Nintendo boosts earnings forecast, cuts Wii U sales target

TOKYO, Japan – Japanese videogame giant Nintendo on Wednesday, January 30, said it returned to the black in the 9 months to December, and lifted its full-year profit forecast as the company looks to shrug off a loss a year ago.

But the Kyoto-based firm also warned over its much-hyped Wii U, saying it was chopping its sales expectations for the new games console in the fiscal year to March and also slashing its overall revenue projections.

The company has been banking on the Wii U to boost its fading fortunes after the original Wii consoles, launched in 2006, proved to be a runaway success as they lured legions of casual gamers into the videogame world with the introduction of motion-sensing controls.

Nintendo said it swung to a net profit of 14.54 billion yen ($160 million), from a net loss of 48.35 billion a year earlier, and upped its profit target for the year to March to 14 billion yen, from a previous target of 6 billion yen.

But Nintendo — which invented Donkey Kong and Super Mario, one of the best-selling video games of all time — said its profit upgrade was largely due to a weaker yen, as it slashed its revenue forecast for the fiscal year by 17% to 670 billion yen and warned it would post an operating loss.

Nintendo said the Wii U, which sold out in the United States during its first week of sales in November, was now expected to sell 4.0 million units through March, from a previous estimate of 5.5 million.

The original Wii device has sold more than 99 million units around the world.

The videogame giant also cut its software sales hopes for the Wii U, and chopped its target on the struggling 3DS, the world’s first video game console with a 3D screen that works without special glasses.

Nintendo faces severe challenges as it competes with Sony and Microsoft, makers of the PlayStation and Xbox, which are also battling for control of a sector worth about $44 billion annually, according to industry figures.

But as the trio face tough economic conditions in their key US and European markets, they are also fending off a challenge from cheap — or sometimes free — downloadable games for smartphones and tablets.

A strong yen, which makes exporters’ products less competitive overseas, and disappointing sales of the 3DS saw Nintendo report an annual loss of 43.2 billion yen in its last fiscal year, its first yearly shortfall since becoming a public company in the early sixties.

With the Wii U, Nintendo vowed to start a trend in “asymmetrical play” that lets players using GamePad tablets have different in-game perspectives and roles than those using traditional wand controllers.

The new console is also portable — offering up a challenge to smartphone games — but still offers players the option to jump, shift and shout as they wriggle their bodies to move the action onscreen, like the original Wii.

Osaka-listed Nintendo, which closed down 2.4% at 9,350 yen before its results were released Wednesday, was to hold a press briefing Thursday.

Earlier this month, its president Satoru Iwata said it would take some time for gamers to realise the benefits of Nintendo’s newest console.

“The attraction and importance of the handheld screen and how it works with the television can only be appreciated very gradually,” he told the leading Nikkei business daily. – Rappler.com