Haters, rejoice! Nintendo has updated their financial forecast for this fiscal year, and things are much worse than expected. Wii U and 3DS sales forecasts were respectively revised to 2.8m and 13.5m, down from the previously expected 9m and 18m. The previous $1 billion operating income forecast suddenly became a $350 million operating loss, and even the weak Yen won't put them in the black this time. Exchange rate gains would have allowed Nintendo to squeeze a tiny profit, but due to some tax stuff they expect to end up with a $240 million net less. And there's still time for the results to get even worse. To be clear, missing the original forecasts, never credible and ludicrously optimistic in the first place, isn't the the big deal. The big deal is that, even though no one took that target seriously, no one expected a loss either
Yes, we're not investors, we don't hold a stake a Nintendo or any other game company (maybe some of us do, but that's certainly not what drives the sales yelling , er, conversation), so as long as we're having fun, sales shouldn't matter, right? That's true to a certain extent, and the whole sales brouhaha among gamers can get seriously ridiculous sometimes, or most of the time. It most definitely shouldn't matter who's selling MORE, or who's "winning". I've seen a game site present PS4 and Xbone launch figures with a "no matter which console you picked, you made the right choice". It reminds me of an amusing
satirical article going around about Wii U sales supposedly skyrocketing (which was, even more amusingly, taken seriously by way too many people) that pokes fun of this all too prevalent and utterly bizarre attitude among gamers. Here's a highlight: “Boy, was I wrong,” said Medulla Oblongata, a previously unsatisfied Wii U owner. “I also own a PS4, and for weeks I was thinking, ‘Man, PS4 sales are going to overtake the Wii U soon.’ I used to hate the Wii U for that. But now that I know the Wii U is almost at 10 mil, I’ve been enjoying my Wii U so much more. The games just look and play better on it now.”
However, sales do matter in the sense that a company won't make the products we like unless it's a good business (goodbye golden age of classic RPGs and JRPGs, I hardly knew ya). I like Nintendo products and I want them to keep making more of them, and so it's in my best interests that they do good business, and right now they aren't.
First let's get all the (mostly justified) caveats that some Nintendo enthusiasts will certainly bring up out of the way. Yes, Nintendo is not going anywhere. Yes, they have huge cash reserves and financial assets and could lose money consecutively for decades before going under. Yes, the media will have a field day with this, and we should expect another fierce round of Nintendoom, with the same tired mantras ("path to irrelevance", "follow in Sega's footsteps", "make smartphone games", etc) spewed over and over again. Yes, media and analysts can't stop talking about Nintendo because it's an easy way to get clicks and attention, and yes, Nintendo "analyses" are chock full with double standards. There are way too many examples to give, but for the sake of brevity I'll stick to just one: Analysts expect Sony and Microsoft to sell 10 and 8 million money-losing consoles a year, respectively, and they call that "thriving". Nintendo sells "only" 13 million profitable handhelds a year? Holy crap, take your ipads and run for the hills!
Yes, I wrote yes way too many times.
Pictured: not Nintendo's finest hour
To be clear, none of the above is out of malice or some big conspiracies, Nintendo is just too entrenched in our brains and thus gets an inordinate amount of attention and scrutiny. Almost everyone connected to the industry somehow, no matter how tangentially, was heavily influenced by Nintendo one way or another, and those memories stick. Whether it's a developer, publisher executive or retail manager being bullied by almighty Nintendo in the 80s-90s or a critic/analyst who fell in love with Nintendo games growing up, Nintendo is always there in a big way, and those memories stick with us. Which means that today, Nintendo's influence on our puny little brains far exceeds its actual market importance. Nintendo used to be 90% of the market back in the day. These days, even though its revenues are twice as big, the industry grew so much they account for "only" 10% of it, but shouting NINTENDO is still the easiest way to turn lots of heads towards you, because we're still shaped by that 90% Nintendo.
All that is true, but what concerns me here is that this will be the third straight operational loss and the second net loss in three years. That suggests structural problems rather than just a bump in the road, and if they don't fix it they might panic and resort to short-term fixes, chiefly mobile/F2P games. If that happens the games (and to a lesser extent the hardware) I like so much eventually might cease to be, and I most certainly wouldn't want that.
Not all is bad news. The Wii U limped the entire year, but did respond to Mario 3D World and the price cut in the holidays. December sales were 26x September levels in Japan (where there was no price cut, and the "normal holiday boost" isn't anywhere close 26x), while December 2013 was its best months ever in the U.S according to the NPD, which means it sold more than the respectable 460k it did in December 2012. The crucial challenge now is making sure the momentum holds in make-or-break 2014. It won't be easy, but with Mario Kart and Smash finally launching, as well as the likes of X and Bayoneta to sweeten the deal for core fans, plus several others, including some sure to come surprise announcements, there's a chance.
But wait, I hear you say, "isn't that what you pathetic Nintendrones have been saying this entire year?" Not really. Well, I can't speak for other drones, but it's definitely not what I have been saying. Games like Monster Hunter, Pikmin and Wonderful 101 are important and definitely help sell systems in the aggregate, but were never going to be THE system savers, and nobody with any common sense expected that. What about Mario 3D World? That is definitely a system seller, and despite the screams that it "flopped", December numbers show it did sell systems. Even so, it is still not the Wii U's biggest hope. 3D Marios tend to be favored by core gamers, but overall they are the least popular Marios (meaning they sell "only" in the vicinity of 10 million copies). Mario Kart is far bigger, and the Wii U's biggest hope.
I was actually more startled by the 3DS situation. The dismal Wii U numbers were expected, but I expected much better from the 3DS. It's not that it's not doing well, obviously, far from it. It is indeed the best selling system in the world, but from the non-stop good press and big numbers and superlatives being thrown around all year long, I thought it was well on its way to meeting the reasonable 18m target. However, it's going to fall short by 4.5m. It's still doing really well, but not as well as we thought. In Japan, Nintendo all but met its 3DS goal (missing it by just 100k), and it was widely reported (and confirmed by Nintendo) that the string of 2013 games buoyed the 3DS in the west and grew its market share, but apparently not quite enough. Also of concern is that, even though 2013 saw 3DS heavy hitter after 3DS heavy hitter and was widely hailed as "the biggest year ever" for the system, hardware sales are actually expected to dip below 2012 numbers. To be sure, the handheld market is in no immediate danger. Nintendo, once again, ignored the conventional wisdom and proved there's still a solid handheld market, 3DS games are selling as well as ever, and Puzzle and Dragons smashing 3DS success shows mobiles and handheld games can happily coexist. Even many previously "stop making hardware" analysts now praise Nintendo's handheld division. Even so, the inability to push past 14 million annual sales and the mild year-over-year dip despite all the stars aligned in its favor suggest that the ceiling may be lower than thought, and raises questions about its long term future (by which I mean 10-20 years).
Wii U sales may have shown encouraging holiday moment, and Nintendo still has a clear winner with the 3DS despite the troubles described above, but this will be a very challenging year. Already, weekly Wii U sales in Japan are back to 2013 levels even though Mario 3D World continues to sell well, and 3DS weekly sales are way down from last year's level. Wii Sports Club is nowhere to be seen in the Eshop charts (and finding a 2-player game is sometimes impossible, showing how few players it has. And of course, Nintendo had to region lock the goddamn online), Wii Fit U also doesn't seem to have made much of an impact. I don't know exactly what Nintendo will do, but either further price cuts and/or hardware redesign are safe bets. I do, however, offer two prediction I'm quite confident in (feel free to call me out on it later!): firstly, I think it's inevitable at this point that Nintendo will introduce a Gamepad-less Wii U. They've had a year to gauge consumer response, they know they need to lower the price, and they know the Gamepad mostly had nothing to do with however many Wii Us they sold (I say mostly because it was definitely a factor in my purchase. I think it's neat, and I love the idea and it makes some games play much smoother, so I'll be sad to see it marginalized and eventually dead) Nintendo is stubborn, but not stupid. I don't think the Gamepad will vanish, rather I think they will sell a "basic" Wii U without it, and a "premium" Wii U with it. Naturally, it means the Gamepad will also be sold separately for basic purchases who decide to upgrade later. However, odds are the $100 cheaper will be the best seller by far. Hopefully Nintendo won't ignore the Gamepad completely (I don't think they will because they are Nintendo, but you never know), if they at least keep implementing off-tv play and the second screen for map and inventory (really helpful in Zelda!) management, which is basically what they are already doing, I'll be happy.
Secondly, the current 2DS will be axed and replaced by one that's just like a regular 3DS sans 3D, and then introduced in Japan. We might even see a 2DS XL. What finally sold the 3DS wasn't 3D, it was the games, and Nintendo knows it. Offering a $130 3D-less 3DS was a great idea, but I believe the form factor, ostensibly aimed at children, was a huge turn off, and a big factor in its failure to move more 3DSes. A redesign just might do the trick.
If only the same could be said of Nintendo
Nintendo is undeniably going through a different period, partly due to market forces outside its control (chiefly casual-siphoning mobiles) and perhaps even more so due to spectacularly boneheaded moves and even worse execution. On the bright side, if changing market conditions were the entire problem then things might really be hopeless, but at least Nintendo can work on its own end, and history shows us Nintendo with its back against the wall is Nintendo at its finest, and if anyone can succeed when everyone is saying (hoping?) it's impossible, it's Nintendo. Go Ninty, we're rooting for you!
Finally, before capping off this monstrous text wall, I have a hearty request to my fellow Nintendo fans: please, please, please, pretty please, resist the urge to run to every single one of the hundreds of clickbait/hyperbolic/outright ignorant/intellectually dishonest Nintendoomed articles that will pop up the entire year to furiously comment on the error of the writer's ways. Those articles exist solely to get as many people to do just that, and you will be playing right into it. Resist the urge to "correct" the worst of the bunch, because those people don't care about being accurate, they just want the revenue and promotion. Don't help them. It's like hating Sarkeesian or Pachter and letting the world know how much you hate them at every turn, that's exactly what they want and it only feeds the monster.
Edit: holy shit that was fast. In the time it took me to write this, a serious and informative Forbes article went up with the not-at-all-troll bait title "Dismal Wii U Sales Move Nintendo Closer To 'Game Over"
. I won't link to it, but highlights include "The once unassailable 3DS handheld is also in free fall. Instead of selling the 18 million the company expected, it will deliver a third less."
(apparently dropping from 13.9m to 13.5 million constitutes a "free fall". Oh, and 13.5 is exactly one quarter less than 18, but who cares, one third sounds scarier!) and "Basically, at this point Nintendo would be lucky to even match that sales total in the upcoming fiscal year, suggesting the console could be headed for orphan status. Nintendo has been down this path before, having failed to gain traction behind the Game Cube in the early 2000s
" (it's a historical fact that the Gamecube was such a disaster that Nintendo quickly killed it off... right? Yes? No? Maybe?). Fun stuff!
Hold fast, Nintendrones! Don't feed the monster!