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[Shiggy]

Sure, they also make hardware. But we expect today's hardware and software sales (paid for by yesterday's R&D) to cover today's hardware and software R&D (which will release tomorrow and pay for tomorrow's R&D). If Nintendo is spending large amounts of money making future hardware, and they can't pay for that R&D now because their current hardware and software is doing poorly, that only increases the financial pressure on future hardware to perform.

So it's still not something where you say "Oh, it's only R&D, we can spend an unlimited amount on that". An R&D-induced loss is a very ordinary way to lose money. It means your sales aren't covering your primary operating costs.

If you have strong confidence that the Wii U is just a weird aberration and their next console is going to be a major comeback, so bleeding a ton of money now is worth it because next time around they're going to make stacks of cash, then I guess massively ramping up R&D is no problem. But if you're wrong, then the consequences are pretty grave.

RE: "Not even produced by themselves" I don't actually know what you're saying here--you mean they use external manufacturers? Of course, but the process of developing the hardware would still be classed as R&D. It's not like they tell Foxconn and IBM "Make us a console lol".

Just to keep up with your previous post:
From what I understand, R&D costs that directly relate to the development of a software title will not be labelled "R&D expense" but will be capitalised as an intangible asset. This is usually the case after a prototype is greenlit, i.e. at a time when no major costs were incurred.

Under IFRS (IAS 38), it is important to distinguish research costs from development costs. The distinction is important: development costs can be capitalized as an asset while research costs much be expensed. IAS 38.57 defines the development phase of a project to be when six criteria are met:

technical feasibility can be demonstrated
there is intention to complete the project for use or for sale
there is ability to use or sell the asset
there is existence of a market for the output (sale)
there are adequate resources ($$) to complete the project
the expenditures for the project can be accurately tracked

If you want a more detailled explanation, I could provide further information. But I hope this is somewhat helpful.

 

[ec0ec0]

Yes they really are amazing at making sure that people who weren't interested in their software lineup remain not interested in it.

but, but, but POKEMON...

 

[Manmademan]

The landscape of any industry changes so frequently. Failing this generation does not mean they will the next or even their next console. They have the 3ds and their handhelds always sells.

I am not saying the Wii U is a runaway success but saying Nintendo is doomed and will go out of business is just ridiculous.

As I said before, every company falls no matter how powerful they were in the past. What separates companies if if they will survive it. Nintendo is not RIM in the least. Come on man.

Nintendo isn't Doomed, there's just no obvious way to reverse the decline. The wiiu is in terrible shape, but their handheld sector long term is in worse shape.

The 3DS is not selling like the DS, and is operating in a market where there is no real competition from Sony. The vita may as well not exist at ALL in the west.

Smartphones are just killing that market, and the decline is clear and irreversible. Smartphones are viewed as a necessity and will only get cheaper and more powerful. There is no strategy or game Nintendo can make to reverse that. Dedicated handhelds are dead men walking, the only question is time.

 

[Guevara]

Updating some graphs I've maintained out of boredom.

http://i.imgur.com/AbUcGfg.png[/IMG

[IMG]http://i.imgur.com/nJS5q5K.png[/IMG

[IMG]http://i.imgur.com/EAJDOg8.png

http://i.imgur.com/MjukCxZ.png[/IMG

[IMG]http://i.imgur.com/ohjbKIU.png[/IMG

[IMG]http://i.imgur.com/YOtpbkh.png[/IMG

Just a continued trend of year-over-year declines in hardware and software for both of their core markets. They're already projecting a further decline in handheld next year, which I think will be even steeper than they've projected since the trend for the (calendar) year is already quite low, and a slight rebound in home console, which I guess we'll have to see if it will materialize. I personally don't think it will, but then, perhaps some heavy bundling/discounting with Mario Kart and Smash Brothers might help a little bit.[/QUOTE]

I look forward to these charts you make.

The one I left in my quote especially shows why a 3DS successor is due soon, and why that platform won't be nearly as long-lived as the DS was.

 

[Psycho_Mantis]

And they have Pokemon remakes, Smash and the 2DS still to release in Japan this year.

That's not to say they'll hit their target, but it doesn't seem too outlandish now.

- a newline Pokemon is bigger than a remake.
- 2DS will have more impact in the West than the East simply because the West is a larger market.
- MH4 is bigger than Smash in JP

 

[jaxpunk]

Is this the thread that I get advice on diversifying my bonds?

 

[Taker666]

Nintendo Q4 Investor Presentation + Q&A
05/07/14 / 09:00 PM EDT

Excellent..I can't wait for the anger over some of Iwata's comments tomorrow*



* mistranslations of Iwata's comments which will turn out to be completely false when the official translation is released a few days later (after he/Nintendo have been ripped to shreds).

 

[1st Course]

Updating some graphs I've maintained out of boredom.

Just a continued trend of year-over-year declines in hardware and software for both of their core markets. They're already projecting a further decline in handheld next year, which I think will be even steeper than they've projected since the trend for the (calendar) year is already quite low, and a slight rebound in home console, which I guess we'll have to see if it will materialize. I personally don't think it will, but then, perhaps some heavy bundling/discounting with Mario Kart and Smash Brothers might help a little bit.

This company is hopeless.

 

[IdreamofHIME]

Can't believe how much they turned things around for 3DS, but somehow can't do it for WiiU.
PS4/Xbone sales show there's hunger for new hardware and 3DS sales show there's life in the Nintendo brand. I just don't get it.

 

[PdotMichael]

Excellent..I can't wait for the anger over some of Iwata's comments tomorrow*



* mistranslations of Iwata's comments which will turn out to be completely false when the official translation is released a few days later (after he/Nintendo have been ripped to shreds).

poor guy

 

[Ansatz]

Oh, are we still pretending Nintendo's woes aren't the result of their own inability to produce a product of sufficient value proposition to a broad market and are instead the product of a collapsing industry?

It is what it is. There ar certain conditions that need to be fulfilled, you're viewing the situation strictly from a business perspective. AAA Games like X, TW101 and Bayonetta 2 simply need to exist even if it's a road that quickly leads to irrelevancy. Nintendo is taking responsibility and funds ex Capcom/Square top tier devs to allow them to continue evolve gaming in the direction of 90's console gaming, that's what we fans and they the devs want creatively. You can at best propose Retro to make Mario Paintball because of the popularity of online shooters, but to say they should do an actual military shooter, an Uncharted equivalent or a sim racer in the veins of Forza is out of the question for philosophical reasons, even if they make sense business wise.

 

[JLeack]

Even 3.6m feels optimistic.

If even half the people who walk into retailers asking if Wii U is an expansion to the Wii purchase the console, they'll hit this projection easily.

 

[Coolwhip]

Nintendo Q4 Investor Presentation + Q&A
05/07/14 / 09:00 PM EDT

Is this the meeting where he has to defend that he didn't meet 100 billion yen profits?

 

[Exile20]

They should release the Nintendo Entertainment System 2 in 2015. Announce at E3 2015 and launch on October 18, 2015.

Job done.

You have no clue what it takes to bring a console to market.

If even half the people who walk into retailers asking if Wii U is an expansion to the Wii purchase the console, they'll hit this projection easily.

If every MKwii player changes over to MK8, they can make that easily.

 

[KingSnake]

It is what it is. There ar certain conditions that need to be fulfilled, you're viewing the situation strictly from a business perspective. AAA Games like X, TW101 and Bayonetta 2 simply need to exist even if it's a road that quickly leads to irrelevancy. Nintendo is taking responsibility and funds ex Capcom/Square top tier devs to allow them to continue evolve gaming in the direction of 90's console gaming, that's what we fans and they the devs want creatively. You can at best propose Retro to make Mario Paintball because of the popularity of online shooters, but to say they should do an actual military shooter, an Uncharted equivalent or a sim racer in the veins of Forza is out of the question for philosophical reasons, even if they make sense business wise.

They should do Mario Paintball MMO. And Mario Strikers with micro-transactions.

 

[ElectricBlanketFire]

You have no clue what it takes to bring a console to market.

Fairly certain he was joking.

 

[Exile20]

Fairly certain he was joking.

Are you sure? lol

 

[LegendofLex]

This company is hopeless.

They are if they continue to operate the way the industry wants them to. They have only ever succeeded by completely bucking the norms. Every time they try to be more "gamer"-friendly, they lose market share.

 

[DNAbro]

Fairly certain he was joking.

You have people constantly saying "DROP THE WII U AND RELEASE A NEW CONSOLE" on this forum. It's hard to tell when people are joking or not.

 

[Majukun]

Wow, that's a huge loss.

When shareholders will break their silence and decide to move against Iwata?

never?

it's the boards of directors that decides,and they are all "iwata's men"

 

[Randolph Freelander]

I look forward to these charts you make.

The one I left in my quote especially shows why a 3DS successor is due soon, and why that platform won't be nearly as long-lived as the DS was.

Yeah, it's looking quite apparent that the 3DS is going to end up falling well short of the GBA in hardware tales, too. It's at ~43 million now, GBA finished at ~81 million. I just don't think it has 38 million in sales left in the tank. I think this year will probably come in around 10, next year will be lower still. I also think FY3/2014 is going to prove to be the software peak for the platform, as well.

The next handheld is going to be necessary quite soon.

 

[mantidor]

RE: "Not even produced by themselves" I don't actually know what you're saying here--you mean they use external manufacturers? Of course, but the process of developing the hardware would still be classed as R&D. It's not like they tell Foxconn and IBM "Make us a console lol".

Well of course, but they don't have the same technological resources and know-how of actual hardware manufacturers like Sony or Samsung.

Again, I'm not saying their losses are because R&D, I'm saying their R&D is too different from companies like Sony or even Microsoft to be even comparable. They are not a technology company, they are an entertainment company, if by some magic all electronics would stop functioning Nintendo would start making tabletop games. Sony and Microsoft would disappear though.

 

[Pain]

The console market isn't a-okay. But it isn't in the dire situation that people like to paint.

It's a low growth market with escalating costs. There are less titles being released as publishers consolidate towards fewer, bigger titles. Software sales as they are now are a reflection of that, but also likely a reflection of an extended cycle and reduced active userbase amongst last gen owners.

All that said, the industry isn't at any risk of a real "collapse", growth in hardware has returned in the US market on a TTM basis. Growth in software should return during the year as increases from new platforms eventually outpace declines in old, at least for the Xbox and PlayStation lines. There's been a contraction a large part of which has been cyclical.

Which doesn't really have any bearing upon why Nintendo is failing to compete, and so ultimately seems irrelevant and something of a Red Herring in discussing their performance.

I fully expect the console market to only get bigger. F2P games will fill the void left by less B-game releases.

 

[cyberheater]

Nintendo Q4 Investor Presentation + Q&A
05/07/14 / 09:00 PM EDT

Is this were Iwata falls on his own sword?

 

[Psycho_Mantis]

I wonder if Iwata is going to get put down by the board of directors. I mean he was at 77% last year and this year he turned a projection of 100 billion yen profit to a 23.2 billion yen loss.

 

[DrROBschiz]

Well of course, but they don't have the same technological resources and know-how of actual hardware manufacturers like Sony or Samsung.

Again, I'm not saying their losses are because R&D, I'm saying their R&D is too different from companies like Sony or even Microsoft to be even comparable. They are not a technology company, they are an entertainment company, if by some magic all electronics would stop functioning Nintendo would start making tabletop games. Sony and Microsoft would disappear though.

Then they should have focused on their strengths and kept shit CHEAP and SIMPLE

The technical state that WiiU Launched in was embarassing to say the least.

 

[Majukun]

They are if they continue to operate the way the industry wants them to. They have only ever succeeded by completely bucking the norms. Every time they try to be more "gamer"-friendly, they lose market share.

actually,they lose this gen because they weren't gamer friendly enough

or do you really think that the gamer-friendly way is giving to the gamers an underpowered hardware with a gimmicky control and no third party support?

they lost exactly because iwata didn't understand that with gimmicks alone you can't go that far,especially when you came up with something that it's a novelty for the sake of being a novelty

 

[IncandescentPrecept]

Can't believe how much they turned things around for 3DS, but somehow can't do it for WiiU.
PS4/Xbone sales show there's hunger for new hardware and 3DS sales show there's life in the Nintendo brand. I just don't get it.

Simple. The 3DS had a 30% price drop in the first 6 months.

 

[RiggyRob]

- a newline Pokemon is bigger than a remake.
- 2DS will have more impact in the West than the East simply because the West is a larger market.
- MH4 is bigger than Smash in JP

- It'll still sell lots of hardware, especially with the likely special edition 3DS / 3DS XL / 2DS
- True, but a cheaper price is a cheaper price - people holding off on a 3DS in Japan may be pushed to get a 2DS, not to mention there might be new bundles/deals
- Going by the point above, Smash will sell more hardware simply because the West is a bigger market, considering MH4 hasn't been released in the West yet

+ Yokai Watch and Yokai Watch 2 look like they'll push tons of hardware too.

 

[Snakeyes]

Isn't this loss smaller than expected (-$240 M)?

 

[DrROBschiz]

I cant get over the irony of releasing a poorly conceived tablet controller and not acknowledging the obvious connection to their rival competitors.

Anyone picking up a WiiU would immediately compare it to an Ipad.

What were they thinking

 

[TheGreatMightyPoo]

Is this were Iwata falls on his own sword?

The Master Sword.

 

[Conezays]

I feel bad for Nintendo's business side of things, as regardless, they still pump out great games on 3DS and Wii U (though the quantity isn't really there on Wii U). Tropical Freeze was one of my favourite platformers ever, and undoubtedly did horribly sales-wise.

I'm not sure Nintendo's brand of games are really what's in vogue enough right now to penetrate the home console market in any strong way. I know I will pick up Mario Kart 8, etc. but I can't see it adding much momentum to Wii U's sales. Very interested to see how the poor sales will affect E3/prospective development on the console; hoping that any unannounced Nintendo IP aren't auto-canned due to sales.

 

[cyberheater]

The Master Sword.

That would be fitting.

 

[Mysterious]

Isn't this loss smaller than expected?

Forecasted 100B yen operating profit. Posted ~46B yen operating loss. So no.

Actually the CEO promised 100B yen to investors.

 

[Somnid]

It is what it is. There ar certain conditions that need to be fulfilled, you're viewing the situation strictly from a business perspective. AAA Games like X, TW101 and Bayonetta 2 simply need to exist even if it's a road that quickly leads to irrelevancy. Nintendo is taking responsibility and funds ex Capcom/Square top tier devs to allow them to continue evolve gaming in the direction of 90's console gaming, that's what we fans and they the devs want creatively. You can at best propose Retro to make Mario Paintball because of the popularity of online shooters, but to say they should do an actual military shooter, an Uncharted equivalent or a sim racer in the veins of Forza is out of the question for philosophical reasons, even if they make sense business wise.

I think this is a good post because there are clearly different concerns depending on how you look at it. Financials to gamers are mostly the ability to continue delivering product you like. A lot of people were not happy with Wii's success either. I also think it's disingenuous to muddy the two concerns in the same argument.

Speaking of value is rather worthless anyway because it's entirely subjective. All we know is people have not bought the system in good amounts, whether that is lack of knowledge, caring, price, games or whatever or (likely) a combination of things is hard to prove or disprove outside limited anecdotal evidence. I seems like a lot of people try to just select one thing as "the" reason Wii U didn't live up to it's sales potential. I don't think that's the case.

 

[shinra-bansho]

It is what it is. There ar certain conditions that need to be fulfilled, you're viewing the situation strictly from a business perspective. AAA Games like X, TW101 and Bayonetta 2 simply need to exist even if it's a road that quickly leads to irrelevancy. Nintendo is taking responsibility and funds ex Capcom/Square top tier devs to allow them to continue evolve gaming in the direction of 90's console gaming, that's what we fans and they the devs want creatively. You can at best propose Retro to make Mario Paintball because of the popularity of online shooters, but to say they should do an actual military shooter, an Uncharted equivalent or a sim racer in the veins of Forza is out of the question for philosophical reasons, even if they make sense business wise.

Are you really under some sort of bizarre impression that Nintendo is funding the types of games they do out of some sort of altruistic responsibility???

Are you actually suggesting that a game like Bayonetta 2 isn't designed for the same target demographics as... shock horror... Bayonetta 1?

:s

The landscape of any industry changes so frequently. Failing this generation does not mean they will the next or even their next console. They have the 3ds and their handhelds always sells.

I am not saying the Wii U is a runaway success but saying Nintendo is doomed and will go out of business is just ridiculous.

The latter is a strawman. The former regarding handhelds really doesn't seem like it will ring true in the long term.

The idea that performance in the current market doesn't impact future performance in the industry is a strange one. Especially a two-sided market characterized by reinforcing network effects.

 

[The Abominable Snowman]

I'd rather Wii U be the last Nintendo console. Let Nintendo go out on a "OK" note. 2015 Should be the year of the DSAdvance, and no further hardware until 2020 or so..

 

[Stumpokapow]

Well of course, but they don't have the same technological resources and know-how of actual hardware manufacturers like Sony or Samsung.

I don't understand the argument here. Nintendo shouldn't be compared to other firms in the sector because they're not able to compete, and when someone isn't able to compete, we should stop considering them a competitor? Blackberry couldn't compete with the technological resources or know-how of Apple or Samsung, but they were still forced to, hence their current predicament.

They are not a technology company, they are an entertainment company, if by some magic all electronics would stop functioning Nintendo would start making tabletop games.

I don't really think this is a very thoughtful reflection on the course of business. A company that does nothing but sell video games is a video game company, even if they tell themselves that they're an entertainment company. But companies can change; if in your alternate reality where electronics cease to exist, electronics manufacturers would use their accumulated capital to transition into markets* that still exist

* markets wouldn't exist without electronics

Sony and Microsoft would disappear though.

Sony being one of the largest actual entertainment companies in the world--being one of the largest TV, film, and music publishers in the world--would not be able to adapt to producing new forms of entertainment but Nintendo, a company that only makes video games, would transition smoothly to making other things?

Just to keep up with your previous post:
From what I understand, R&D costs that directly relate to the development of a software title will not be labelled "R&D expense" but will be capitalised as an intangible asset. This is usually the case after a prototype is greenlit, i.e. at a time when no major costs were incurred.

That makes sense, but the same would presumably apply to hardware R&D after the basic shape of the product takes form; so what would you expect accounts for a general trend over many years to expand their R&D budget? More experimental research that isn't making it into products? That seems somewhat unlikely.

 

[Stone Ocean]

They are if they continue to operate the way the industry wants them to. They have only ever succeeded by completely bucking the norms. Every time they try to be more "gamer"-friendly, they lose market share.

Nintendo does not operate in the way the industry wants them to. They have a notion of what it should be, but instead do things half-assedly because reasons.

People like HD graphics? Dated hardware. People like online? A passable online infraestructure at best. People like normal controllers and buttons? Gimmick this shit up. People like good prices? Make it more expensive than current hardware while offering less value.

I could go on and on but the Wii U is a mess not because Nintendo was trying to fit into the industry, but because they did so without as much as trying to learn from their competition. It's a R&D mess with great games on it because at least the Nintendo talent is still there.

 

[Danny Dudekisser]

Jeez, that forecast. It's nice to see them being more realistic with their expectations, but holy shit.

 

[Coolwhip]

I don't understand the argument here. Nintendo shouldn't be compared to other firms in the sector because they're not able to compete, and when someone isn't able to compete, we should stop considering them a competitor? Blackberry couldn't compete with the technological resources or know-how of Apple or Samsung, but they were still forced to, hence their current predicament.



I don't really think this is a very thoughtful reflection on the course of business. A company that does nothing but sell video games is a video game company, even if they tell themselves that they're an entertainment company. But companies can change; if in your alternate reality where electronics cease to exist, electronics manufacturers would use their accumulated capital to transition into markets* that still exist

* markets wouldn't exist without electronics



Sony being one of the largest actual entertainment companies in the world--being one of the largest TV, film, and music publishers in the world--would not be able to adapt to producing new forms of entertainment but Nintendo, a company that only makes video games, would transition smoothly to making other things?

Being a large company is often a downside.

But still, this whole QOL thing sounds like a desperate and pointless move by Iwata.

 

[Exile20]

I cant get over the irony of releasing a poorly conceived tablet controller and not acknowledging the obvious connection to their rival competitors.

Anyone picking up a WiiU would immediately compare it to an Ipad.

What were they thinking

Did anyone think this?

 

[lefantome]

Can't believe how much they turned things around for 3DS, but somehow can't do it for WiiU.
PS4/Xbone sales show there's hunger for new hardware and 3DS sales show there's life in the Nintendo brand. I just don't get it.

They didn't, they delayed the problems wasting lots of money selling undercost.

the 3DS is falling down fast already and, even without serious direct competitors, it was far below the DS and it's even below the GBA.

That's a failure, the handheld market is shrinking fast

 

[Natureboy99]

Can't believe how much they turned things around for 3DS, but somehow can't do it for WiiU.
PS4/Xbone sales show there's hunger for new hardware and 3DS sales show there's life in the Nintendo brand. I just don't get it.

Theres hunger for NEW hardware. Most gamers equate WiiU with PS3/360 gen, which we already experienced. 3DS is back to GBA levels. Respectable, but not catching the world on fire like DS.

 

[TheGreatMightyPoo]

Did anyone think this?

I thought of it as an extension of the DS line myself if I gave it any thought.

 

[Koppai]

12m 3DS - they'll need some announcements for that.

3.6 for WiiU is their first conservative (ie, realistic?) number they release.

Well Pokémon Omega Ruby & Alpha Sapphire were just announced...and you have Smash Bros coming. And whatever Nintendo is keeping under wraps as well ;3

 

[DrROBschiz]

Being a large company is often a downside.

But still, this whole QOL thing sounds like a desperate and pointless move by Iwata.

QOL is an awful idea and yet another poor assessment of his potential competitors that already exist in this market

 

[mantidor]

Then they should have focused on their strengths and kept shit CHEAP and SIMPLE

The technical state that WiiU Launched in was embarassing to say the least.

It's not embarrassing at all, it's actually the cheapest current gen console and it is very simple.

It's the hardcore techies that see it as horrible because it is not state of the art stuff, but is more than capable of making great games and great looking games, as it has already shown.

If anything they underestimated how harmful their "weak" hardware was going to be for third parties and word of mouth.

 

[DNAbro]

Did anyone think this?

when Wii U was announced, there was a constant "it's like they packed a shitty ipad with buttons" here.