Nintendo’s painful quarter spells real trouble for company


In this file picture taken on April 24, 2013, a man walks past an advertisement for Japanese video game giant Nintendo at an electrical shop in Tokyo. (Yoshikazu Tsuno/AFP/Getty Images)

Get jumping, Mario. Nintendo is in need of cash and another lease on life after reporting Friday that it has cut its sales estimates for several of its game systems and is projecting an annual loss of $240 million.

In a statement explaining the painful financial report, Nintendo president Satoru Iwata said that while sales of the company’s latest Wii U console “showed some progress” at the end of the year, the recovery was not enough. Nintendo originally projected that it would sell 9 million consoles between April 2013 and March 2014; now the company has cut that forecast to 2.8 million units. Projections for software sales were also cut — halved, in fact, to 19 million from 38 million.

The low sales are even more striking given that high demand for new consoles from Sony and Microsoft have sent the sales of video game hardware in December up 28 percent from the same period last year — the highest since December 2010. Sony boasted its console sold 4.2 million units, globally, in a little over a month; Microsoft reported global sales of 3 million Xbox One consoles in a similar period of time.

Perhaps most concerning for Nintendo, the sales slump wasn’t only for the Wii U console, which has struggled to gain a strong following since its introduction in 2012, but also for its handheld Nintendo 3DS and older Wii console. The company had to revise its estimates for the 3DS down to 13.5 million units from 18 million units. Projections for the Wii fell to 1.2 million from 2 million.

With all the bad news for the company, Iwata has said that the company will more seriously consider a “new business structure” and look at the expansion of gaming in the mobile world.

“Given the expansion of smart devices, we are naturally studying how smart devices can be used to grow the game-player business,” Iwata said, according to a report from Bloomberg. But, he cautioned, “It’s not as simple as enabling Mario to move on a smartphone.”

Nintendo games, particularly of late, would seem to translate well to mobile devices, however. The Wii U, while unpopular with gamers in the living room, does feature games designed specifically for its tablet-like controller — meaning that many of the games have already been conceptualized for smaller screens with touch capability. The same can be said for games for the 3DS and the 2DS, which also use some touch controls and are also designed for smartphone-sized screens.

Not only that, Nintendo’s classic games and characters, which are the lifeblood of the company, would also likely do well on mobile devices. Games from the early days of the video game world from companies such as Atari and Activision have found second lives on mobile devices, and Nintendo would certainly be able to leverage its nostalgia value with such a service.

Alternatively, the company could also look at making its older titles available digitally. That’s the tack Sony’s taken, having announced plans, at this year’s International CES, for a streaming service called PlayStation Now that gives players access to games from previous consoles.

Hayley Tsukayama covers consumer technology for The Washington Post.
Comments
Show Comments
Most Read Business