Nintendo's Financial Report

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It's funny. If Sony had done that with, say, standalone DVD players, nobody would care. But because Nintendo is doing it with GameCube, GC is suddenly fucked and going to die.

DVD as a format isn't dependant upon one hardware manufacturer though. In light of the continued growth of the DVD market, if Sony did stop making DVD players for a while it would be seen as down to their products rather than a relection on the entire market.

GC *is* the format though. It Nintendo [EDIT]stop[/EDIT] production in an attempt to reduce surplus stocks, it can mean only one thing; that the format isn't as popular as they were planning, and by quite a margin.

It's hard to see how this won't stir up the debate about Nintendo's future in hardware to previously unseen levels.

Speaking of which, sort of on topic (but kind of off topic)...

It's funny to think that if Sega hadn't been forced to pull the plug on the DC, it would have probably walked away with a clear second place (in terms of units sold) at the end of this generation, leaving MS and Nintendo scrapping over 3rd/4th place. Sega may well have been better set up for a DC 2 than either MS or Nintendo are for successors to their present machines.

Perhaps this is fitting as IMO the DC was the machine that, after the superbly handled PS2, deserved success the most.

Edited, because I managed to mess up the key point in my post. I.e. "stop" production, not even "scale back".

 

[jandar]

I know quite a few companies (including the one I do support for) that scale back production all the time.

Each line is capable of make 60-80K of an item every 12 hours.

full plant production is close to 1.5 million items every 24 hours.

They just closed down half the lines. Too much inventory, not enough sales, yet this company has over 70% of the market its in. (Big money maker as well)

Are they hurting? No, they are simply meeting demand, no sense in having too much stock.

Anyone who works in a manufacturing enviroment will tell you this.


I wouldnt worry too much unless Nintendo's next quarterly statement shows a loss again.


BTW, they just sold another 11000 GC in Japan last week. Still doing strong.

 

[Qroach]

Sorry, But Nintendo isn't your company. You're right cutting back on production does happen all the time. However Nintendo doesn't own 70% of the home console market, if anybody, Sony does. As the reports have stated, Gamboy advance is making nintendo money and gamecube isn't. right there is the difference between the two situations.

The only reason I know what retailers are doing/buying is becuase i'm invovled in that part of the gaming biz now, much more than any year before. retailers are dropping support and hardly picking up units of titles that aren't big names/licenses. Even then they always pick up the least amount on gamecube if it's cross platform. The sales of the consle are slowing. There's less and less developers concentrating on all three systems. then nintendo annouces a stop in production. Even if it's temporary, it's going to scare all the retailers. All of these factors point towards problems.

GC can sell 11,000 units in japan, but fat lot of good that's going to do in north america or europe (the two biggest markets) where it isn't doing nearly as well. Not to forget that the market in japan has been on a decline for years, that doesn't paint a pretty picture for the future in that area as well.

like i said before, Nintendo isn't going to be able to clear that stock by september. When a company like nintendo, that has traditionally NEVER spoken a word about it's future plans so early on, halts production (even for a month) and then starts talking about future consoles, while admitting the current consle hasn't sold well... then something is wrong. I really don't know how you can ignore Nintendo saying their console isn't selling well or that they made mistakes, and turn around and say it's nothing?

 

[Sonic]

My thoughts on Nintendo are that they are in a very special yet fragile situation right now. It's clear to me that a lot of people are looking at them to see what they will end up doing. They need some sort of breakthrough with the consumers if the Gamecube is going to continue to sell and increase sales to a much higher level than what is reported during the quarter. The new president seems to have the weight of Nintendo on his shoulders and I do beleive he can transform the company into a powerhouse in the next generation. Nintendo isn't nearly as bad as SEGA was in the (sort of/somewhat but not really) situation with losing marketshare. SEGA didn't have an outlet that it could have made any major cash from to keep it afloat so they had to go software only.

Nintendo definitely needs to change its image and it needs to do it faster than what it's been taking. The GBA SP was a very good step in the right direction, but hwy not have a GCN SP? I'm sure they could design a new case for the hardware that would look really sleek. But then there is the software to go with it.

I do think Nintendo has made several errors in this gaming generation. It's rare that I see much advertising on TV like I did for the N64. It's rare that I find many people hyping up future Nintendo games, even from the most loyal Nintendo fans I know personally. It's like they aren't in the gaming world itself giving much publicity to itself. Maybe I'm crazy but the GCN isn't doing nearly as well as Nintendo had hoped for. It's becoming increasingly clear that mature themed titles are taking over where cute titles once ruled. I do believe you can keep the same demographic as before but yet also release mature themed titles with the great Nintendo gameplay that we have come to expect from one of the world greatest game maker's. The question is, how do they keep the current younger demographic while gaining users who are older in age?

I don't really think that Nintendo has to do something drastic, but it needs to start making games that catch the eye of the consumer a lot more than Mario, a cel-shaded Zelda, and the same old stuff we've seen for a long time. They have what it takes, but the question is will they do it? Their next console could be quite possibly a huge hit if they surprise the consumer in a big way.

 

[Ooh-videogames]

Microsoft isn't doing that much better either, for every Xbox or GC thats sold, 5 PS2 are sold. Pessimism runs ramped in forums these days, even hipocracy running a muck in these forums. One day your saying don't trust the numbers that Nintendo, MS, and Sony release when it comes to sales numbers. But when Nintendo release's some numbers that doesn't look to good, then you get the response " these numbers came from Nintendo they got to be right I just can't believe its a typo". Everyone need to just say what their truly thinking, I want Nintendo to fail.

Sonic is the only one in here that looks at things with a open mind. The videogame industry is the most unpredictable of all industries.

This feels like politics.

 

[Geeforcer]

Nintendo's president, Satoru Iwata, has also said he wants to move away from increasingly sophisticated and time consuming games, which dominate the games industry at the moment.

The games market shrunk dramatically last year, Mr Iwata said, because players were getting frustrated with the ever more sophisticated games.

Where is the giant rolleyes emoticon when you need one?

So A) Apperently the game market has dramaticly shrunk and B) Those gosh-darn "sophisticated" games are to blame.

 

[PC-Engine]

Anyone who works in a manufacturing enviroment will tell you this.

Exactly.

 

[Qroach]

Ooh-videogames,

Microsoft isn't doing that much better either, for every Xbox or GC thats sold, 5 PS2 are sold.

We're talking about Nintendo here, not MS. MS is actually hitting their revised sales targets, where as Nintendo isn't on the cube. Also, retailers, publishers, and developers aren't removing support from the Xbox. PS2 will always garner more support this generation. But in the case of GC and xbox that's what's wrong with this stituation.

One day your saying don't trust the numbers that Nintendo, MS, and Sony release when it comes to sales numbers. But when Nintendo release's some numbers that doesn't look to good, then you get the response " these numbers came from Nintendo they got to be right I just can't believe its a typo".

1. So you now don't beleive numbers nintendo is saying? when you believed those numbers where nintendo said they were outselling xbox in North ameirca and europe? well what a suprise...

2. The number is either 80,000 or 800,000, it doesn't matter to me. It actually IS supported by various independant sales tracking. Have a look on the GA forums and find a post where someone compiled this earlier this week.

We need to just say what their truly thinking, I want Nintendo to fail.

How about you just say what you're thinking, I don't think Nintendo can fail.

Like I said, nintendo says they are stopping prodution for a few months to clear inventory. Can you tell me just how they are going to move 5 -6 million untis of inventory in such a short time? If you can explain to me how this is going to unfold, and the outlook will turn around for them, then I'll agree with you. let me list the following events that have already occured....

1. Slow GC console sales
2. Lack of any title that has significantly moved systems. lack of popular exclusives other than nintendo's own titles. Lack of appealing to the older demographic.
3. Retailers stocking less gamecube product and sometimes clearing inventory out at a reduced price. Shrinking GC sections in some stores.
5. Publishers dropping gamecube support or only providing ported titles on it. Publishers having a hard time selling large numbers of units to retailers, always selling less units of any given multiplatform title.
6. developers concentrating on Xbox and PS2 more often than all three systems.
7. Nintendo saying sales are slow, admitting they made mistakes with gamecube, by not having enough software. Having a huge inventory of unsold systems and stopping production for a few months leading up towards the end of the year. Also starting to give hints about their next products and promises of the future to shareholders.

This all leads up to something, and not something good. Will they drop gamecube support? no, of course not. They don't have to for other publishers, developers, and retailers to begin to abandon it. Just them annoucing they are stopping production is enough to create a bad vibe with the anyone in the game biz.

Sonic is the only one in here that looks at things with a open mind. The videogame industry is the most unpredictable of all industries.

Sonic is saying the exact same things I've been saying was nintendo's problem, even before the gamecube came out. Of course you didn't think I had an open mind back then. Specifically when I said nintendo didn't have an online plan, which has become extremly clear.

 

[LisaJoy]

"There's nothing funny about this at all. Halting production at this time of year, when you expect your largest number of units needed heading into Thanksgiving/Christmans, is not a good thing! "

Uhm, this is the summer time as of right now, Late Spring/Early Summer is the worst time for game sales, they said they halted production until september, which is a good 2-3 months until the holidays.

 

[ben6]

Problem with that is, you're building up for the holiday season RIGHT now. You start production in September that means you'll be lucky to get those units in stores for October assuming no need for a ramp up of production. I don't know how many units Nintendo intends to have on store shelves for November/December, but to have much SIGNIFICANT new build GCs on shelves for holiday season, you really wouldn't want to start production in September

 

[Teasy]

There's nothing funny about this at all. Halting production at this time of year, when you expect your largest number of units needed heading into Thanksgiving/Christmans, is not a good thing!

Er, man they've halted production because they already have a large amount of GC's. So halting production is not going to mean that they don't have lots of GC's going into the holiday season now is it? If they didn't have lots of consoles going into the holiday season then they simply wouldn't halt production in the first place....

 

[ben6]

Err that's true. But how many unsold GCs does Nintendo have in the channel/their warehouses?

 

[ben6]

For that matter, I wonder how many unsold XBoxes are in the channel as well.

 

[Vince]

Er, man they've halted production because they already have a large amount of GC's. So halting production is not going to mean that they don't have lots of GC's going into the holiday season now is it?

Teasy, you're missing the fundamental point. They halted production because their inventories have grown to such an extent that they've crossed the threshold where they can nolonger produce addition units and create a profit on them in the foreseeable future.

So, then we must ask why the inventories have grown so large. We can attribute this to either: (a) Failing demand in the consumer channel as contrasted with their projections that has resulted in inflated inventories, (b) Someone left the switch in the "ON" position for a few week while on vacation.

Economically, you don't overproduce purposely. It's like a golden rule. Thus, we can only assume the following:

• Sales have faultered by N amount.
• N amount is large enough to absorb the Holiday increase in sales.

This is bad, very bad. I've said it before but I'm a big believer in trends and initiative - probably stemming from the boardgames I play. I tend not to care about the absolute events in the current frame, but try to see who has the initiative going into the next and where the underlying patterns lead.

This is why I don't get involved in the Nintendo-Microsoft Sales Wars. Because the current close condition won't last, it's only a temporary plateau that's become an arguing point. One of them will take the initiative and surpass the other in a large way at some indefinite point in the future. This company won't be Nintendo.

Not only did they loose the initiative, they've publically admitted to the current situation which could have long-range implications as far as publisher confidence (which already sucked) is concerned. This is overlooking the company's other faults as Quincy talked of and what is the most glaring problem in my eyes - the companies mentality towards technological advancement and embracing of this backwards 'pure gaming' niche. And their handling of the PSP and it's wireless/media functionality?!? Lets be honest, they're going to get raped. The company's a long-term dead-end.

 

[Teasy]

Quincy

The sales of the consle are slowing.

Nobody can argue that GC is selling less then Nintendo thought it would, or that its not selling very well overall. But are its sales actually slowing down?.. I'm not sure that's true.

There's less and less developers concentrating on all three systems

Yeah some developers are concentrating less on all three systems, but that doesn't only effect GC.

We're talking about Nintendo here, not MS. MS is actually hitting their revised sales targets, where as Nintendo isn't on the cube

What are Nintendo and MS's revised sales targets?

retailers are dropping support and hardly picking up units of titles that aren't big names/licenses

Which retailers are dropping support?

Geeforcer

So A) Apperently the game market has dramaticly shrunk and B) Those gosh-darn "sophisticated" games are to blame.

Iwata said the problem was games that took many years to develop. He said nothing about people being frustrated by sophisticated games AFAIR.. looks like yet another hack journalist spouting utter crap to try to make Nintendo look bad. Unless this is some new comment that I didn't see, but I doubt it.

 

[Kolgar]

Nintendo's president, Satoru Iwata, has also said he wants to move away from increasingly sophisticated and time consuming games, which dominate the games industry at the moment.

The games market shrunk dramatically last year, Mr Iwata said, because players were getting frustrated with the ever more sophisticated games.

This is typical Nintendo for you. And here I thought we were done with this sh!t when Yamauchi retired.

The games market has shrunk dramatically? No, only the Nintendo's own position in the market share has. But the company can't even face the reality of its own mistakes. Its perception of the market is completely screwed. And still they continue to come out with ridiculous statements like this, and expect us to believe them!

Amazing. Absolutely amazing.

I think this is the generation when Nintendo finally jumps the shark and alienates the last of its die-hard fans. We've all watched as Nintendo has made and broken the same promises again and again - I think everybody's getting tired of it but Nintendo.

Kolgar

 

[Teasy]

Teasy, you're missing the fundamental point

Actually your missing the point of my post here. I didn't say anything about how good or bad this situation was with Nintendo halting GC production. I was replying to Quincy who said that Nintendo may not have enough stock for Christmas because they've halted production. My only point was the reason they have halted production is because they already have too much stock. So obviously not producing consoles for the next few months is not going to mean they run out of stock for Christmas. If it did then they would not have halted production in the first place. Unless GC sales suddenly increase by a huge amount of course, but that's unlikely.

From your post:

N amount is large enough to absorb (in toto) the Holiday increase in sales.

That's exactly what I was saying.

 

[Geeforcer]

Iwata said the problem was games that took many years to develop. He said nothing about people being frustrated by sophisticated games AFAIR.. looks like yet another hack journalist spouting utter crap to try to make Nintendo look bad...

http://www.gamespot.com/gba/news/news_6073088.html

"All these complex, large-capacity games of today require enormous amounts of energy and time of users," said Iwata. "I want to release a very different product, and by next spring we'll be ready to announce the details."

 

[Vince]

Actually your missing the point of my post here. I didn't say anything about how good or bad this situation was with Nintendo halting GC production. I was replying to Quincy who said that Nintendo may not have enough stock for Christmas because they've halted production. My only point was the reason they have halted production is because they already have too much stock. So obviously not producing consoles for the next few months is not going to mean they run out of stock for Christmas. If it did then they would not have halted production in the first place. Unless GC sales suddenly increase by a huge amount of course, but that's unlikely.

Well, Q can explain what he ment, but with him making comments like:

like i said before, Nintendo isn't going to be able to clear that stock by september

I don't think he's worried about a shortage of supply. More like a shortage of consumers who want to buy it - but I could be wrong.

N amount is large enough to absorb (in toto) the Holiday increase in sales.

That's exactly what I was saying.

And Ben and I are saying their fucked because of it. If their inventories have grown to such a level, such a high percentage of yearly sales, that they can fully absorb the typical double/triple-digit % increases in sales during the holidays - then it's really, really bad. Demand for the console has fallen drastically and we're just seeing the trailing-indicator of it that I talked about in a post to Chappers about PS sales.

 

[Teasy]

"All these complex, large-capacity games of today require enormous amounts of energy and time of users," said Iwata. "I want to release a very different product, and by next spring we'll be ready to announce the details."

Oh right so its a different comment then. I thought they were refering to a comment made many months ago.

Anyway all I see in that comment is Iwata mentioning that a lot of games today require a lot of effort and he's going to release a game soon that is simple and very different. Or that's basically what he seems to be saying anyway. I certainly don't see any comment of the market shrinking because of gamers becoming frustrated with sophisticated games.