Wii U R&D Costs Over-ride Profits from Nintendo 3DS – Analyst

When Nintendo posted its profits for the past three months ending on June 30th, not only did it manage to sell only 160,000 units worldwide for the console but it also failed to post a profit despite the 3DS handheld being extremely successful.

IHS head of games Piers Harding-Rolls managed to explain just why, stating, “While 3DS platform profitability has grown during the quarter, the traditional slow nature of sales from April to June means that any significant increase in R&D costs for Wii U software would easily overwhelm these profits.

“Even so, IHS expects R&D costs for Wii U software to continue to undermine profitability for at least the next four to six financial quarters, as Nintendo seeks to generate momentum for the stalled Wii U platform by spending more on developing its own software.”

Echoing yesterday’s statements from Baird Analyst Colin Sebastian about the Wii U’s fate resting on the popularity of its holiday games lineup, Harding-Rolls also stated that, “[U]ntil we experience a strongly backed holiday sales season for the Wii U, long-term outlook is less clear. If sales of the Wii U fail to impress during the holiday season, IHS will downgrade its outlook for the platform and implement a significantly shorter sales cycle for the Wii U compared to the other next generation consoles.”