There’s been an avalanche of Nintendo stories today thanks to the company holding its second quarter investor’s meeting. For those not familiar with the situation, Nintendo CEO Satoru Iwata (and other important executives) meets with the company’s investors and shareholders four times a year to talk game and console sales, finances, strategy, and more. After these meetings, Nintendo releases all the data publicly. If you missed any of the news or you’re not sure what to make of all of it, we’ve got a full breakdown of what was announced and what it means for Nintendo. Hit the jump to dig in!

The biggest headline from Nintendo’s investor meeting is that the company turned a $220 million profit for the second quarter, which is July 1 – September 30. This is significant for two reasons. First of all, Nintendo lost $90 million in the first quarter, so this is an impressive financial turnaround in a short period of time. Secondly, analysts predicted Nintendo would make $63 million, so the actual earnings were much higher than expected. For the fiscal year (which starts on April 1), Nintendo is now profit positive to the tune of $132 million.

Nintendo CEO Satoru Iwata said at the start of the year that he expected the company to make $200 million for the full year, and he told his investors he’s not changing that forecast at this time. This may seem at first glance like he doesn’t expect to make much money in the last six months of the fiscal year, but there are two other possible reasons for this low figure. First, there may be upcoming costs that we don’t know about. A big possibility is that Nintendo is about to put a lot of money towards the Quality of Life devices they’ve mentioned in the past. These devices won’t come out until sometime next year, so if research and development is expensive, that money will come out of this year’s budget, and the profits won’t be seen until next year. A second possibility is that Iwata is simply playing it safe. In 2013 he predicted the company would make $1 billion in profits, and they end up losing $228 million, so Iwata may be hesitant to promise too much to his investors.

So where did all this cash come from? In total, Nintendo has sold 1.12 million Wii U units and 2.09 million 3DS units in the past six months. Although Wii U sales are still not where Nintendo would like them to be, through two quarters the console is selling nearly twice as fast as it was last year. 3DS, on the other hand, is selling slower than last year, largely due to the fact that there have been less game releases for it. A big reason for the financial boost is that Wii U is no longer selling at a loss. Previously it cost more to build a Wii U than what Nintendo was charging people to buy it, but as of April 1, that is no longer true. As of the last investor’s meeting the Wii U brand as a whole was still losing money, though, as things like shipping costs and advertising outweighed the profits being earned. This is likely no longer true, as manufacturing costs are going down and sales are rising up. So while neither 3DS nor Wii U had amazing sales numbers, they’re both making money.

Iwata also chose not to revise his sales forecasts for either device. At the start of the year he told investors that Wii U would sell 3.6 million units and 3DS would sell 12 million. Given their current numbers (1.12 million and 2.09 million) at the halfway mark, it may seem like these are unreachable goals, but there’s some reason for optimism. The holiday season (typically defined as Black Friday until New Year’s Day) generally accounts for nearly 50% of all sales for the year, which means both consoles should get a big end-of-the-year boost. Wii U will have
Super Smash Bros. as a big holiday title to help push sales. Meanwhile, 3DS should continue to see some momentum from the handheld version of Smash, and possibly a slight boost from Pokémon Omega Ruby and Alpha Sapphire. The way things are going now, Wii U should hit its sales target without much problem, but 3DS is going to need some help. The good news for Nintendo is that the New Nintendo 3DS model is selling like hotcakes in Japan. If Nintendo brings it to the West before the end of the fiscal year (March 31), the target could still be reached. If not, it will likely fall short, just as it did last year when Nintendo predicted 18 million in sales and ended up with 12 million.

As expected, big name games like Mario Kart 8 and Super Smash Bros. for Nintendo 3DS are selling well, but Nintendo also earned some extra cash in the form of higher than expected sales of Tomodachi Life and Hyrule Warriors. Both games were expected to appeal mostly to Japanese gamers, but have performed well in the West as well. Tomodachi Life in particular has sold over 1 million units in regions outside of Japan. This is a good sign, and could lead to more Japanese games being localized globally.

Then there’s the big numbers. Lifetime sales of Wii U and 3DS are now sitting at
7.29 million and 45.42 million, respectively. From a historical perspective, both consoles are selling at a slower rate than any of their predecessors. Wii U software sales total 41.67, and 3DS has sold 186.22 pieces of software. This means the average Wii U owner has around six games for the console, while the average 3DS owner only has about four. However, the software–hardware relationship is hard to gauge for handhelds as many have upgraded to new models, skewing the number of actual owners. As for the company’s financial status as a whole, Nintendo currently has $4.5 billion in the bank and $9.67 billion in assets. This number is down from where it was a few years ago because Nintendo lost money in both 2011 and 2013, but so far they’re on track to stay profitable now.

Finally, Nintendo got its leader back full time. Satoru Iwata underwent surgery to remove a growth from his bile duct a few months ago, and during his recovery period he could not travel, so he had to work from home and could not attend the last investor’s meeting in July. However,
Iwata has recovered and is back to running the company full time from their offices.

Our Verdict

Ben Lamoreux


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