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Nintendo Profits Down Even With Strong Game Sales

Nintendo’s profits declined over 30 percent through 2015 despite the company experiencing positive software sales for some of its key first-party games, led by a new franchise.

Nintendo revealed its financial earnings for its fiscal year between April 1 and Dec. 31, 2015 on Tuesday. The company’s profits dropped nearly 32 percent through the third quarter, down to 40.5 billion yen ($335.8 million) from 59.5 billion ($493.3 million) during the same time period in 2014. Profits in the third quarter from October through December were 29.1 billion yen ($241.3 million), a 36 percent decrease from 45.2 billion ($374.8 million) in 2014.

Net sales for the Kyoto, Japan-based company declined for the fifth straight year, down 3.9 percent to 425.6 billion yen ($3.5 billion) in 2015 from 442.9 billion ($3.7 billion) in 2014. Sales outside of Japan made a large percentage of the nine month total last year, with 308.9 billion yen ($2.6 billion). Holiday sales during the third quarter from October through December were at 221.5 billion yen ($1.8 billion). This is down from 271.5 billion yen ($2.3 billion) at the same time in 2014, around an 18 percent drop in sales in part from a lack of big new games released for the holiday season.

The company’s operating profit grew from 31.6 billion yen ($262 million) to 42.5 billion yen ($352.4 million) between April and December, around a 34.4 percent increase because of cost-cutting measures and more sources of income from areas like digital content and amiibos.

While overall net sales are down from 2014 in most territories and especially in Europe, they slightly increased in the Americas. Part of the reason for these financial declines is the change in currency exchange rates for the yen around the world, which impacted Nintendo’s non-operating income.

The company sold 3.06 million Wii U consoles during these nine months in 2015, with 1.45 million sales in North America. Wii U console sales are now at 12.6 million worldwide since its November 2012 launch. In comparison Sony’s PlayStation 4 has sold more than 35.9 million consoles since November 2013. The Wii U’s slow growth contributed to Nintendo’s declining profits in the past several years.

The 3DS family of consoles, which include the New 3DS and the New 3DS XL, sold 5.88 million in nine months, a decline from 7.08 million in 2014’s fiscal year. These two versions sold the majority of the 3DS hardware line, according to Nintendo. The 3DS is now at 57.9 million lifetime sales. There were 38.87 million games sold on 3DS platforms by the end of December.

Splatoon, the colorful multiplayer shooter for Wii U and brand-new IP for Nintendo, sold more than 4 million units worldwide since its May 2015 release. Its total is 4.06 million globally, making it the sixth highest-selling game on the Wii U. In Japan the game sold 1.37 million copies. Splatoon became one of Nintendo’s strongest accomplishments of the Wii U and was established as an important new franchise for the company.

First-party games from Nintendo have a high attach rate among owners, especially on its home console. About a third of all Wii U owners have bought Splatoon. Super Mario Maker released on Sept. 10 and has sold 3.34 million worldwide, or to a fourth of all Wii U owners. It’s now the seventh best-selling Wii U game for the console and one of the titles that helped grow the Wii U install base last year.

Mario Kart 8, the all-time best-selling Wii U game, sold 2.13 million so far through Nintendo’s fiscal year, bringing its lifetime sales to 7.24 million worldwide. Since its May 2014 release, around 58 percent of Wii U owners bought Mario Kart 8.

Yoshi’s Woolly World on the Wii U sold 1.31 million copies. The game released in June across Europe and October in North America. Woolly World had more popularity outside of Japan, with 1.19 million copies sold in other territories. Mario Party 10 sold 1.65 million globally since its 2015 release, making it the 10th highest-selling of the Wii U library.

Between April and December last year, 22.62 million games were sold for the Wii U. The Wii U has now sold more than 79.3 million total games during its lifespan.

Nintendo said it would aim to maintain the popularity of its newest Wii U hits in Splatoon and Super Mario Maker while also releasing new home console games like The Legend of Zelda: Twilight Princess HD this March.

Of the new 3DS games released last year, Animal Crossing: Happy Home Designer in July sold 2.93 million worldwide while The Legend of Zelda: Tri Force Heroes from October sold 1.08 million, with 900,000 sales outside of Japan. Happy Home Designer was one of the top-selling 2015 releases on the 3DS.

Pokemon Omega Ruby/Pokemon Alpha Sapphire sold a combined 1.52 million over nine months, bringing its lifetime sales to 11.46 million since its November 2014 release and making the combo the third best-selling 3DS games of all-time. Super Smash Bros. on 3DS is now at 7.92 million worldwide sales from its fall 2014 launch after 1.16 million reported sales during those nine months last year.

Even though Mario Kart 7 released in December 2011 it’s still one of the most popular 3DS games, with 1.33 million global sales from April to the year’s end. The game is the second-best 3DS game in the console’s history at 13.03 million worldwide units since its launch.

Pokemon X/Pokemon Y, released on Oct. 12, 2013, are the highest-selling 3DS games of all-time at a combined 14.46 million. The popularity of the franchise continues as the original Pokemon trilogy games of Red, Blue and Yellow will release on the 3DS eShop. The three games will also come pre-installed on certain 3DS console bundles on Feb. 27.

Downloadable content from Nintendo’s digital eShop’s on the Wii U and 3DS had 30.5 billion yen in sales or $252.9 million. This is an increase from 21.1 billion yen during the same point in 2014. The top games are Super Smash Bros. that added extra fighters, Mario Kart 8 with its extra characters and race tracks and StreetPass mini-games.

Nintendo continues to see phenomenal success with its Amiibo line. Amiibo figurines have sold 20.50 million worldwide and amiibo cards 21.50 million during this nine month period. Amiibos have become popular collecting items but are also used in connectivity with certain Wii U and 3DS games. Amiibo cards are currently based on Animal Crossing: Happy Home Designer characters. Some of the best-selling amiibo figures in North America include Link, Bowser, Mewtwo, Sonic, classic Mario and Pac-Man. In Japan, the Inkling Girl, Boy and Squid from Splatoon are the top three while classic Mario is the most popular in Europe.

By the end of the financial year on March 31, 2016, Nintendo estimates its net sales at $570 billion yen ($4.8 billion), $50 billion yen ($416.7 million) in operating profits and $35 billion yen ($291.7 million) in overall profits. The company predicts total worldwide Wii U sales for the fiscal year will be at 3.4 million and the 3DS at 7.6 million by the end of March.

[Update 2/27/16: Nintendo changed its financial estimates for the 2016 fiscal year due to lower than expected 3DS hardware and game sales along with a decreased exchange rate for the yen to dollar.

Using the lowered exchange rates, the company now expects to have $500 billion yen in net sales ($4.3 billion, a 12.3 percent decrease), $33 billion yen in operating profits ($287 million, a 34 percent decrease) and $17 billion yen in overall profits ($147.8 million, a 51.4 percent decrease). For its hardware, Nintendo plans to sell 6.6 million 3DS consoles while Wii U sales will remain the same. The Wii is on track to sell 100,00 units for the fiscal year and 7 million games. Game sale estimates for the Wii U have increased by 4 million, up to 27 million total. However 3DS software predictions have decreased by 9 million to 47 million total. The lowered exchange rate will cost the company $20 billion yen ($173.9 million) in non-operating expenses.]

Nintendo is rumored to reveal its next console, code-named “NX,”sometime this year. The company will also release its first mobile app Miitomo in March in 16 countries. Nintendo announced on Wednesday that the pre-registration for the app starts Feb. 17 for iOS and Android users.

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