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Nintendo Nets Profit, Lowers Expectations

Nintendo has some good news and bad news today.

First the good news. this past year has been a rough one for Nintendo, thanks in part to the sluggish start of the 3DS. But for the first time in nine months of the 2012/2013 fiscal period, Nintendo’s profit is in the green. The company’s net profit is about $160 million American, which is still way down considering where they were just 3 or 4 years ago which was in the billions. But at the very least they’re not in the red, so that’s good news for any company trying to grow. Especially for a company that’s been having some difficult times.

And now for the bad news.

Nintendo is now changing their expectations numbers for their hardware. The company has admitted that they are not going to reach their initial goal of 5.5 million Wii U units sold by this March. Through December, about 3.06 million Wii Us were sold, that should equal to about 4 million units by March. So Nintendo is lowering their expectations by about 1.5 million.

The 3DS, which has sold roughly 12.5 million units, was expected to have 17.5 million units by March. But Nintendo has once again dropped their prediction slightly to about 15 million.

Again at the very least, Nintendo does have something to celebrate. The company is able to post in the green for the first time in nine months, that is a good thing. But there is cause for concern. Right now Nintendo’s main hardware the Wii U, is competing against other manufacturers’ consoles that is six-seven-years old. The question they have to be asking themselves at this juncture is: can they truly compete against Microsoft’s and Sony’s brand-new systems, which are expected to come out at the end of this year? I’m not so certain, especially if those systems can match the price within $50-100 of the Wii U.

I don’t hate the Wii U, in fact I really do like the idea of having a tablet inside the controller, even more so than the innovativeness of the WiiMote. And great games are the heart and soul of a good system, and Nintendo knows how to produce a great game. But my question is can third-party companies create a great experience with the Wii U, years down the road? Looking back at Nintendo’s other systems, especially the original Wii, I don’t have confidence that they will. In fact, when the new systems arrive, which likely are at the end of this year, those will be significantly more powerful. And companies will NOT be able to just port them over to inferior hardware. So in the end, next-generation might resemble a lot this current generation. Great games by third-party developers for Microsoft and Sony, a lot of terrible games for the Wii, except for the ones that Nintendo published. And that won’t be enough for Nintendo to truly compete in this revolving industry.

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