(snip)
Great post/points.
When a big company like EA is questioning how to support the system (or if they should at all), you know you are in trouble.
(snip)
That's it, not trolling, but that is my reasoning.
To the 5% of you who ARE assholes, bring it on ;-)
He's wrong, though. Wii Fit U and Pikmin won't move Wii U's. People who bought Wii Fit had a Wii collecting dust and, by God, they needed something else to justify their initial purchase.
Pikmin? No one gives a shit about that. Certainly GAF does, but it's not going to sell Wii U's. Nope.
Isnt it still beating worldwide ps3 / 360 launch aligned ?
Isnt it still beating worldwide ps3 / 360 launch aligned ?
Patcher being born is a mistake that we will never recover from.
First, I must apologize...
Apparently not seeing as a lot of Nintendo fanboys think the WiiU is doing "fine".
Isnt it still beating worldwide ps3 / 360 launch aligned ?
I don't think Michael said those things.
360 was supply constrained, PS3 was $600. Oh and the WiiU just sold 55k in January in the US and 34,000 pieces of software in the UK in January. If the WiiU was ever beating the 360/PS3 launches, it surely isn't anymore.Isnt it still beating worldwide ps3 / 360 launch aligned ?
Good analysis, but it doesn't stop the original statement from being outlandish to get attention.
Isnt it still beating worldwide ps3 / 360 launch aligned ?
A lot of people think this.Noone thinks this.
A lot of people think this.
and like three months ago this same guy was saying the Wii U would be a huge success
God Patcher really does love to troll Nintendo
Did he use the word success? I only remember him saying that it would be sold out for the first few months. That does not necessarily translate to success.
A lot of people think this.
I think it's far too early to call the Wii-U a mistake Nintendo won't recover from.
Microsoft's profits off 360 have been great enough to mask the huge losses in the groups that are put in the same division as them. Sony, you're right, has a lot to worry about.
First, I must apologize for calling two thirds of you assholes. It's probably more like 5%, so I was overly sensitive in my generalization.
Second, and to the point, there is actually some reasoning behind my comments that the Wii U is a mistake from which Nintendo may not recover, and I threw the 3DS' cannibalization from smart phones and tablets in there to make a point.
Nintendo has historically made money, and a lot of money, on each hardware unit sold. The DS at $99 US is more profitable for them than the 3DS at $169 (see many quotes from Nintendo in Kyoto about losing money, or being barely profitable). The DS sold 23.5 million units in FY:07 (ended March 31), 30.3 million in FY:08, 31.1 million in FY:09, and 27.1 million in FY:10. Nintendo made money, and a lot of money, in each of those years.
I think it is instructive to use operating income in Yen as a guide, since Iwata said he would consider resigning if Nintendo did not earn ¥100 billion in FY:14. Nintendo made ¥90 billion in FY:06, ¥226 billion in FY:07, ¥487 billion in FY:08, ¥555 billion in FY:09, and ¥356 billion in FY:10. In FY:11, DS sales dropped to 17.5 million units, and operating income fell to ¥171 billion; in FY:12, combined DS and 3DS sales were 18.6 million units, but operating income disappeared, and Nintendo generated a LOSS of ¥37 billion. Obviously, the loss was impacted by lower Wii sales and lower software sales, but the point here is that the 3DS doesn't generate much of a profit per unit, if any, and the DS did.
Over the same period, Wii hardware sales were 0, 5.8 million, 18.6 million, 25.9 million, 20.5 million, 15.0 million, and 9.8 million. We have been repeatedly assured by Nintendo that the company makes a profit on every Wii sold, but as sales leveled off at 10 million, the company printed its first loss ever.
In FY:13 (the current year, ending next month), Nintendo is projected to sell 17.3 million DS and 3DS units combined, and to sell 8 million Wii and Wii U units combined, and is projected to generate an operating loss of ¥20 billion. That means that current levels of sales keep the company at roughly breakeven.
My comment about the Wii U being a "mistake" from which the company "may not recover" was intended to say that if Wii U sales don't materially improve, Nintendo is unlikely to be profitable. They have around ¥1 trillion (around $11 billion) in cash, so they aren't in danger of going out of business for decades. However, if they aren't profitable, they aren't doing a good job for shareholders.
To elaborate, if the Wii U is not generating profits, and if the 3DS is not generating profits, the only thing that will generate profits is software. Nintendo is ensured high sales of its proprietary software, but it makes the most money on its royalty business, collecting fees from third parties for the privilege of letting them put out games on Nintendo platforms. Publishing (software) revenues peaked at ¥675 billion in FY:09, and are on track to come in around ¥235 billion this year; my call is that if hardware sales don't materially improve above current combined levels, software sales are unlikely to materially grow. If software sales don't materially improve, losses or break even will become the norm. Nintendo will not "recover" to its formal highly profitable glory.
The poor sales of the Wii U in January are likely to impact third party publisher plans to support the console. Notice that GTAV is not on the Wii U; that wasn't a typo, they don't see enough promise in sales to cause them to spend extra development dollars on a Wii U version. I have spoken to several publishers who are skeptical, and I think that the Wii U will see a lower level of third party support than the Wii did, unless sales materially improve. If I'm wrong, I'll admit it, but without third party titles, Nintendo will not generate its customary levels of royalties, and losses or break even could become the norm.
Many of you point out that the 3DS is selling better than the DS at a similar point. That's true, but the DS was always profitable, and the 3DS is not. Also, the DS saw sales go from 8.8 million units in its first four quarters to 18.0 million its next four, to 20.2 million in its third full year; I'm pretty confident that the 3DS will not get to 20 million units, but even if it did, it would generate little profit from hardware. Keep in mind that the DS redesign to a lite version boosted sales, and there was little competition for 12 year-old and older from smart phones and tablets. Now, parents who can afford it are opting for Kindles, iPads, and smart phones for their teenagers, and the more casual of those are perfectly happy playing Angry Birds and putting their DS or 3DS into a drawer.
The important point is that if 3DS sales level off at 15 million and Wii U sales level off at 8 - 10 million, software sales will be much lower than they were in the past. If Nintendo doesn't make a profit on hardware, they can't afford to cut prices further. If they do cut price, it will likely occur as their manufacturing costs come down, but I don't expect big hardware profits in the foreseeable future. They are stuck with software profits, and at current sales levels, they are unlikely to make an overall profit from software.
That's it, not trolling, but that is my reasoning.
To the 5% of you who ARE assholes, bring it on ;-)
He didn't comment on the long term success of the Wii U as far as I can remember, but did presume that based on recent history that the launch would be a lot more successful than it was. Obviously no one predicted what eventually did happen would happen.
Such exciting times in the industry! Feb. is going to be epic. So excited to see what Nintendo will do. They surprised me early this generation already by not having enough software ready for the Wii U launch, after letting the Wii die alone in the gutter. What's next??
Yeah in the last two years, Microsoft began to be profitable with the xbox360, but they still doesn't recover the losses that they made in the first years and specially with the first Xbox.
I haven't seen it once on these boards.
I mean, how can you spin that NPD sales amount?
My comment about the Wii U being a "mistake" from which the company "may not recover" was intended to say that if Wii U sales don't materially improve, Nintendo is unlikely to be profitable. They have around ¥1 trillion (around $11 billion) in cash, so they aren't in danger of going out of business for decades. However, if they aren't profitable, they aren't doing a good job for shareholders.
I don't know man, first the outlandish statement. Im not against or pro with his pov, but the fact there's some data in there doesn't make the analisys more valid.That post where pachter finally elaborates on some of his thought process, whether I agree with him or not in his assessment, completely restores my respect for him, even if not particularly for his predictive skills.
It was reasoned, articulated his position well and even made attempts to amend some of the bad blood. I really enjoyed it reading it. Good shit, Michael.
Not likely to be profitable in 2013 or not likely to be profitable ever again? The phrasing used seems to suggest finality.My comment about the Wii U being a "mistake" from which the company "may not recover" was intended to say that if Wii U sales don't materially improve, Nintendo is unlikely to be profitable. They have around ¥1 trillion (around $11 billion) in cash, so they aren't in danger of going out of business for decades. However, if they aren't profitable, they aren't doing a good job for shareholders.
Was GAF around during the fall of the Dreamcast? I'd love to read some of those threads and compare them to what we see with the WiiU. I know it's different but it'd be fun to compare/contrast.
overall... hardware isn't the issue... the Wii U doesn't have RROD type issues.
There's some funny DC threads in this archive of old school GAF
http://www.goodcowfilms.com/farm/basement/ga-archive.htm
It also seems bizarre to hear Mr Pachter constantly down on the 3DS...
..yet he barely mentions the Vita.
I haven't seen it once on these boards.
I mean, how can you spin that NPD sales amount?
Do you really believe that?
I don't know man, first the outlandish statement. Im not against or pro with his pov, but the fact there's some data in there doesn't make the analisys more valid.
The man is indeed backpedaling. I recall him saying that Wii U will be sold out from launch through March. Now, the tune changes to "Nintendo near the bottom of the abyss".
No ill feeling towards the man, he just doesn't know videogames much.
First, I must apologize for calling two thirds of you assholes. It's probably more like 5%, so I was overly sensitive in my generalization.
Second, and to the point, there is actually some reasoning behind my comments that the Wii U is a mistake from which Nintendo may not recover, and I threw the 3DS' cannibalization from smart phones and tablets in there to make a point.
Nintendo has historically made money, and a lot of money, on each hardware unit sold. The DS at $99 US is more profitable for them than the 3DS at $169 (see many quotes from Nintendo in Kyoto about losing money, or being barely profitable). The DS sold 23.5 million units in FY:07 (ended March 31), 30.3 million in FY:08, 31.1 million in FY:09, and 27.1 million in FY:10. Nintendo made money, and a lot of money, in each of those years.
I think it is instructive to use operating income in Yen as a guide, since Iwata said he would consider resigning if Nintendo did not earn ¥100 billion in FY:14. Nintendo made ¥90 billion in FY:06, ¥226 billion in FY:07, ¥487 billion in FY:08, ¥555 billion in FY:09, and ¥356 billion in FY:10. In FY:11, DS sales dropped to 17.5 million units, and operating income fell to ¥171 billion; in FY:12, combined DS and 3DS sales were 18.6 million units, but operating income disappeared, and Nintendo generated a LOSS of ¥37 billion. Obviously, the loss was impacted by lower Wii sales and lower software sales, but the point here is that the 3DS doesn't generate much of a profit per unit, if any, and the DS did.
Over the same period, Wii hardware sales were 0, 5.8 million, 18.6 million, 25.9 million, 20.5 million, 15.0 million, and 9.8 million. We have been repeatedly assured by Nintendo that the company makes a profit on every Wii sold, but as sales leveled off at 10 million, the company printed its first loss ever.
In FY:13 (the current year, ending next month), Nintendo is projected to sell 17.3 million DS and 3DS units combined, and to sell 8 million Wii and Wii U units combined, and is projected to generate an operating loss of ¥20 billion. That means that current levels of sales keep the company at roughly breakeven.
My comment about the Wii U being a "mistake" from which the company "may not recover" was intended to say that if Wii U sales don't materially improve, Nintendo is unlikely to be profitable. They have around ¥1 trillion (around $11 billion) in cash, so they aren't in danger of going out of business for decades. However, if they aren't profitable, they aren't doing a good job for shareholders.
To elaborate, if the Wii U is not generating profits, and if the 3DS is not generating profits, the only thing that will generate profits is software. Nintendo is ensured high sales of its proprietary software, but it makes the most money on its royalty business, collecting fees from third parties for the privilege of letting them put out games on Nintendo platforms. Publishing (software) revenues peaked at ¥675 billion in FY:09, and are on track to come in around ¥235 billion this year; my call is that if hardware sales don't materially improve above current combined levels, software sales are unlikely to materially grow. If software sales don't materially improve, losses or break even will become the norm. Nintendo will not "recover" to its formal highly profitable glory.
The poor sales of the Wii U in January are likely to impact third party publisher plans to support the console. Notice that GTAV is not on the Wii U; that wasn't a typo, they don't see enough promise in sales to cause them to spend extra development dollars on a Wii U version. I have spoken to several publishers who are skeptical, and I think that the Wii U will see a lower level of third party support than the Wii did, unless sales materially improve. If I'm wrong, I'll admit it, but without third party titles, Nintendo will not generate its customary levels of royalties, and losses or break even could become the norm.
Many of you point out that the 3DS is selling better than the DS at a similar point. That's true, but the DS was always profitable, and the 3DS is not. Also, the DS saw sales go from 8.8 million units in its first four quarters to 18.0 million its next four, to 20.2 million in its third full year; I'm pretty confident that the 3DS will not get to 20 million units, but even if it did, it would generate little profit from hardware. Keep in mind that the DS redesign to a lite version boosted sales, and there was little competition for 12 year-old and older from smart phones and tablets. Now, parents who can afford it are opting for Kindles, iPads, and smart phones for their teenagers, and the more casual of those are perfectly happy playing Angry Birds and putting their DS or 3DS into a drawer.
The important point is that if 3DS sales level off at 15 million and Wii U sales level off at 8 - 10 million, software sales will be much lower than they were in the past. If Nintendo doesn't make a profit on hardware, they can't afford to cut prices further. If they do cut price, it will likely occur as their manufacturing costs come down, but I don't expect big hardware profits in the foreseeable future. They are stuck with software profits, and at current sales levels, they are unlikely to make an overall profit from software.
That's it, not trolling, but that is my reasoning.
To the 5% of you who ARE assholes, bring it on ;-)
Jesus christ pachter tldr; that essay. who the fuck is gonna read all that
I don't know man, first the outlandish statement. Im not against or pro with his pov, but the fact there's some data in there doesn't make the analisys more valid.
The man is indeed backpedaling. I recall him saying that Wii U will be sold out from launch through March. Now, the tune changes to "Nintendo near the bottom of the abyss".
No ill feeling towards the man, he just doesn't know videogames much.
I have wondered why he never seems to mention the vita anywhere near as much he has talked about the 3DS.
The Vita just did 35k for FFS and is has bombed hard in Japan yet his still banging on about the 3DS.
See Pach, I have to disagree here. I don't think there is any truth of Nintendo going out of business, that much is true. The issue though, that seems to be brought up all the time, is if Nintendo will, like Sega in 2001, drop hardware development to make software for Sony and Microsoft. And I think THAT is a definite possibility, considering that isn't a decision based solely on how much they have in the bank, but on the decline of their profits. And while Iwata and co. is steadfast that it will never happen, Nintendo has shareholders that certainly have rights and are at least seemingly open to it happening, with many capital investment groups questioning Nintendo not entering iOS development last year, which could potentially be a huge moneymaker. Again, Iwata feels that having a hardware division allows the company to be fully ready for the future, but if the Wii U and 3DS continues on the downward trend they are on, he might not have any other choice but to bite the bullet.