Sat, Jan 18, 2014 - Page 15 News List

Nintendo expects losses as Wii U, game sales stagnate

Bloomberg

Nintendo Co revised its forecast for the fiscal year to a net loss of ¥25 billion (US$240 million), cutting its projections for the Wii U console and saying year-end software sales were far below expectations.

The world’s largest maker of video game machines had projected a profit of ¥55 billion as it counted on Christmas shoppers to revive stagnant sales of its Wii U console. The firm cut forecasts for Wii U sales to 2.8 million units from 9 million.

“We can no longer expect our financial performance to recover in the current fiscal year,” the company said in a statement to the Tokyo stock exchange.

Nintendo posted a quarterly loss of ¥8 billion in October last year after cutting the price of the console in the face of new machines from Sony Corp and Microsoft Corp. Nintendo president Satoru Iwata also is trying to lure consumers who prefer playing games on tablet computers and smartphones including Apple Inc’s iPhone.

Nintendo’s family-focused content is losing its appeal as titles were delayed, casual gamers migrate to mobile devices and hardcore players opt for the faster Sony PlayStation 4 and Microsoft Xbox One. Nintendo also refuses to offer games with its lineup of iconic characters such as Mario and Zelda on mobile devices, limiting its ability to profit from surging demand by online players.

The Kyoto, Japan-based firm also cut its forecast for its handheld 3DS player sales to 13.5 million units from 18 million, and for 3DS software sales to 66 million units.

The revisions increase the pressure on Iwata, who vowed in October last year to meet a forecast for ¥100 billion in full-year operating profit and 9 million units in Wii U sales. Nintendo has lost about 80 percent of its market value since the introduction of the original Wii drove shares to a record high of ¥72,100 in November 2007, according to data compiled by Bloomberg.

Its market capitalization is about US$20 billion — less than Samsung Electronics Co’s planned capital expenditures.

Even with new titles including Pikmin 3, Nintendo failed to capitalize on US video game product sales that surged to their highest in three years last month.

Hardware sales increased 28 percent to US$1.37 billion from a year earlier, Port Washington, New York-based NPD Group Inc said on Thursday in an e-mail. The tally, the highest since spending hit US$1.84 billion in December 2010, drove total retail sales for the industry to their fifth straight monthly gain.

The Wii U’s price in the US was cut by US$50 to US$299.99 on Sept. 20 last year, while the Japanese price remained a suggested ¥30,000. Sony plans to introduce the PS4 at US$399 next month, while Microsoft is set to release the Xbox One for US$499 a week later.

The global video game market may reach US$111 billion by 2015, researcher Gartner Inc said on Oct. 29. Mobile games are the fastest-growing segment, with revenue set to reach US$22 billion by 2015 from US$13.2 billion this year, Gartner said.

This story has been viewed 1539 times.
TOP top