Nintendo forecasts net loss, slashes Wii U sales target

Jan 17, 2014 by Peter Brieger
A man plays on a Nintendo portable video game console at an electronics shop in Tokyo on January 17, 2014

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 ($240 million) in the year to March, reversing an earlier 55 billion yen net profit forecast, while annual revenue would drop 36 percent.

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 demand to boost flagging 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.

A family plays on a Nintendo portable video game console at an electronics shop in Tokyo on January 17, 2014

Demand was weak in the crucial European and US 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 percent 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 November 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.

A man walks past a poster of Nintendo video game character Super Mario at an electronics shop in Tokyo on April 24, 2013

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 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 videogames industry, but have faced tough economic conditions in the US and Europe, while also fending off a challenge from cheap—or sometimes free—downloadable games for smartphones and tablets.

Explore further: Nintendo to stop making Wii console for Japan market

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