Nintendo loses money for the first time in two years

Posted by Mark Raby

Despite recent assurances from Nintendo that the company was not losing momentum, it today announced a net loss for its most recent quarter - the first time Nintendo has lost money in more than two years.

In its quarterly earnings statement, Nintendo posted a net loss of 25.2 billion yen, approximately $289 million. During the same three-month period in 2009, the company enjoyed a 42.3 million yen profit.

Nintendo still remains the leader in video game console sales, with the Wii and DS having topped global sales lists virtually every month since they were each introduced around four years ago.

However, both systems have seen declines lately as Sony's PS3 finally begins to see strength and Microsoft's Xbox 360 continues to do well in the North American market.

There was also a very big lack of blockbuster titles on Nintendo consoles over the last three months. And adding insult to injury, the value of the yen took a dive during the quarter, further lessening Nintendo's global value.

"The foreign-currency fluctuation exposure and sluggish consumer demand in the U.S. add up to a rather bleak outlook for the company," said UFJ Asset Management strategist Kiyoshi Ishigane in a Bloomberg report.

Nintendo is only going to face worse competition in the months to follow, as the Xbox 360 and PS3 both prepare to introduce their own motion-sensing controllers similar to the technology in the Wii. Additionally, the PS3's strong support for 3D will begin pushing the envelope for immersive and graphically intensive games, against which the Wii is absolutely unable to compete.

There is light further down the tunnel for Nintendo, as its 3DS handheld, the world's first glasses-free dedicated 3D gaming device, will be rolled out in Japan, followed by other regions, in less than a year from now.

It still does not look good for Nintendo in the big picture, though, as the Wii continues to look more and more like a relic against the more future-proof Xbox 360 and PS3 systems. It is widely expected that Nintendo will have to introduce new hardware for the console gaming market long before either of its competitors, but the strength it has built so far should give Nintendo some breathing room as it decides where to go from here.