What a $91 Million Loss Means for Nintendo

Nintendo has released their 2014 first quarter (Q1) financial results, showing off their landmark Mario Kart 8 software sales — however, they still have a loss of ¥9.4 billion ($91 million USD). While the gaming industry loves to keep up with their favorite companies’ sales and earnings, little know the meaning behind them. What does this operating loss mean for Nintendo and how does it affect them in the long run?

Quarterly losses are by no means doom and gloom for any company — especially when it comes to software. While the summer season is a boon for gaming news, the games themselves don’t normally hit until the holidays. It isn’t uncommon to see generally poor financials during Q1 (April – June). While a ¥9.4 billion operating loss isn’t by any means “peanuts”, Nintendo followers may remember that last Q1 they were dealing with a ¥4.9 billion ($49 million USD) loss — Q1 losses aren’t a surprise for the Big N.

A (silly) misconception of many people following the news is that Nintendo hasn’t made a lick of profit this term — this just isn’t true. They’ve managed within the first quarter to sell ¥74.7 billion ($728 million USD) worth of software and hardware. However, due to the sheer size of the company — along with their investments in upcoming software and conventions like E3 and Evo — they still ended up spending $91 million USD more.

Evo Super Smash Bros. Melee

What’s more impressive are the sales numbers between this and last year’s Q1 net sales. Last year Nintendo managed to sell ¥81.5 billion worth of software and hardware, a $68 million USD difference from 2014’s Q1. However, last year’s Q1 was during the release of Monster Hunter 3 Ultimate, Resident Evil Revelations (Wii U), Luigi’s Mansion Dark Moon, Donkey Kong Country Returns 3D, and Animal Crossing: New Leaf. These were all huge hits for Nintendo, and brought in a ton of money. Meanwhile, this year Nintendo managed their $728 million USD in sales mostly on hardware sales, Mario Kart 8, Mario Golf: World Tour, Tomodachi Life, and a handful of indie titles.

mario kart 8

While there is some room for debate, I think it is hands-down clear that 2013 Q1’s software was critically better than 2014’s; though 2.82 million copies of Mario Kart 8 were sold, this certainly shows how Wii U and 3DS’s market is continually growing.

Don’t expect much for the near future: there are no large releases on the horizon for Nintendo during Q2. However, starting with October (Q3), Nintendo has an avalanche of content (Super Smash Bros. for Nintendo 3DS, Super Smash Bros. for Wii U, Skylanders: Trap Team, Pokémon Omega Ruby/Alpha Sapphire, and Captain Toad: Treasure Tracker, just to name a few).

pokemon-omega-ruby-alpha-sapphire-cover-1280

While Q1 and Q2 are half the year, don’t be shocked by Nintendo’s losses — they are a fan of reverse hibernation. They are a sleeping giant in the summer and a beast in the winter. While this doesn’t spell success for Nintendo, there is no reason to count them out. We have to wait for Q3 for that.


Lou Contaldi is MONG’s Executive Editor. In his off time, he enjoys being aggressively mediocre at Hearthstone. You can follow his incoherent ramblings at Twitter.

6 thoughts on “What a $91 Million Loss Means for Nintendo”

  1. Well, it’s good to know that you write at a gaming site and not give actual investment advice. Companies exist to make money. Sure, a quarterly loss is not that bad specialy when the company is in a seasonal market, and assuming that they spent the extra money in developing the products they’ll be selling in the next high season – which they’re not, most new games from Nintendo have a future release date for 2015 (and those are not even confirmed dates). But when you have like 12 or so consecutive quartely losses, while competitors in the same or similar industries have been reporting profits, and some of those at record highs, then you have to admit that there is something fundamentaly wrong at the company’s core. I’m seriously worried about Nintendo’s ability to stay relevant in the gaming market for the near future. Their pile of cash is eroding at an incredible pace, if they don’t revert the losses they may go bankrupt in the next 5 years or less, and I’m being really serious. I see Nintendo’s decay to be extremely similar to RIM/Blackberry’s. Today you read articles in gaming media and those with positive stories don’t mention Ninetndo at all, and those with negative stories talk only about Nintendo. Same thing happend to the Blackberry a few years back, where you could read articles about iPhone/Android only, as if the Blackberry didn’t exist anymore. Also a $91 million loss over a $728 million revenue is huge, that’s 12.5%. If you were talking revenues of, say, 2 to 3 billion, then you could be writing an article titled “WHAT A $91 MILLION LOSS MEANS FOR NINTENDO”.

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    1. Hey Frank!

      Thanks for responding back to my article!

      I’m not saying Nintendo still isn’t facing an uphill battle — however, the fact that they managed to bridge the gap between this year’s and last year’s loss with only one hit title on a generally underselling platform (Wii U) suggests higher consumer confidence in Nintendo. A 12.5% loss seems huge, until you realize that Nintendo hasn’t had any of their investments come into fruition this quarter (with the exception of Mario Kart 8) and that Q1 is faced with substantial management costs related to sponsoring gaming conferences (Evo and E3, to name a few).

      Fall 2015 is packed with Pokémon, Captain Toad, Skylanders, and Smash Bros. (not to mention the inevitable sales pumping in from the holiday season. Each Q3 since 2011, Nintendo has managed to lessen operating loss, to the point where $160 million USD losses are only $16 million losses. It seems they are poised to finally move out of the red.

      It is no secret to anyone that Nintendo has been in financial hardships since moving away from the Wii.

      The point of the article was to highlight what a $91 million USD loss means to the company at the present market and to analyze the trend of Nintendo’s financials–not to evangelize Nintendo and show how everything is suddenly successful. When it comes down to it, Nintendo’s losses are facing a downward trend.

      Nintendo has a generation to turn things around before they slip into irrelevance. That said, judging from this year’s E3 and the growing consumer confidence (at least among gamers) in the Nintendo brand and IP, it would be foolish to count them out. The next couple of years are going to be critical for Iwata and the rest of the board of directors.

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