Nintendo’s current fiscal year officially kicked off on April 1st, and before the companies’s earnings release and subsequent presentation, it looked like 2016 was going to be a good year. With improvements in 2014 and 2015 and the NX possibly launching in 2016, it looked like Nintendo was finally on the up and up after the long slog of the Wii U. But then current Nintendo president Kimishima indicated that, in fact, 2016 was going to be another rough year for the house of Mario.
Perhaps the biggest announcement that should worry fans and investors alike is that Nintendo will not be releasing the NX until March 2017. It should come as no surprise that strong hardware sales are vital to Nintendo’s earnings success. Despite this, their newest system won’t be coming out until the last month of the fiscal year. As a result, Nintendo will not be able to capitalize on a new system this year. Of course, the system is also launching in March rather than during the holiday seasons. In a Q&A session with investors, Kimishima indicated the NX’s launch was held off so the software will be ready in time for the game’s launch. While it will likely be better for Nintendo to hit its March date in the long run, it hurts their commercial prospects greatly for the rest of this year.
Of course, Nintendo’s E3 plans don’t help much either. While external stakeholders assumed the NX would be the focus of E3, Nintendo confirmed the system will not be at this years show. In fact, the only game playable at E3 is the newest Legend of Zelda. This game was also confirmed to be an NX title as well, so, like the Wii U, it wont launch till March. E3 is when companies show off their big titles for the year. Since Nintendo is only highlighting this one title, it gives the impression that the company doesn’t have anything lined up for this holiday season, or for the rest of the year. Of course there are other games Nintendo is releasing this year. Moreover, Paper Mario Color Splash and Metroid Prime Federation Force have both received an exuberant about of backlash from fans, and E3 would be a perfect time to put fan qualms to rest.
Even worse is the Wii U sales will be severely depressed. Nintendo has committed to only ship 800,000 units during the fiscal years. Conversely, Nintendo sold 3.26 million Wii Us during their 2015 fiscal year. Of course, Nintendo does not have much in the way of software either. Beyond The Legend of Zelda, which is also a NX title, the only other Wii U software Nintendo is releasing are Star Fox Zero, Paper Mario Color Splash and Mario and Sonic at the Rio 2016 Olympic Games. Star Fox Zero’s result have been mixed. Despite poor sales in Japan, the game was the 5th best selling game for the month of April according to the NPD (with separate SKU).
Can Nintendo increase the user base any further.
So what has been Nintendo’s solution? The company seems to be planning to rely on 3DS hardware and software sales to boost 2016 earnings. That’s easier said than done. During the President’s presentation, Kimishima stated, “The installed base in Japan is fairly saturated compared to other countries, meaning there is reduced opportunity to sell Nintendo 3DS hardware to new consumers” In terms of software, there aren’t as many big hitters. The biggest titles appear to be Kirby Planet Robobot, Pokémon Sun/Moon, and the European release of Fire Emblem Fates. Kirby Planet Robobot topped the sales charts with its first week in Japan, with sales totaling 145,000, but it fell 70,000 short of Kirby Triple Deluxe’s first week sales. Therefore, having the 3DS making up the earnings gap might be easier said than done.
“But what about Pokémon Sun/Moon?” Yes, Nintendo does have a new mainline Pokémon game. It goes without saying that each iteration is a multimilion seller; however, Pokémon sales have been declining over the past few installments. Pokémon White/Black sold 11.5 percent less than Pokémon Diamond/Pearl and Pokémon X/Y sold 5.8 percent less than Pokémon White/Black. The remakes have been falling as well. Pokémon Omega Ruby/Alpha Sapphire sold 6.9 percent less than Pokémon Heart Gold/Soul Silver. Given this tend, the next Pokémon game will likely see a similar decline. Of course, Pokémon Sun/Moon will still sell extraordinarily well in spite of the decline, but the title alone can not carry Nintendo’s 2016 earnings.
Data from Nintendo’s Investor Relation Website
Closing
Of course, as I’m writing this the year has only just started, and the first quarter isn’t even over yet. Nintendo may prove me wrong as these games perform above and beyond expectation, or the one month of NX sales may be extraordinary. Of course, Nintendo is also releasing new cellphone games based on Fire Emblem and Animal Crossing. These titles could be huge successes, but it remains to be seen. What I can say for sure is that fans and investors alike will be keeping an eye out for what the NX truly has in store.
I wouldn’t say that the pokemon games are selling worse on the 3DS than the DS. The DS had +150 million units sold, meaning that there was a MUCH larger install base compared to the 3DS’s +50 million. Seeing as how there were +100 million more units hanging around, there were probably more casual consumers just picking up the games just to give them a try. In terms of volume there are more 3DS’s with a pokemon game than DS’s with a pokemon game.