Nintendo sank into a ¥43.2bn (£330m) loss for the financial year just ended as weak sales of the Wii console and the strong yen eroded earnings.
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Kyoto-based Nintendo, once the star of video games with franchises such as Pokemon and Super Mario, has seen its glory fade with the advent of smartphones that are wooing away casual gamers.
Nintendo, whose products compete against offerings from Microsoft and Sony, acknowledged sales suffered because of the price cut on the 3DS handheld during the fiscal year.
Such price cuts are relatively common to boost slow sales and try to make up in profit later from game software sales. But that strategy has chipped away at Nintendo’s earnings.
Nintendo, which did not break down quarterly numbers, had reported a ¥77.6bn yen profit the previous financial year.
But the company was upbeat about a turnaround on the back of the upgrade to its Wii, the Wii U, which is set to go on sale at the end of this year – critical because of year-end shopping revenue.
Nintendo also said it will continue pushing its online Nintendo Network service that will link players of the Wii U, which will come with a touch-screen controller, with those of its 3DS.
Nintendo president Satoru Iwata has repeatedly denied that smartphones are a threat to his business. In the past, Nintendo scored success by appealing to people who are not hard-core gamers.
Iwata has said the company has learned from the mistakes of the 3DS launch and will do the Wii U launch right.
Nintendo’s annual sales plunged 36%to ¥647.7bn. That was worse than the company’s earlier forecast at ¥660bn and the ¥670bn analysts had forecast.
Nintendo sold 9.8m Wii consoles in the financial year just ended, fewer than the 1m it had sold the previous year, and below its initial hopes of selling 13m.
It remained optimistic for the fiscal year through March 2013, and forecast sales of 10.5m Wii consoles.
Also damaging for Nintendo was a strong yen, which erodes the value of overseas earnings of Japanese manufacturers. The US dollar dropped to ¥70 levels in recent months, although it has recently recovered to about ¥80.
Nintendo stuck to its forecast for the financial year ending 31 March 2013, to swerve back into the black at ¥20bn.
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