Nintendo Profit Drops from Christmas sales

On January 28, 2010 Nintendo Co., maker of the Wii game console, reported a profit of 192.6 billion yen ($2.1 billion) over the last nine months. That was down 9 percent from the same period in 2008, in which Nintendo generated profit of 212.5 billion yen ($2.35 billion).

Nintendo blames an unproductive first half, a 20 percent price cut of the Wii game console, and the rising value of the yen. Because Nintendo makes 85 percent of its revenue outside of Japan, the stronger yen reduces the value of overseas earnings.

Since the launch of the Wii game console in 2006, Nintendo has consistently outperformed its rivals. However, recent sales have fallen allowing Microsoft, maker of the Xbox, and Sony, maker of the PlayStation, to close the gap.

Much of Sony and Microsoft’s recent success can be attributed to price cuts to their gaming consoles in 2009. Prior to the holiday shopping season Nintendo did the same, lowering the Wii price from $250 to $200 in the U.S. (25,000 yen to 20,000 yen in Japan).

The reduced Wii price allowed Nintendo to set a record (3.8 million units) for the most gaming systems ever sold in a single month in the U.S.. Nintendo sold more Wii units than Microsoft and Sony sold Xbox 360 and PlayStation 3 units combined.