Successes And Failures - Nintendo's Financial Year 2016

Published: May 16, 2017 10:53 AM /


Nintendo logo

The end of the financial year means different things to different different people. For those in the Accounting industry, it's the busiest time of the year. For those in Sales, it's generally quieter, with clients disinterested in making large purchases due to budget restraints.

Nintendo Switch Box Angle

For Nintendo, the end of the last financial year must have come as something of a relief. While the launch of the Switch exceeded Nintendo's expectations of 2 million with 2.74 million units sold, this year was something of a downer on previous years, with profits down across the board in year-on-year comparisons. Net sales were down ¥15.3 billion ($135 million), gross profit down ¥22 billion ($194 million), and operation profit down ¥3.5 billion ($30.9 million).

But what caused this drop in profit? It's highly likely that the late launch of the Switch was to blame for the large drop in numbers, and while the Switch was a great success, it's highly likely that the shadow of the Switch on the horizon held back Nintendo fans from purchases they otherwise would have made for the Wii U. Nintendo themselves attribute the drop in profitability to a large drop in sales for the Wii U and related software, which is as close to acknowledgement of that theory as we're likely to get.

The Legend of Zelda Breath of the Wild Art Hilltop

But despite the drop in profitability, Nintendo was still able to garner a comfortable profit in the last year, recording ¥489 billion ($4.3 billion) in net sales, and ¥199 billion ($1.75 billion) in gross profit. Particular successes for Nintendo include the aforementioned sales of the Nintendo Switch, and unsurprisingly, sales of The Legend of Zelda: Breath of the Wild. Interestingly for Nintendo, sales of Breath of the Wild on the Switch actually exceeded the sales of the Switch itself, selling 2.76 million units. Copies of Zelda games do tend hold their value comparatively well, so it's entirely possible that these units were bought by scalpers - but it's also just as likely these units were bought in advance by people unable to get a hold of a Switch console.

Nintendo also saw a rise in sales of the 3DS console, up by 7% to 7.27 million units sold that year. This is likely in large part down to the exceptionally strong performance of Pokémon Sun & Moon, which saw sales of 15.44 million units combined, utterly eclipsing Super Mario Maker's 2.34 million units and Kirby: Planet Reboot's 1.36 million units. Altogether, 3DS software was bolstered by 55.08 million units sold over the year - another increase for Nintendo, up 14% on the last year. With these impressive numbers in mind, it's unsurprising that Nintendo pledged to continue supporting the 3DS brand into 2017, and aim to sell 6 million further units of the 3DS/2DS - no doubt helped by the launch of the new 2DS XL.

nintendo wii u

The Wii U is perhaps the one sore point in Nintendo's line-up - somewhat fittingly since the console has been replaced by the Switch. Being replaced has clearly had an impact on sales of the console over the financial year, with both hardware and software down on the previous year. Despite this, The Legend of Zelda: Breath of the Wild still sold well on the Wii U, selling a respectable 1.08 million units.

Looking to the future, Nintendo clearly has their sights set on greater heights. For their forecast, Nintendo has predicted sales of at least ¥750 billion ($6.6 billion). That number includes the aforementioned 6 million additional units of the 3DS family and 40 million 3DS games, as well as a further 10 million Switch console units and 35 million Switch games. When questioned about the supply of Switch consoles, Tatsumi Kimishima, Nintendo's current president, only said that they are "preparing to ship 10 million units", so consumer worries about the availability of Switch consoles will likely continue well into 2017. On the software side, Kimishima was more optimistic, stating that they were expecting to sell 3-4 games per each console, especially with the impending release of Splatoon 2, and ARMS.

Interestingly, Nintendo has also forecast for 3 million further units of Wii U hardware to sell, and clearly expect games for the system to continue selling, despite the end of the console's lifespan. Presumably, that number is what Nintendo has in stores and warehouses remaining to be sold, as the console is not longer being created. Also of interest is the 5 million additional games Nintendo expect to sell on the 3DS, compared to the Switch. While it's not surprising that a very well established and popular console would have a higher number of expected sales, the only very slight difference is surprising in itself - clearly, Nintendo has confidence in the Switch's future lineup and uptake. The numbers, however, do continue to stress that Nintendo will support the 3DS following the Switch's launch - a matter that some Nintendo fans were worried would not be the case.

Pokemon Sun and Moon Black Friday

A list of the best sellers on both consoles most likely reveals the truth. From the list of the best sellers, it's pretty obvious that Pokémon rules the roost, and without any mention of Pokémon moving to the Switch, Nintendo is likely to keep the 3DS family around for a long time.

On the smart device front, Nintendo is keeping a very close hand. There was little made of the fledgling division during the financial report, so it's safe to assume that there has been nothing of particular note outside of Super Mario Run. However, Kimishima did say that another 2-3 games are planned for smartphones and tablets, so while a rapid expansion has been ruled out, it's clear that Nintendo is still keen to expand their catalog of games on Android and iOS.

Fire Emblem Heroes

Finally, Nintendo released a schedule for their upcoming releases. So much of it is pretty well known, and the curious can check out the full list here. Of particular interest, however, are the entries for Splatoon 2 on the 21st of June, a new Kirby game coming in winter 2017, a new Mario in holiday 2017.

Quick take

It's been an interesting year for Nintendo. While they may be down overall, the strong start to the Switch has brought the end of the year up. However, it's clear that leaving the Switch's launch to so late in the financial year meant a massive impact on the WiiU's sales. While it was inevitable, the Switch's Sword of Damocles hung above the WiiU for too long. It'll be interesting to see if Nintendo hit the meager target for the WiiU in the coming year. 

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| Staff Writer

When I'm not writing on TechRaptor, you can normally find me on YouTube pulling stupid faces under a silly pseudonym.