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Nintendo on Friday warned it would swing back into the red this fiscal year as the Japanese gaming giant slashed its sales target for the Wii U console, blaming poor sales over the key holiday season.
The dramatic downgrade stands in marked contrast to rivals Sony and Microsoft which have seen huge demand for their new consoles as the firms battle for control of a sector worth about $44 billion annually.
Nintendo said Friday it expects a loss of 25 billion yen in the year to March, reversing an earlier 55 billion yen net profit forecast, while annual revenue would drop 36%.
The company, maker of the Donkey Kong and Super Mario brands, also said it expected to sell just 2.8 million units worldwide of the Wii U, less than a third of it earlier prediction for 9.0 million consoles.
Nintendo's hopes for big holiday season demand to boost flagging sales were dashed, forcing it to chop forecasts as demand for the Wii's high-margin software slumped, it said.
"During the year-end shopping season, we weren't able to lift sales momentum for the Wii U," Nintendo President Satoru Iwata told a press briefing in Osaka.
"The decrease in game software sales is having the biggest impact" on profit, he added.
Demand was weak in the crucial European and U.S. markets, Iwata said as he apologised to shareholders.
"My duty, more than anything else, is to revive our business momentum," he said.
Nintendo's Tokyo-listed shares ended down 2.75% at 14,645 yen on Friday, before the firm made its announcement.
The firm's revised figures came as key domestic rival Sony saw record demand for its new PlayStation 4 console, which had already sold more than 4.2 million units by the start of the year.
The console was launched on Nov 15.
US rival Microsoft has also seen robust demand for its Xbox One console, which sold more than one million units in the 24 hours after its November release.
For Nintendo, the grim forecast is especially disappointing after it scratched back to profitability last year thanks to a sharply weaker yen, which inflates Japanese firms' repatriated profits.
The company has previously blamed weak earnings partly on high development and marketing costs for the Wii U, although sales of its 3DS handheld console and related game titles fared better.
Nintendo, which cut prices for both products to shore up flagging sales, launched the Wii U in late 2012 with high hopes it would repeat the original Wii's blockbuster success.
But analysts said a lack of games took away some of the fizz the company had been hoping for after the 3DS -- the world's first video game console with a 3D screen that works without special glasses -- had initially suffered from disappointing demand abroad.
Sony, Nintendo and Microsoft are giants in the global video games industry, but have faced tough economic conditions in the U.S. and Europe, while also fending off a challenge from cheap -- or sometimes free -- downloadable games for smartphones and tablets.
© (c) 2014 AFP
6 Comments
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combinibento
My take is that Nintendo's main thing is to release very playable, fun games without all the bells and whistles you find under the hood of a PS4 or Xbox One. It's a noble thing to focus on playability over graphics and the like, but the thing is that mobile devices have become just as viable a platform for "fun games without bells and whistles." Candy Crush, Angry Birds, Fruit Ninja... Those are fun and addictive games and you don't need a console to play them. If you DID want more than that, you'd opt for a PS4 or Xbox. There really is not a compelling reason to buy a Wii U anymore.
Fox Cloud Lelean
Nintendo's main problem is that they were slow in releasing their powerhouse game titles: the Mario, Donkey Kong, Pokemon and Zelda franchises. The Wii U launched with fairly weak games that mostly taught you how to use the Wii U's new controls, and provided about five minutes of fun, but that was all really. Xbox and Playstation on the other hand pushed out some of it's champions right off the bat, so hardcore gamers could get straight into the games they love, parting with their money willingly to do so. With Nintendo fans, they had to wait for the games to get good. By that time, the Wii U was no longer selling at launch price, so fans were paying less. It's a tactic that started with the Wii, which also had a fairly weak launch, despite Wii Sports and Red Steel. Fans would wait a couple months for games like Super Mario Galaxy to come out, then they would buy the Wii at a lower price, getting a quality game and paying less. Neither Microsoft or Sony made that mistake.
Revitalizing Wii U sales is not going to be easy. Nintendo will have to release a high volume of its heavy hitters in a short period of time. The fourth Smash Bros game is due to be released later this year. Smash Bros is a popular franchise, so sales should be strong. Factor in it's debut into the handheld market as it gets released on the 3DS as well, and that should help out. If there were a Mario game, a Zelda game and a Pokemon game being released during that time as well, say during the same financial quarter, that will drive up demand and ratchet up sales.
Whatever consoles Nintendo plans for the future, they need to enure that it gets launched with a powerhouse, like the Gamecube was with Zelda: Windwaker. Nintendo has never had to rely on graphics or features to push its sales: their games have always had the quality to counteract that and then some, but perhaps they should feature some "bells and whistles" to strengthen their weaker games, the ones that don't comprise a part of their core franchises.
HCKpro
????
Wind Waker wasn't a launch title for the GameCube. It came out a year or so after the console had launched in all territories.
And Nintendo HAS relied on graphics and features to drive sales. Super Famicom, Nintendo 64, and Game Cube were all about graphic power. It was a top Nintendo selling point up until the Wii when they suddenly started the "graphics don't matter" mantra because they had to.
Raymond Chuang
The biggest problem with Nintendo is that the Wii U doesn't have a wide selection of third-party games like the PlayStation and Xbox does. Nintendo needs to aggressively court third-party game developers a lot more.
oldman_13
Nintendo execs screwed up big time in under powering the Wii U.
A 'next generation' system that is maybe only slightly more powerful than a PS3 or Xbox 360?
Unacceptable.
That alone kept game buyers away in droves. Why waste money buying a system only as good as your competitor's last generation systems? Where's the logic in that?
Paying the price of hubris.
Carcharodon
Wii u is a great option for children, I guess they are an insignificant market in the grand scheme of things.