How Nintendo Is Being Kicked When It's Down

In Japanese, it's called "endaka" (円高), or "high-valued yen". And it's wreaking havoc on so much of the country.

If you are living in Japan, getting paid in yen and then converting that into another currency, or if you are importing goods from outside the country, the strong yen is gravy. If you, like me or Nintendo, are taking dollars and converting that into yen, you are getting screwed. Bad.

Today, Nintendo released its latest financial earnings. They were bad, but not as bad as first thought. Nintendo is selling fewer games and less hardware. However, it still is releasing hit titles. The 3DS isn't doing gangbusters yet, but people are buying it, and sales are on the uptick. The handheld should have a strong holiday season.

It's an odd in-between period as the 3DS finds its audience, and Nintendo readies a brand-new home console. But what's kicking Nintendo when it's down, and what's killing Toyota, hell, what's killing me, is the strong yen. According to Toyota, the strong yen is hurting the company more than the earthquake. For a country that sells its goods all over the globe, the strong yen has been devastating.

More and more production seems like it will be moved outside of Japan, accelerating the "hollowing out" of the country's manufacturing section. That means more and more working class Japanese people are going to be out of jobs. It means that foreign goods are cheaper, so people buy them and not Japanese ones. A vicious cycle is created.

Even companies like Nintendo, who have long outsourced their manufacturing to China, are getting hammered when they bring their foreign-earned profits home. Almost 80 percent of Nintendo's net sales are foreign, meaning that Nintendo loses money on every single dollar and euro it brings back to Japan. In the past six months, Nintendo lost ¥52.4 billion or US$600 million on simply exchanging foreign cash into Japanese yen.

The games we play are the same. The hardware is the same. The prices are roughly the same. Unfortunately for Nintendo and others, the value of money isn't.

(Top photo: Shizuo Kambayashi | AP)

You can contact Brian Ashcraft, the author of this post, at bashcraft@kotaku.com. You can also find him on Twitter, Facebook, and lurking around our #tips page.