Sony sees huge loss, Nintendo profits fall, Apple noted as competition

Hearing about corporate losses is nothing new these days, so it is sometimes what ELSE is contained in those announcements that is of interest. In this generation of consoles, Nintendo has led the way with their always-profitable Wii and DS systems, while Microsoft and especially Sony have struggled to cut costs and boost sales to make profits, a struggle made more difficult by constant downward price pressures and the sagging economy.

In the latest quarter, Sony “said Thursday its net loss for the fiscal first quarter was 37.1 billion yen ($391 million) compared with a 35 billion yen ($368 million) profit in the April-June period a year earlier. Quarterly sales dropped 19.2 percent to 1.56 trillion yen ($16.4 billion).” Those results were noted as being “better-than-expected because of cost cuts, an easing of the yen’s appreciation and gains on the Tokyo stock market”.

Sony console sales for the quarter were 1.1 million PS3 systems (compared to 1.6 million in 2008) and 1.3 million PSP handheld systems (compared to 3.7 million in 2008).

Nintendo, on the other hand, still made money – but the news from them was seen as even more bleak. They were the only console company (aside from surprisingly strong performance of PC games) that saw gains in 2008, and their performance so far in 2009 has defied the economic realities. However, it seems that reality has finally caught up.

“Nintendo said net profit for the three-month period was ¥42 billion (US$443 million as of the last day of the period being reported), down 61 percent on the same period last year, while sales dropped 40 percent to ¥253 billion.”

More specifically, sales of Nintendo’s Wii console were down sharply to 2.2 million units for the quarter, off 65% in North America, 60% in Japan, and 47% in the rest of the world.

Even more telling, sales of the Nintendo DS handheld were down from 7 million to 6 million for the quarter, a drop of ~14%. This is significant as the new DSi handheld, featuring dual cameras, a download store and a host of multimedia features, launched late in 2008 in Japan and in April in the US and Europe. The sales in Japan saw a year-on-year increase, but fell everywhere else.

This could be a bad sign for the boost Sony is hoping to get from the launch of its ‘premium priced’ PSP Go in October.

A final note from the gloomy news: in their announcement, Nintendo said the following: “the company faces increased competition in the handheld business from Apple Inc’s (NASDAQ:AAPL) iPhone.”

Up to this point neither Nintendo and particularly Sony have admitted to the Apple iPhone / iPod Touch as a viable competitor in the gaming and portable media market. But it is clear that as family budgets tighten, buying a convergence system has become more attractive – and Apple’s App Store with low-priced games has made that an even easier choice for many.

It will be interesting to see what happens over the coming months.

Sources:
- Sony Losses
- Nintendo Profit Drop
- Nintendo news from New York Times

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Tags: Games & Gaming, Nintendo, Sony