Nintendo has been selling the 3DS at a loss, but that's expected to change in the next fiscal year. "In the first half of the next fiscal term, we are now anticipating to get out of the situation that we sell the hardware below cost."
Nintendo is expected to post a massive 45 billion yen ($575 million) loss for the fiscal year ending in March 2012. How did it get there? The plummeting value of the dollar versus the yen certainly impacted the company's bottom line. An even more significant factor was the drastic, sudden price drop implemented on the 3DS over the summer, which caused Nintendo to sell the handheld at a loss.
That's expected to change in the next fiscal year. "In the first half of the next fiscal term, we are now anticipating to get out of the situation that we sell the hardware below cost," Nintendo president Satoru Iwata said.
When the system launched, the materials cost of the 3DS was about $101, excluding the cost of R&D, marketing, retail, etc. It's likely to cost significantly less now. By Nintendo's estimate, the company will stop losing money by September of this year.
While investors will have to brace for a rough fiscal 2012, Nintendo predicts the next fiscal year should offer far better news. Sales of the 3DS have "drastically increased," and once Nintendo returns to being profitable on hardware again, the momentum will only help the company. According to their investor's report, the platform is selling at a faster pace than the original DS or the Wii in first-year sales. "This brought a pleasant surprise to the video game industry and changed the thoughts of third-party software developers for the better," Iwata gloated.