Nintendo 'studying smart devices' as shares tumble
The Japanese gaming giant slashed its sales forecast after its Wii U console failed to sell over the holiday period
Monday 20 January 2014
Nintendo suffered a drop in its share price of as much as 18 per cent after the gaming giant issued a significant profit warning last Friday.
The 125-year-old company has reduced its net profit forecast for the year ending March 2014 from 55 billion yen ($527m, £320m) to a net loss of 25 billion yen.
The dramatic change in fortune was blamed mainly on weak sales of the company’s Wii U console over the holiday period, with the sales forecast for the device cut by nearly 70 per cent, from nine million to 2.8 million units.
This was matched by a corresponding dip in software sales, with the forecast of 38 million Wii U titles cut in half.
The forecast for sales of Nintendo’s handheld gaming console, the 3DS, were also reduced, from 18 million to 13.5 million units.
The net loss is only the second in Nintendo’s 52 years as a public company, but follows hard on the first, announced in 2012.
Analysts suggest that the company’s traditional business model (selling hardware cheaply and recouping profits on the software) is the reason for the failure.
The Wii U was launched in 2011 but has failed to convince consumers.
The company has been stuck in the ever-shrinking middle ground of the gaming industry, as rivals Sony and Microsoft have launched high-powered consoles that also double up as media devices, and the casual gaming market has been cannibalised by smartphones and tablets.
Last week Nintendo president Satoru Iwata suggested that the company would have to re-evaluate its position in the market, declaring that he was “thinking about a new business structure”.
“Given the expansion of smart devices, we are naturally studying how smart devices can be used to grow the game-player business. It's not as simple as enabling Mario to move on a smartphone,” said Iwata.
Until now Nintendo has been hostile towards the smartphone market, dismissing these cheaper titles as offering short-term profits but eroding long-term value.
Transporting well-loved characters such as Mario and Link onto mobile devices would mean that Nintendo would no longer control the entire gaming experience, forcing them to rely on the cheap hardware powering many Android devices.
“If we think 20 years down the line, we may look back at the decision not to supply Nintendo games to smartphones and think that is the reason why the company is still here,” said Iwata.
He company is expected to hold a strategy event on 30 January following the full announcement of its third-quarter results.
Liam Neeson's Downton dreams
Thriller is set in the secret world of British espionage
Bomber jacket worn by Mary Berry sells out within an hour
Life & Style blogs
Daniele Watts: Django Unchained actress detained by Los Angeles police after being mistaken for a prostitute
Scottish independence referendum: A nation divided against itself
Scottish independence: David Cameron is becoming the 'George Bush of Britain'
Russia freezes Ukraine into submission: Kiev admits country doesn't have enough fuel for winter
Scottish independence: The Queen breaks silence on referendum debate – as think tank warns of £14bn black hole if Scotland votes Yes
Portuguese academic says British are 'filthy, violent and drunk'
- 1 Thailand beach murders: Thai PM suggests 'attractive' female tourists cannot expect to be safe wearing bikinis
- 2 Scottish independence: What you shouldn't tweet about if you want to avoid jail today
- 3 Scottish independence: Five reasons Salmond is secretly hoping for a 'No' vote
- 4 Isis plan to 'behead random member of the public' in Sydney thwarted by Australian police
- 5 Archbishop of Canterbury admits doubts about existence of God
iJobs Gadgets & Tech
£50000 - £70000 per annum: Ashdown Group: Cloud Product and Solutions Marketin...
£18000 per annum: Ashdown Group: An established and growing IT Consultancy fir...
£24000 per annum: Ashdown Group: An established and growing IT Consultancy fir...
£45000 - £55000 Per Annum 31 days holiday, pension, healthcare, annual bonus: ...