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Wii U Sales Down 36% Prompting Nintendo Executives to Take Pay Cuts

Jan 29 2014, 9:12am CST | by

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Wii U Sales Down 36% Prompting Nintendo Executives to Take Pay Cuts
 
 

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Wii U Sales Down 36% Prompting Nintendo Executives to Take Pay Cuts

Nintendo has released their third quarter fiscal earnings report and the results, as expected, aren’t pretty.

Here are the highlights:

- An operating loss of $15M over the nine month period ending December 31st, 2013

- Revenues at $4.8B, down 8.1% from the same period last year

- An operating profit of $210M in the third quarter because of an uptick in Wii U holiday sales

- They missed their already revised targets for hardware and software sales. They predicted 2.8M Wii U console sold with 19M software units. The actual figures were 2.41M Wii Us sold with 15.96 software units. As recently as a few weeks ago, Nintendo said they expected to sell 9M Wii Us over that period.

- The 2.41M Wii Us sold is a 36% decrease over the same period last year

- The 15.96M software units sold is a 19% increase over the previous year

- To date Nintendo has sold 5.86M Wii Us worldwide

- Nintendo sold 1.95M Wii Us over the holiday, down from 3.06M last year

- 3DS sales are strong with 11.65M systems and 57.25M software units sold, but that’s down from 13.95M sold last year. Software sales are up from 49.61M

As can be seen, it’s not all bad news, but the Wii U is obviously underperforming, which should come as a surprise to no one. In response to these figures, Nintendo CEO Satoru Iwata said he’ll be taking a 50% pay cut for the next five months, with other executives slicing their salaries by 20-30%. The actual cost savings is a mere drop in the bucket, and the execs will likely be just fine because of their stock options, but it’s more of a symbolic gesture, admitting their own wrongdoing. Iwata is not stepping down from his role at Nintendo however, as some have suggested.

The report is a sobering reality check for Nintendo because as recently as a few weeks ago, they were still sticking with their predicted 9M in Wii U sales before they were forced to dramatically slash that forecast ahead of this earnings report. A company that would miss projections that badly would seem to be in need of a corporate shake-up to reassure investors they’re getting back on track, but outside of these pay cuts, nothing of the sort has been announced.

I’ve already prescribed a few immediate remedies for Nintendo’s woes that might not solve all their problems, but would at least give their fans and investors confidence they’re moving in the right direction. So far, none have come to fruition, unsurprisingly.

Nintendo can weather this Wii U storm as they have before, but with the video game landscape growing increasingly crowded between Microsoft and Sony's huge-selling next-gen systems, and new future entries from Steam, Oculus Rift and even Amazon , they’re going to have to find a way to stay relevant, and do so rather quickly.

Pay cuts are a nice gesture, but are only that, a gesture. It’s time for Nintendo to go to work and solve their very real problems they can no longer deny exist.

Follow me on Twitter , subscribe to my Forbes feed , and pick up a copy of my sci-fi novel, The Last Exodus , and its sequel, The Exiled Earthborn .

Source: Forbes

 

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<a href="/latest_stories/all/all/31" rel="author">Forbes</a>
Forbes is among the most trusted resources for the world's business and investment leaders, providing them the uncompromising commentary, concise analysis, relevant tools and real-time reporting they need to succeed at work, profit from investing and have fun with the rewards of winning.

 

 

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