Low sales target prompts Nintendo to forecast loss.
Tokyo: Nintendo yesterday warned it would swing back into the red
this fiscal year as the Japanese gaming giant slashed its sales target
for the Wii U console, blaming poor sales over the key holiday season.
The dramatic downgrade stands in marked contrast to rivals Sony and
Microsoft which have seen huge demand for their new consoles as the
firms battle for control of a sector worth about $44 billion annually.
Nintendo said yesterday it expects a loss of AN25 billion ($240 million)
in the year to March, reversing an earlier AN55 billion net profit
forecast, while annual revenue would drop 36 per cent. The company,
maker of the Donkey Kong and Super Mario brands, also said it expected
to sell just 2.8 million units worldwide of the Wii U, less than a third
of it earlier prediction for 9 million consoles. Nintendo's hopes
for big holiday season demand to boost flagging sales were dashed,
forcing it to chop forecasts as demand for the Wii's high-margin
software slumped, it said. "During the year-end shopping season, we
weren't able to lift sales momentum for the Wii U," Nintendo
president Satoru Iwata told a press briefing in Osaka. "The
decrease in game software sales is having the biggest impact" on
profit, he added. Demand was weak in the crucial European and United
States markets, Iwata said as he apologised to shareholders. "My
duty, more than anything else, is to revive our business momentum,"
he said. Shares slip Nintendo's Tokyo-listed shares ended down 2.75
per cent at AN14,645 yesterday, before the firm made its announcement.
The firm's revised figures came as key domestic rival Sony saw
record demand for its new PlayStation 4 console, which had already sold
more than 4.2 million units by the start of the year. The console was
launched on November 15. US rival Microsoft has also seen robust demand
for its Xbox One console, which sold more than one million units in the
24 hours after its November release. For Nintendo, the grim forecast is
especially disappointing after it scratched back to profitability last
year thanks to a sharply weaker yen, which inflates Japanese firms'
repatriated profits. Marketing costs The company has previously blamed
weak earnings partly on high development and marketing costs for the Wii
U, although sales of its 3DS handheld console and related game titles
fared better. Nintendo, which cut prices for both products to shore up
flagging sales, launched the Wii U in late 2012 with high hopes it would
repeat the original Wii's blockbuster success. But analysts said a
lack of games took away some of the fizz the company had been hoping for
after the 3DS -- the world's first video game console with a 3D
screen that works without special glasses -- had initially suffered from
disappointing demand abroad. Sony, Nintendo and Microsoft are giants in
the global videogames industry, but have faced tough economic conditions
in the US and Europe, while also fending off a challenge from cheap --
or sometimes free -- downloadable games for smartphones and tablets.
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