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- 30 Apr 2002
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Erfolgreich ist, wer am meisten verdient, und wer könnte das wohl in der Videospiel sparte sein? MS? Nein sicher nicht. Sony? Ja gewiss sind sie aber... so erfolgreich wie Big N? Weit gefehlt. Lest selbst diesen äußerst interessanten Artikel der sich mit den aktuellen Finanzberichten von Sony, Nintendo und MS befasst:
Nintendo's GBA, NDS und GBA SP sowie GameCube zusammen sind also die erfolgreichsten im Bereich "Operating Earnings" der einzige wo man Sony, als auch Nintendo und MS vergleichen kann beim net profit geht das nicht, da Sony und MS diesen für alle Sparten zusammenfassen, dann wären wir beim Vergleich Äpfeln und Birnen.
Unterm Strich wird deutlich wer eindeutig am meisten Geld in dieser Branche macht und wer die treibende Kraft ist, es ist nach wie vor Nintendo, so wie sie es schon seit der Einführung des NES und des Gameboys vor rund 20 Jahren waren.
EXPLAINING TERMS
Before we dive in to the intimidating world of financial reports, though, let’s define a few terms first.
First, you have “sales,” or revenue. This is a pretty raw number which tells us how much money a company made in selling products. Secondly, and probably the most important term for this discussion, you have “operating earnings,” also known as operating profit (if you made money) or operating loss (if you lost money). Operating earnings is, essentially, “sales” minus the cost of goods sold (how much it cost to make the products), marketing expenses (which the Big 3 certainly have a lot of), administrative costs, etc. So, this is where big spending and taking a loss on system sales may come to haunt a company.
Finally, you have “net profit” (or “net loss”), also known as the bottom line. This would normally be the most important thing to look at in a company’s financial reports, as it tells us the final amount of revenue a company made after taxes. However, companies like Microsoft and Sony only report “net profit” for the entire company. If we were only to look at net profit, Microsoft would win because it also makes products like Windows. In this discussion, we will look at operating earnings because those numbers are available for each of the company’s game divisions.
There is one other word of caution I must make – Sony and Nintendo have a different fiscal year than Microsoft. Yes, companies are strange and don’t start their years with January and end with December. Instead, Sony and Nintendo start with April and go through the next March in reporting fiscal results, while Microsoft starts with July and goes through the next June. While Sony and Nintendo’s most recent fiscal year results are out, Microsoft’s are not, because they are not finished with the fiscal year. For this discussion only, I will include the fourth quarter of its last fiscal year along with the first three quarters of its current fiscal year in examining financial health. (Basically, the numbers below take a look at the four most recent quarters for each company).
THE BIG TEST: OPERATING EARNINGS
I’ll start with Microsoft. As I alluded to earlier, the Xbox isn’t exactly doing a lot for Microsoft financially. Every fiscal year, Microsoft has reported a sizeable loss in operating earning for its Home and Entertainment division. Now, the Home and Entertainment division does not only do Xbox – it also does PC games and Microsoft’s “TV platform” – but the Xbox makes up the largest part of the division.
The news isn’t all bad – in Microsoft’s second quarter of fiscal year 2005, the Home and Entertainment division made profit for the first time ever, thanks to $300 million in sales by Halo 2 alone and overall revenue of $1.4 billion. Microsoft ended the quarter with an operating profit of $84 million. However, the very next quarter, the Home and Entertainment division was back to where it began, with sales of $593 million but an operating loss of $154 million. That kinda cancels that one out, doesn’t it?
Backtracking, in the first quarter of fiscal year 2005, the Home and Entertainment division reported $632 million in revenue, but ended with an operational loss of $142 million. And in the fourth quarter of fiscal year 2004, the Home and Entertainment division reported $499 million in revenue, but a $339 million operational loss.
Put it all together, and for the last four quarters, Microsoft’s Home and Entertainment Division has reported revenue of over $3.1 billion but a $551 million operational loss. The Xbox’s selling at a loss, as well as very high marketing spending, were major contributors to the operational loss.
Next, we have Sony; unlike Microsoft, its games division was profitable during the most recent fiscal year. Overall, revenues were at 729.8 billion yen, or approximately $6.76 billion. Its operating profit was 43.2 billion yen, or $400 million. Still, that’s over a $6 billion drop going from revenue to operating profit, and a 36.1% drop from the previous fiscal year. One of the prime instigators, says GameSpot? The PlayStation Portable launch.
And finally, we have Nintendo. Even with three systems in its hands, including a recent launch of the Nintendo DS, Nintendo’s operating profit increased by 3.6% in the new fiscal year to 111.5 billion yen, or $1.03 billion. Its revenue was also 515.3 billion yen, or $4.77 billion, meaning a $3.74 billion drop from revenue to operating profit, compared to Sony’s $6.36 billion drop. Quite simply, Nintendo’s conservative business principles have allowed the company to turn respectable operating profits. No drop because of the DS launch or even less GCN sales here.
INVESTORS TRUST NINTENDO
You may not hear a lot about Nintendo’s fiscal strength in the press, but investors understand it well. According to Reuters, in the most recent fiscal year, Nintendo was one of the few video game companies that gained in the stock market. The company's shares rose 11.3 percent in the last fiscal year, while Electronic Arts lost 3.6 percent, Microsoft dropped 3 percent and Sony lost 2.1 percent.
WHAT THESE NUMBERS MEAN
Just like last week, we can pretty much nail one thing right off the bat – Nintendo certainly isn’t going to pull another Sega any time soon. What we have here is a successful company that knows what it has to do to turn a profit.
We also see the fiscal consequences of managing a video game system like Microsoft, or even Sony. It should be abundantly clear that if Nintendo made the GameCube more powerful than Xbox, put DVD movie playback features into the GameCube, took the ‘Cube online like Microsoft, etc., it would only have negative consequences on the company.
Let’s be clear – Microsoft can afford to lose money on Xbox. In fact, spending as lavishly as Microsoft has done on the Xbox will only help the company in the long run, and Microsoft expects to start making profit by fiscal year 2007. But Nintendo isn’t Microsoft – they don’t have a Microsoft Windows to absorb any losses.
THE REVOLUTION REVISITED
In the last Latest Line, with Nintendo’s market share analyzed, we looked at how Nintendo’s decision to bring out a third pillar really did make sense.
Similarly, an analysis of Nintendo’s profitability helps us understand Nintendo’s path with Revolution. The PlayStation 3 and Xbox 360 will be many times faster than their predecessors, while the Revolution will only be 2-3 times faster (says USA Today, anyway). It seems clear that, if Nintendo desires to remain profitable, trying to win a video games arms race isn’t going to help much, and Nintendo has realized that.
I didn’t mention it in the article, but Nintendo ended its most recent fiscal year with its net profit skyrocketing 163% over the previous year. Next year, it expects to pull in another 75 billion yen in net profit; in comparison, Sony as an entire company (including the electronics division, games division, etc) expects to bring in 80 billion yen. And Nintendo only makes video games.
Are we really supposed to believe Nintendo is struggling?
Success is a funny thing. Most of the time, as video gamers, we have a tendency to look at how game companies are doing from our glasses only, meaning how many sales their consoles have made in North America and how much third-party support each system has - and that’s to be expected.
But when we take a step back and try to see the big picture, especially from Sony, Microsoft and Nintendo’s perspective, we see a different ball game. Suddenly, we see that Nintendo is actually pulling in a nice amount of cash, that Nintendo depends on more than just GameCube for market share, and that Microsoft isn’t doing as well in territories like Japan as it is in North America. When we determine the success of companies like Nintendo, we must not limit ourselves to simply North American console sales.
Nintendo's GBA, NDS und GBA SP sowie GameCube zusammen sind also die erfolgreichsten im Bereich "Operating Earnings" der einzige wo man Sony, als auch Nintendo und MS vergleichen kann beim net profit geht das nicht, da Sony und MS diesen für alle Sparten zusammenfassen, dann wären wir beim Vergleich Äpfeln und Birnen.
Unterm Strich wird deutlich wer eindeutig am meisten Geld in dieser Branche macht und wer die treibende Kraft ist, es ist nach wie vor Nintendo, so wie sie es schon seit der Einführung des NES und des Gameboys vor rund 20 Jahren waren.
- Net Profit = Reingewinn[alle Kosten für Personal, Werbung, Produktion, Lagerung, Distribution einfach alles bereits abgezogen, das landet auf dem Konto von Nintendo und addiert sich zu deren 6 milliarden Dollar hinzu]
] könnten sich die Strategen ne gewaltige scheibe von abschneiden.
