Wii U’s weak sales hurt Nintendo earnings
In an admission that the launch of its new Wii U console has been slower than hoped, Nintendo Co. slashed its earnings forecast on Wednesday.
The Japanese gaming giant said its revenue for the fiscal year ending March 31 would be about $7.35 billion, down from a previous estimate of $8.883 billion.
And instead of an anticipated $219 million in operating income, Nintendo predicted that it will end the year with a $219-million operating loss.
In a statement to investors, the company attributed the changes to “sales performance in the year-end sales season and afterward.”
On the weekend before Thanksgiving, Nintendo launched its new Wii U console, a successor device to the Wii, which was a huge success when it launched in 2006 but has slowed significantly. In recent years, sales of the Wii and games for it have dropped from first place to third, behind Microsoft’s Xbox 360 and Sony’s Playstation 3.
The Wii U features high-definition graphics and online capabilities similar to those competing devices, along with a controller with its own screen, similar to a tablet.
Wii U also includes a number of online video options, including interactive television and access to Netflix and Hulu.
The company previously predicted that it would sell 5 million Wii U’s by March 31, but now says it will sell 4 million. It also slashed its estimate of the number of Wii U games it will sell during the same period from 24 million to 16 million.
Nintendo cut forecasts for its handheld 3DS device as well. It now expects to sell 15 million by March 31, instead of 17.5 million, and 50 million games, instead of 70 million.
Analyst Evan Wilson of Pacific Crest Securities described the news as a “big negative.”
“The Wii U launch was officially a flop,” he wrote in an email. He added that the number of games sold for each console appears to be falling and, in further bad news for Nintendo, consumers are shifting their gaming time to other devices such as smartphones and tablets.
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