Strong yen adds to Nintendo losses

Nintendo, makers of the DS and Wii consoles, reported losses of 400 million pounds

Published: 8:43am, 26th January 2012
Updated: 12:17pm, 30th January 2012

Nintendo sank into losses for the April-December period last year, battered by a price cut for its 3DS handheld console, a strong yen that erodes earnings and competition from mobile devices like the iPhone that offer games-on-the-go.

The Japanese video game machine maker behind the Super Mario and Pokemon franchises said it now expects to sell far fewer 3DS machines, which feature three-dimensional images, at 14 million machines for the full fiscal year through to March 2012, down from an earlier 16 million.

That is despite a price cut it carried out on the 3DS in August.

Kyoto-based Nintendo also lowered its forecast for the fiscal year through to a 65 billion yen (£538 million) loss, much larger than the 20 billion yen (£165 million) loss projected earlier. It had marked a 77.62 billion yen (£637 million) profit the previous fiscal year.

Nintendo, which also makes the Wii home console, racked up a loss of 48.35 billion yen (£400 million) for the first nine months of the fiscal year ending in March 2012. That was a reversal from a 49.56 billion yen (£407 million) profit the same period in 2010. Nintendo did not break down quarterly numbers.

The company's past success has come from the appeal of its products to so-called casual gamers - people who now turn to smartphones and tablet devices like the iPad from Apple to enjoy games. The demand for the Wii has also diminished in recent months.

Nintendo's nine-month sales dropped 31.2% to 556.17 billion yen (£4.6 billion) from the same period the previous year. The numbers are a disappointment as they include those from the key year-end holiday season.

Worldwide sales of the 3DS for the nine months totalled 11.43 million, the company said. Game software for the 3DS like Super Mario 3D Land became million sellers, but games from outside companies did not fare as well, it said.

Competition in portable gaming is heating up with the arrival of the PlayStation Vita from Japanese electronics and entertainment company Sony. Vita went on sale in Japan in December and will be available in the US and Europe next month. Nintendo has continuously outpaced Sony in portable game sales with its hit DS machines.

The strong yen has also hurt Nintendo's bottom line. The dollar has been trading at about 77 yen lately, down from about 83 yen a year ago.