Poor Wii U sales send Japan’s Nintendo back into red

May 7, 2014
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Poor Wii U sales send Japan's Nintendo back into red/AFP
Poor Wii U sales send Japan’s Nintendo back into red/AFP

, TOKYO, May 7- Japanese videogame giant Nintendo on Wednesday booked a $229 million annual loss, reversing a year earlier profit as dismal sales of its Wii U console during the crucial Christmas holiday period dented results.

Lacklustre demand for the unit saw the firm move 2.72 million units globally during the year, less than a third of its earlier prediction for 9.0 million and dealing a blow to hopes it would match the blockbuster success of the original Wii.

Nintendo said Wednesday it saw an annual net loss of 23.2 billion yen ($229 million) — reversing a net profit of 7.1 billion yen a year ago — on sales of 571.7 billion yen, which were down 10.0 percent. However, it said it expected to creep back into the black with a 20 billion yen net profit in the current fiscal year.

The maker of the Donkey Kong and Pokemon franchises has fallen on hard times in recent years, piling up losses as rivals Sony and Microsoft outpaced it in console sales.

All three companies are having to fight off a trend toward cheap — or sometimes free — downloadable games for smartphones and other mobile devices.

Sales were “not as high as expected”, Nintendo said, adding that price cuts and slower demand for the Wii’s high-margin software weighed on results.

The grim results are especially disappointing for a company that scratched its way back to profitability in its previous business year thanks to a sharply weaker yen, which inflates Japanese firms’ repatriated profits.

Nintendo has previously blamed weak earnings partly on high development and marketing costs for the Wii U, which was launched in late 2012.

– Losses show chasm with Sony, Microsoft –

Sales of the 3DS handheld console — the world’s first 3D videogame system that works without special glasses — and related game titles have fared better, but Nintendo cut prices on both consoles to boost sales.

The latest losses highlighted a growing chasm between Nintendo and rivals Sony and Microsoft.

In April, Sony said it sold more than seven million PlayStation 4 consoles since its launch late last year and Microsoft said last month it had sold more than five million XBox One consoles since they hitting shelves in November.

The Wii U took more than a year to sell 5.86 million units.

“The Wii U’s sluggish sales dealt a blow to Nintendo while sales of the 3DS have also lost their momentum,” said Eiji Maeda, an analyst at SMBC Nikko Securities in Tokyo.

“There is little Nintendo has currently to turn things around. They need to create a new market with something surprising.”

In January, company president Satoru Iwata said he would slash his salary in half for five months to atone for the downturn, while other members of the board will take a pay cut of between 20 and 30 percent.

Among the key criticisms levelled at Nintendo has been its longstanding refusal to license some of its iconic brands for use on mobile applications.

Iwata has said the firm would look at loosening that policy to promote some of its beloved characters on smartphones and other mobile devices.

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