Let us all be honest with ourselves and admit together that the Wii U is not doing great at all. In fact, if things keep going like they are, the Wii U will reach that dark area where it will take a miracle for it to find its way back into the light. It almost seems like the day after the November 18th Wii U release that the “Nintendo is doomed” talk started to appear. This doom of one system has turned into a total oblivion for a company that has been around for over a 100 years. Even if the Wii U is a failure, does that mean Nintendo should close their doors and walk away from everything? Let us play the what-if game to figure out what it would take for Nintendo to fail as a company.

Everyone’s favorite video game analyst, Michael Pachter, made a statement that went pretty much unnoticed. “I think Nintendo is no longer able to compete the way they did in the past and sell their consoles at a big profit.” The good news is, Nintendo has something around 8 or 9 billion dollars – billion – of cash on their balance sheet. When they lose money, they lose something like a billion dollars. And frankly, I think next year their losses will be smaller. I think if they lose money, it’ll be between $100m-$200m. They can run for 50 more years and keep losing money and they’re not going to go out of business. So they aren’t forced to do anything. “ To be clear, that is 8 or 9 billion dollars in extra cash that Nintendo has stored up like Scrooge McDuck.  Until the Wii U, Nintendo had managed to make a profit on most of their systems. A good example of this is the Nintendo Wii.

The catch-phrase, “the Wii printed money,” is one of the most accurate symbolism for the Wii.  According to a December 2008 Forbes report, Nintendo was making $6 in operating profit for every Wii sold. At that time the Wii had sold 40 million units. That would come out to $240 million Nintendo had already made off the Wii in the first two years. This profit number could have only grew as time went on and technology became cheaper. Let us assume that during the Wii’s lifetime, that Nintendo averaged around  $10 for every Wii sold. If we add in the total Wii sales of 100 million, Nintendo has made 1,000,000,000, just off the Wii.

Like any smart company, Nintendo doesn’t put all their faith in one type of revenue stream. A recent Nintendo annual report claimed that Nintendo has sold around 4 billion software units between handhelds (1.907 billion) and console (2.195 billion). There are too many variables and information we do not know that will keep us from honestly predicting the average profit per game unit sold. For fun we will assume a low average for a console game could be around $1 per game. That would mean, that over 30 years, Nintendo has gained a profit of 4 billion in software alone.  According to the same report, Nintendo has moved around 5.5 million pieces of hardware in the past 30 years; Home console (268.97 million), portable (385.15 million). If that $10 profit holds up, that is another 5.5 billion dollars. For those keeping track, that is almost 10 billion dollars we just math’ed. These numbers do not take into account what Nintendo made off peripherals that went along with their systems and all the Nintendo merchandise that the cool kids have. To sum everything up, it shouldn’t be too hard to imagine Nintendo has made billions of dollars and they could be swimming a vault full of golden coins.

The simple answer to what it would take Nintendo to fail – a lot. It would take a few years of consistent poor sales for Nintendo to have serious troubles. When I say poor sales, let us not forget Nintendo has two systems; it would take poor sales of both systems for Nintendo to be in real trouble.

Over the years, it could be hard to find Nintendo struggling on both the hand-held and home console front simultaneously. While one struggles, like the GameCube, there was the Game Boy and DS to help ease the pain. Then we take a look at the struggles or the 3DS, and remember the Wii was still selling surprising well for the time. Now we have the Wii U and its problems, but thanks to one of the hottest systems, the 3DS, the Wii U struggles are eased. For Nintendo to financially struggle, quickly, it would take both systems to fall flat on their faces, for an extended period. But with both systems simultaneously failing, it would still take a few years before Nintendo was in any real financial trouble.

There is a lot more to this then what was presented. We could take a look at operation loss, net income, what it would cost to launch another system so soon, R&D, marketing, and so on. Even without counting all that, the main idea stays the same. Nintendo has enough money to ride out the weak Wii U sales for some time. In fact, just take a look at some of your other favorite electronic companies and compare their last fiscal report to Nintendo’s. I am sure it will not be too hard to find other major electronic companies just as bad or worse off than Nintendo.

Even though I am right there with everyone in claiming the Wii U is in trouble, Nintendo, as a company, is just fine. Looking back at the GameCube, Nintendo has already proven that they could survive what the industry would consider a console flop. Now, over ten years later, and thanks to the Wii and DS, Nintendo should be in a better financial state to weather a storm of a flop. There is no reason to believe Nintendo, as a company, is in trouble if the Wii U flops. Nintendo will just pick themselves up and try at least one more time to make a successful console.