Nintendo makes drastic cut to forecast

Nintendo makes drastic cut to forecast

Summary: The Japanese games company said it will post an operating loss of US$220 million for the year, instead of a profit of US$220 million in its previous estimate, due to lower-than-expected sales in the year-end sales season and the weaker yen.

TOPICS: Emerging Tech, Japan

The Japanese games company Nintendo has predicted it will post an operating loss for its financial year due to lower-than-expected sales.

Super Mario creator predicts operating loss for its financial year ended March 31, 2013.
(Credit: Nintendo)

In a statement released Wednesday (PDF), Nintendo said it expected operating losses of 20 billion yen (US$220 million) for the year ended March 31, 2013, significantly down from its previous estimate of 20 billion yen in operating profit. The figure was also more drastic than market estimates of 12.1 billion yen (US$134 million) in profit, according to a Reuters poll of 19 analysts.

However, Nintendo raised its net profit forecast for its next financial year to 8 billion yen (US$88 million), up from 6 billion yen (US$66 million).

Nintendo said the earnings forecast was modified to reflect a weaker Japanese yen as well as lower-than-expected sales outlook based on the sales performance during the year-end sales season and afterward.

In the Reuters report, Nintendo president Satoru Iwata said: "The sales of Wii U were smooth at the beginning, but since the turn of the year they have been losing momentum.

"Due to delays in software development, we had to postpone sales of software products we had planned to [release] early this year, which is interrupting our sales," Iwata said.

In a ZDNet report in September, market watchers noted that the overall game console market in Asia had been challenged by the rise of online and mobile games, especially when console devices had created a high entry barrier for consumers.

Topics: Emerging Tech, Japan

Liau Yun Qing

About Liau Yun Qing

The only journalist in the team without a Western name, Yun Qing hails from the mountainy Malaysian state, Sabah. She currently covers the hardware and networking beats, as well as everything else that falls into her lap, at ZDNet Asia. Her RSS feed includes tech news sites and most of the Cheezburger network. She is also a cheapskate masquerading as a group-buying addict.

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  • Too bad

    So sad. Yet another delay in software from the not so big N... They had a good run but its now over for the struggling Japanese Company. Get over yourselves Nintendo. Your games just aren't that great. How many Mario or Zelda games can you make??? Move on!
    John Shue
    • Nintendo is dying because ....

      .... everything is nothing by Mario. Nothing new, nothing better. Just Mario rehashed with new names.

      The Wii was a great game console ... that attracted new demographics. But that demographics is not the kind that throws away something to get the latest and greatest or people who actually buy a lot of games.

      Most Wii owners only play the games that came with the console.
  • Makes sense...

    Coming from the people that own the Seattle Mariners, MLB's punching bag for 10 years and counting... They had winners in the 80's but that was some time ago...
  • Similar to the Dreamcast

    The Wii U, at the moment, has poor support from developers and also has poor marketing at the moment. Might end up with the same fate as the Dreamcast, except Dreamcast actually had good support, great games, and at first, great marketing. In this case, Nintendo is screwed and may be forced to slash the hell out of the price of the Wii U until it starts selling.
  • I Stand Behind My Old Prediction...

    This is Nintendo's last console.
    They will have to rely on their software very soon.
  • Hardly an impact

    Considering how much money hand over fist Nintendo made with the Wii and DS, they can afford quite a hit for several generations to come yet. There are companies ailing a lot more these days, like Sony. Sony is in a lot worse shape as a company overall, with a horrible launch with the PS3, which forced them to accept 3rd place of 3 systems last generation.Their film and electronics divisions are struggling too with dramatic rise in production costs.

    At the end of the day, the Wii U won't beat the Wii, but it's still launched better than the PS3 did. The Wii U is gaining support from developers, with more exclusives being announced. Their rush to the market hurt them, and they should have a had a more robust lineup. This was a big problem the PS3 had too - few games at launch (and a hefty price tag).

    It is interesting, however, that after talking so much about a Blue Ocean, they go back to the old Red Ocean mentality. Yet, now that the Nintendo fans have 3rd party games coming to their system as well, they will have little need to get another system to compliment them. This will lower the amount of competitor machines as well.

    Overall, I expect to see the entire videogame industry shrink compared to last generation. They peaked with the advent of HD and motion controls. There's not really much else new in the pipeline to get anyone but the loyal fanbases to support each of the respective consoles. The older gamers (30 +) and the under 14 crowd will continue on with Nintendo, for the classic franchises, and the teens and twentysomethings will be split in either Sony or Microsoft factions. Of course there will be some variances in those ranks, but overall this is where the cards will fall.

    At the end of the day, there's really nothing new coming to be excited about - another mario, another zelda, another halo, another god of war, another call of duty, another madden game. The industry is starting to die due to stagnation, doubled with high production costs, which are forcing studios to live paycheck to paycheck, where one gmae not selling well can shut a studio down forever.
  • Scaled back version on the way

    Expect a scaled back version minus the portable device, it's waht they should have done all along