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.
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.
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).
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.