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A recent Nintendo investor briefing included more than 30 slides with fascinating details on the company's success with DS and Wii in the U.S. and Europe -- as well as many detailed on the company's competition -- compiled by Gamasutra and presented here with detailed analysis.

Eric Caoili, Blogger

November 1, 2007

11 Min Read

Nintendo Co., Ltd. president and CEO Satoru Iwata and other senior management held an investor briefing last Friday aimed at Western investment professionals. The goal was to explain in depth the company's financial results, sales trends, and future strategies.

This followed the announced second quarter financial results and figures from the previous day, in which Nintendo raised its full year forecast, expecting net sales of ¥1.55 trillion ($13.59 bn) and a net income of ¥275.0 billion ($2.41bn).

We've extracted over thirty slides from the 40-minute presentation, looking over regional sales for the Game Boy Advance, Nintendo DS, and Wii, as well as data for several individual software titles. We also have graphs tracking hardware and software sales transitions for all of the major consoles.


Compared to last year's financial term, April 2006 - March 2007, Nintendo has so far seen a 132.5% increase (¥694.8 billion, $6.07 bn), largely attributing this sharp rise to the Nintendo DS Lite's release in all territories and the Nintendo Wii's launch. Operational and recurring profits received similar increases, contributing towards a net profit of ¥132.4 billion (#1.16 bn). The company greatly exceeded its own sales and profit forecasts made earlier this year in July.


Nintendo's sales in this fiscal year's first two quarters were at the highest they've ever been since 2005 - 2006, almost reaching 2007's third quarter holiday levels. Once again, the Nintendo DS and Wii's global hardware and software success are credited for the rise. Iwata also posits that "the so-called seasonality factor in determining demand has become smaller." Operational profit has matched the increased sales, resulting in quarterly numbers at their highest in the past three years.


Previously, it was believed that a 20 million units installed base was the limit for any console sold in Japan. Nintendo has already reached that so-called limit with Nintendo DS shipments in less than three years after the system's launch in the country. The company's plan is to not only have a single Nintendo DS in every household, but multiple Nintendo DS systems for each household.


While the Americas made up for over half of the Game Boy Advance's total hardware and software sales, Japan and Europe halving the remainder amongst themselves, the sales breakdowns for the Nintendo DS have been more even.

Japan, the smallest of the three territories in both population and size, was actually the Nintendo DS's largest market in September, while the Americas were the smallest. Expanding the breakdown to the first half of the fiscal year, however, shows Europe as the largest market for DS software and hardware during the April to September period.


On the home console side, the Americas once again dominate the charts, accounting for the majority of Wii hardware sales and over half of software sales. Japan's lesser percentage reflects the "softening" demand we've seen in weekly sales reports -- such as this one -- from the country - though could potentially be a supply-related trend.


As hardware sales for the Game Boy Advance have decreased in the past two years to make way for Nintendo DS purchasers, the portable market as a whole has expanded significantly in the U.S. and Europe (U.K., France, Germany, and Spain in these results). The Nintendo DS has nearly replaced the GBA in Europe. Sony's PSP has captured a portion of the portable audience, improving on its 2006 system sales in the U.S., but failing to really increase its market share in both regions.


Software sales for the Nintendo DS also show the handheld taking over the GBA's share while at the same time expanding the portable software market as it exists during the January - September months. In Europe, that market has more than tripled in the past two years, the Nintendo DS being the primary element. Again, though the PSP has carved itself a notable audience, the charts show very little growth in the past year for Sony's handheld, software-wise.


The Nintendo Wii has contributed greatly to overall hardware sales in the U.S., putting up much better numbers in 2007 than the GameCube in its later years. The GameCube and original Xbox have for the most part disappeared, but Sony's PlayStation 2 remains a force, maintaining its sales and matching the Xbox 360. Its intended successor, the PS3, comes in third in next-gen console sales.


Though Europe's market is only half of that in the U.S., Nintendo has managed to duplicate its sales success with the Wii in the territory. System sales for the PlayStation 2 continue to surpass those of the Xbox 360, and the PS3 takes second in the next-gen console sales competition, also overtaking the Xbox 360. As these charts only track January - September sales, it is important to note that they do not take into account hardware and software sold during the holiday season.


PlayStation 2 titles make up the bulk of software sales in the U.S. and Europe again in 2007, as they have in previous years. The Wii's 2007 numbers equal the GameCube's in 2006, but its software growth isn't yet matching its hardware's. Microsoft's Xbox 360 has benefited largely from the Xbox's demise and the PlayStation 2 sales' slow decline. Even with the PlayStation 3 hardware's current state in Europe, its software sales in Europe are relatively low.


With its PSP, PS2, and PS3 combined, Sony comes out on top in software sales in the U.S. and Europe, mostly supported by the PlayStation 2. The Wii's software sales trails behind the Xbox 360's in both territories, with the Xbox 360 being the next-gen leader, whereas the Nintendo DS is growing towards PlayStation 2 numbers.


Nintendogs, Brain Training (known as Brain Age in the U.S.), and Brain Training 2 have performed very well in Europe, with sales in some cases outstripping Japan's and showing a notable 'long tail'. While also popular in the U.S., the Brain Training series isn't selling nearly as well in the States. Neither the U.S. nor Europe have experienced the same success as Japan's with the second edition of Brain Training.


In this chart, the growth of each console's hardware sales since launch are compared. The Wii's sales have risen at a record speed, outperforming even the PlayStation 2. The Xbox 360 was actually slower to sell than the Xbox in the same period of time. That orange line at the bottom, right under the GameCube, is the PlayStation 3's hardware sales.


After the Nintendo DS Lite's release in the U.S. in June, 2006, sales for the handheld rose dramatically. Limited availability at the beginning of 2007 constrained the system's hardware sales, but once the shelves were stocked, the Nintendo DS's sales went right back up. The PSP's sales sharp in September crease can be attributed to a recent hardware revision.

The second graph tracks Europe's portable hardware sales, emulating the U.S.'s peaks and valleys. While this year's Nintendo DS sales seem to fall off at the same time as the PSP line's rise (week 36 - 38), it's worth noting that the DS sales' decline mirrors last year's drop.


Despite limited availability, Nintendo remained the console leader in hardware sales for the majority of 2007 with the Wii. While Microsoft spent the year trailing behind at about half of Nintendo's numbers, the Xbox 360 managed to just barely break Nintendo's seven-month streak in September with the release of its flagship title, Halo 3. PlayStation 3 hardware sales, however, haven't moved much from its third place position, settling at a sluggish 20k.

Iwata blames U.K. shortages for the drop in Wii hardware sales in Europe during weeks 39 and 40, as shown by the large spike afterwards after stocks were replenished. The PlayStation 3 also saw a sudden rise in sales once its price was cut. Bumps in the Xbox 360's line indicate the system's price cut and new configurations.


Finally, following higher than expected sales and profits, Nintendo has revised its expected estimate of shipped hardware and software for the Nintendo DS and Wii. As mentioned earlier, forecasts for the fiscal year's sales (¥1.55 trillion, $13.59 bn) and profits (¥275.0 billion, $2.41bn) have also been updated. Overall, Nintendo's presentation showed a comprehensive, well-put together picture of the state of the console and handheld business in 2007.

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About the Author(s)

Eric Caoili


Eric Caoili currently serves as a news editor for Gamasutra, and has helmed numerous other UBM Techweb Game Network sites all now long-dead, including GameSetWatch. He is also co-editor for beloved handheld gaming blog Tiny Cartridge, and has contributed to Joystiq, Winamp, GamePro, and 4 Color Rebellion.

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