Last week Nintendo reported it is expecting its first annual loss in its 30 year history. In the last six months, the company has lost nearly $1 billion dollars. According to EEDAR's Jesse Divnich, we shouldn't panic for Nintendo yet.
"I am not too concerned for Nintendo. Nintendo has consistently delivered high-quality products and I think we owe them the benefit of the doubt that they can once again retain the crown in profitability and hardware sales," said Divnich. He also noted Nintendo has hit tough times before, "They’ve stumbled before with the Virtual Boy and the Gamecube, and have easily bounced back with their next release."
Jesse Divnich is the VP of Electronic Entertainment Design and Research. You probably recognize him from Feedback. He points out how difficult console transitions are on video game companies and this is most likely the cause for Nintendo's financial woes. "There are a lot of sunk R&D costs that really drive down profits right before a console launch. I believe this loss is a combination of the poor 3DS sales and the costs Nintendo is currently occurring with the Wii-U development."
While Divnich has faith in Nintendo, he does note how pivotal the Wii U will be for Nintendo. "It does put a lot of pressure, however, on the Wii-U since Nintendo has never had two hardware products perform below expectations consecutively."
I think it bodes well for Nintendo that an industry analyst has faith they will bounce back. I admit when I first read how much Nintendo had lost I was worried, but they've recovered from loss before.
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