling 3DS systems at a loss contributes to the Mario factory posting $458 million operating shortfall for the year; Nintendo predicts return to profit next year.

Nintendo today confirmed what it had been predicting for some time: the fiscal year ending March 31, 2012, ended with the firm's first-ever annual operating loss. A 36 percent drop in hardware and software sales year-on-year meant a 36 percent drop in revenue, leading the firm to report a ¥37.3 billion ($458 million) loss for the financial year, on ¥648 billion ($7.99 billion) worth of sales.

Mario and friends hope to return to profit next year.

Both losses and sales were smaller than Nintendo had predicted. The firm had predicted full-year sales of ¥660 billion ($8.14 billion) and an operating loss of ¥45 billion ($555 million). The firm said the loss was due to 3DS not fully recovering "from the sales slump early in the fiscal year," despite an aggressive price cut rolled out worldwide from August of last year. That price cut means Nintendo is currently selling 3DS consoles at a loss, but it expects to begin making a profit in 3DS sales again from September of this year.

Nintendo expects to return to profit in its next fiscal year. It is expecting sales to rebound to ¥820 billion and to record a profit of ¥35 billion. It predicts these to average out to $10 million and $440 million respectively over the course of the year. This return to profit will be driven by the release of the Wii U across the world at the end of this calendar year and a number of key software releases.

The firm highlighted the planned releases of New Super Mario Bros 2 for the 3DS in August, Animal Crossing on the 3DS "this fall," and a new Brain Training title "this summer" as reasons for cheer in the coming fiscal year. The firm also outlined plans to expand its Nintendo Network programme that will allow Wii U and 3DS owners to play online, and will be used to provide DLC for its games. The firm also confirmed it was looking into allowing full-game downloads via the Nintendo Network in the future, but it did not offer a timescale for this.

Source : GameSpot