Nintendo's Profit Drops 66 Percent

By Cindy Waxer April 25, 2011

Gamers may go nuts for flashy platforms and high-res graphics but that hasn’t stopped Nintendo’s annual profit from plummeting. According to the Kyoto-based company’s latest financial statement, Nintendo’s net profit for the fiscal year ended March 31 dropped 66 percent to 77.6 billion yen ($947 million) from 228.6 billion yen the year before.

What’s worse, annual sales dropped 29 percent to 1.014 trillion yen ($12.4 billion). And that’s prompting a full-fledged shootout among today’s game console players.

Without a doubt, Nintendo is banking on its newest gaming platform, the 3DS, to boost demand for its products. Released in Japan in February for 25,000 yen ($302), the portable gaming system features a 3D screen that works without glasses and is capable of graphics markedly better than the original Nintendo DS handheld. It also has two cameras on the lid so that users can take 3D pictures and share them with friends. The 3DS is now available in the United States for $250.

For this reason, Nintendo is predicting sales to increase 8.4 percent to 1.1 trillion yen ($13.4 billion) for the fiscal year through March 2012 and anticipates earnings to rise 41.7 percent to 110 billion yen ($1.34 billion).

So how is Nintendo faring next to Microsoft’s Xbox? Well, Nintendo sold 15 million Wii consoles last fiscal year – a 27 percent dip, and anticipates selling just 13 million in the current fiscal year. In the meantime, sales of the company’s popular DS handheld device also plummeted – a whopping 35 percent to 18 million units over the last fiscal year.

Compare those figures to Microsoft’s Xbox gaming system – now present in 50 million homes worldwide. What’s more, Microsoft has shipped more than 10 million of its Kinect units, which a recent Fortune article deems “an astonishing figure for a product on the market since only November.”

Edited by Jennifer Russell

TechZone360 Contributing Editor

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