Fahey: Nintendo-bashing undeserved after loss statement

I thought I'd share with you readers a nice little piece of editorializing I recently read by Rob Fahey of GamesIndustry.biz. Mr. Fahey sent this piece through the GI.biz e-mail newsletter, and it's being reprinted here with his permission. I think it speaks for itself, but I would like to add that I think it's essential for most video game publications to have someone on staff who understands how to read and interpret financial figures like the ones discussed below from a business standpoint. Without further adieu, Mr. Fahey:



It's not exactly uncommon for Nintendo to come under attack from a wide range of critics these days, and there's no doubt that some of the attacks are deserved - particularly those focused on the company's appalling treatment of the European marketplace. However, last week's announcement that the company has recorded a six-month loss figure saw the console maker savaged openly by a large number of commentators - some of whom should really have known better, and some of whom simply don't know enough to discuss financial figures like these.



Yes, Nintendo has dropped its projections for the first half into loss - but closer reading of the figures reveals that this is almost entirely down to losses made on its overseas cash reserves (some $5 billion) due to the stronger Yen and weaker US Dollar during the six month period. The company's operating profit projections, in fact, remained unchanged.



So why did so many news websites and industry commentators choose to read this news as proof that the GameCube is somehow doomed, while the continuing operating losses at Microsoft's Home and Entertainment Division scarcely cause an eyebrow to be raised? The answer is simple; Microsoft has an incredibly powerful and well-coordinated PR machine behind the Xbox, spinning every figure that emerges into a positive light, while Nintendo has seemingly decided that it doesn't need to get involved in the messy business of PR - making itself seem either arrogant or scared, depending on who you speak to, in the process.



This is perhaps Microsoft's biggest triumph with the Xbox to date - a spin machine which has successfully convinced the world that it's thoroughly thrashing the console veteran Nintendo in every way, despite the fact that most figures put the installed base of GameCube ahead of the Xbox by over 100,000 units, and that Nintendo continues to make healthy operating profits while the Xbox loses money hand over fist. Even shockingly poor figures - such as the 50,000 installed base of Xbox Live kits in Europe - have been made to sound positive with enough repetition and chest-beating from the Xbox team. Nintendo would do well to swallow its pride and learn some lessons from the new industry upstart, before the predictions of doom become self-fulfilling prophecies.