24% Drop in Earnings Ends 10-Year Boom for Nintendo

Nintendo Co., once the unchallenged king of the video game industry, reported its first earnings decline in 10 years, amid fierce competition from Sega Enterprises Ltd.

The maker of Super Mario is finally feeling the pinch of the global economic slowdown. Nintendo said Thursday that pretax profit in the first half of its fiscal year, equivalent to about $576 million, was down 24% from a year earlier and far below the $741 million analysts had foreseen.

Analysts said the showing signals the end of a 10-year boom that made Nintendo Japan’s most profitable company.

“Nintendo cited sharp appreciation of the yen as a reason for lower profits, but it is not that simple,” Takeo Naruse, an analyst with Daiwa Institute of Research Ltd., said.

In addition to the yen’s strength, a Nintendo spokesman said sluggish consumer spending worldwide was to blame for the drop in earnings.

Analysts said the end of an era of phenomenal sales growth in the video game industry is also apparent from Sega’s earnings report last week. Sega’s half-year, pretax profit inched up 4.3% to about $269 million. Since 1989, Sega’s pretax profit has risen by 50% to 70%.