Why the Nintendo 3DS Will Turn in Profits for Nintendo

Nintendo is King in Japan. And the company recently celebrated another milestone in their hardware history with the Nintendo 3DS passing the 6 million mark in terms of sales. That's like a full 1 year and 3 months. I guess we will be having these kinds of news every time the handheld reach a certain million mark.

Whether that will result to a profit for Nintendo is the big news that I want to know. Well, we have known how much the company lost last fiscal year despite the massive sales the Nintendo 3DS got. But do I think this will actually turn into a profit for them?

Production Cost

Probably at this point in time and absolutely in the coming months, the cost for producing the Nintendo 3DS will decrease as depreciation of the parts' value will take over. That means the company will no longer take a hit for every Nintendo 3DS sold, but rather a net profit. Nintendo is expecting that sales of the handheld will remain in its pace now that the consumers will have more software to choose from and buy. Hence profit. Add the fact that the company thinks that the Nintendo DS will continue to sell outside Japan, and we all know how low cost it is to produce the DS now. Again, profit.

I do believe that this is the single most important issue that the haters (yeah, I finally said it) needs to think about when speaking of doom and gloom for a company that is way over a hundred years in existence and has more money in the bank than any decent company out there. 

The Consumers are King

What? They will succeed just because they will now turn a profit for every 3DS sold? Of course, not just that. Profit is one, success is another. If Nintendo continues to deliver what the consumers want, it is unlikely that the market will not buy their hardware. 

And we all know how much the world like their software. Throw a good Mario game (like everyone else) and it is unlikely that it will not sell. Pull Smash Bros. from the franchise vault and I doubt it won't turn into profit. Just take a look at Kid Icarus. Decades dead and gone, and then Sakurai chose to revive it. . . Just like that. Nintendo, is perhaps, the only company that has a library of franchises that are well loved it is doubtful that those will not sell. Add the culture part. Say video games to anyone and 99% of the time, Mario will be on their minds. 

What The Investors Want Is Different

Do they know what the consumers really want from Nintendo? We don't want them to make games for the smartphone. What we really want is to play Nintendo software in a Nintendo hardware. The reason why the Nintendo 3DS" launch went poorly is not just because of the price, but rather because the consumers cannot find value to what they will be paying for.

If the investors want Nintendo to produce for the smartphones, the people's perception of the company will change. They will not be Nintendo anymore, but rather, just another video game company. Just take a look at Sega. Or in other industries, look at the future of Kodak. Consumers are the product guys. They will not buy something to support the company at Wall Street (or in Nikkei, in our discussion.) They buy because of the product, and the value.

I am not skeptical of the upcoming Wii U, however. But I think the success of the Wii U and the continued sales of the Nintendo 3DS will be the factors that will determine whether the company will turn this year into a profit or not. It will also determine how much Nintendo's value as a company really is. Do I think the Nintendo 3DS will turn in a profit for the company? Absolutely.

What do you think? Do you have any justifications as to why Nintendo will turn a profit this year? Or are you betting against it? I encourage you to please join the discussion by leaving a comment below. Thanks much!