Has Nintendo Crested Already?


Nintendo had an awesome quarter, raking in operating profits of $900 million, a 60% jump y/y. This beat the average analyst estimate by about $100 million.

But that’s the last quarter. The future looks a lot less bright for the video game powerhouse: It’s predicting profit growth of just 9% for the next 12 months.

What’s going on? Isn’t the Wii still selling like crazy? Yes, it is. Nintendo is ramping up production by about a third every month, and it has two big games coming out in the next few months — Mario Kart Wii and Wii Fit.

But the company’s other mainstay, the ageing DS portable game machine, has hit the wall. It’s peaked in Japan, and will do so soon in the U.S. and Europe. Nothing to be ashamed of — the DS has been an exceptionally long-lived gadget.

And as the New York Times notes, the Wii itself may have an Achilles heel: People who own them don’t buy much software for them, and that’s where the game console makers are supposed to make most of their money: Wii owners only buy 3.7 games a year, compared with 4.7 for Xbox 360 owners and 4.6 for PlayStation 3 owners. If Nintendo can’t change that, the Wii’s huge success will start to look a little less impressive.

See Also: Nintendo Gets Downgraded — Have Wii Sales Peaked?