Nintendo profits plunge by 50% as sales of Wii fall

Gaming giant cuts its full-year forecasts as sales of consoles and games decline
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The Independent Online

Gamers' enthusiasm for keeping fit or playing tennis in their living rooms may be on the wane as sales of the Wii console plunged in the first half, slashing Nintendo's profits and prompting the group to cut its full-year forecasts.

Nintendo said it had continued its strategy of "putting smiles on many people's faces... regardless of age, gender or gaming experience" this year. Yet there would have been few smiles in its boardroom as the gaming giant reported that net income had fallen from ¥144.8bn (£950m) to ¥69.4bn.

The falling profits were largely attributed to a fall in sales of the Wii console, as well as recent price cuts and the appreciation of the yen. The group cut its forecast for the full year from ¥300bn to ¥230bn.

The company sold 5.7 million Wii consoles in the first six months of its financial year, down from 10.1 million a year earlier. The number of games sold fell from 81.4 million to 76.2 million over the same period. Piers Harding-Rolls, a senior analyst at Screen Digest, said: "Nintendo had such a spectacular year in 2008, that the comparatives are really tough. But the Wii's adoption curve has steeply declined."

Nintendo admitted it released fewer game titles in the first six months that "briskly" drove hardware sales in the same way as the previous year. "The software hasn't been there in the first half and content has been hugely important," Mr Harding-Rolls said.

The Wii was a huge success as it expanded the computer game market beyond the "core" group of 18- to 35-year-old men with its innovative motion sensing game play, but there was talk the console had hit saturation point.

Mr Harding-Rolls said: "They have cut prices but there might be further to go. As a company they feel they can sell more consoles, but there is some saturation at the existing price. A little bit of the buzz may have subsided."

The Japanese group hopes a first cut in the console's price in September will drive sales, and has put its faith in the launch of three games: Wii Sports Resort, a new Wii Fit and an updated version of Super Mario Bros.

Wii are the champions: Nintendo rivals line up

* Nintendo faced a significant challenge from Microsoft's Xbox 360, which offered a strong line-up of games and the Xbox Live facility, allowing gamers to challenge each other online. The subsequent release of the Xbox 360 Arcade even challenged the Wii on price. Microsoft is also preparing to launch its own motion sensor for the Xbox in Project Natal, due out at the end of next year. The system, with no controllers, wowed the E3 expo in July.

* Sony's much-anticipated PlayStation 3 suffered a tough launch, with critics complaining it was too expensive and didn't have enough quality games. It has since slashed the price and launched a "slim" model. In July, Sony unveiled a motion sensing "wand" for its PS3, which is expected to be released in the spring.

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