Nintendo counts on holiday sales to meet forecasts

  • Bloomberg News
  • Friday, November 1, 2013 4:20pm
  • Business

TOKYO — Nintendo is counting on a blowout Christmas shopping season for sales of its Wii U game console to meet its full-year forecasts.

Nintendo, which posted a net loss of $81 million in the three months ended Sept. 30, this week maintained its projection to sell 9 million Wii U units and 18 million 3DS devices in the full fiscal year. That means it needs to move nearly 20 times as many consoles in the second half than it sold in the first.

Nintendo cut the U.S. price for its flagship machine last month as President Satoru Iwata tries to lure consumers who prefer playing games on tablet computers and smartphones including Apple Inc.’s iPhone. Even with new titles including “Pikmin 3,” the creator of the Mario and Zelda franchises failed to capitalize on U.S. video-game product sales that jumped by almost a third last month, even before Sony Corp. and Microsoft Corp. release their updated consoles.

“If Nintendo’s software does not sell well in the second half, then it could lead to a management capability issue,” said Hideki Yasuda, a Tokyo-based analyst at Ace Research Institute. “The company will have a hard time in this year-end shopping season.”

Pressure is building on Iwata to fulfill his pledge to deliver 100 billion yen in operating profit for the current fiscal year, a forecast he affirmed this week. The company had an operating loss of 23 billion yen during the first half.

Nintendo sold 460,000 Wii U units in the six months ended September, about 5 percent of its annual target of 9 million. The company’s 3DS sales totaled 3.89 million during the half, about 22 percent of its full-year target of 18 million.

“Whether we can meet the target we committed to hinges on how year-end business will go,” Iwata saidy. “We expect Wii U to take off going forward when titles are prepared.”

The Wii U features a tablet-like, 6.2-inch touchscreen controller that lets players connect wirelessly to the console and shift the display between the device and a television. The updated console competes in a market where smartphone sales are on track to exceed 1 billion units this year, researcher IDC said Oct. 29.

“Nintendo struggled to create titles that can fully tell users the uniqueness of the tablet controller,” said Eiji Maeda, an analyst at SMBC Nikko Securities Inc. in Tokyo. “Nintendo hasn’t been able to come up with any notable innovations in the past years that can match the success of its Wii.”

The earnings are cushioned by a weaker yen that boosts the repatriated value of overseas earnings at Nintendo, which makes about 70 percent of its annual revenue overseas. The yen depreciated about 4 percent against the U.S. dollar in the six months ended Sept. 30.

Nintendo has lost more than 80 percent of its market value since shares reached a high of 72,100 yen in November 2007, after the introduction of the original Wii, according to data compiled by Bloomberg. Its market capitalization is about $16.2 billion – less than Samsung Electronics Co.’s planned capital expenditures this year.

The 3DS titles “Pokemon X” and “Pokemon Y” that were launched Oct. 12 sold more than 4 million units worldwide during their first two days on the market, the company said Oct. 15.

Sony expects to sell 5 million units of its upcoming PlayStation 4 from its introduction next month through March, Andrew House, the head of Sony’s game operations, said last month.

Nintendo said it is releasing new titles this quarter, including “Wii Party U,” “Wii Fit U” and “Super Mario 3D World.”

“The problem of Nintendo is how it can attract consumers toward its product when the market is shifting toward mobile devices,” said Masamitsu Ohki, a fund manager at Stats Investment Management Co. in Tokyo.

The Wii U’s price in the U.S. was cut by $50 to $299.99 on Sept. 20, while the Japanese price remained a suggested 30,000 yen. Sony plans to introduce the PS4 at $399 next month, while Microsoft is set to release the Xbox One for $499 a week later.

Nintendo introduced the 2DS portable machine, resembling a tablet, this month for $129.99 in an effort to lure first-time and casual gamers.

“It would have been better to simply cut the price of the 3DS than introduce the 2DS, which didn’t even create any buzz,” SMBC Nikko’s Maeda said.

The 3DS was Japan’s best-selling gaming device in September with sales of 749,398 units, according to market researcher Enterbrain Inc. Sony’s PlayStation Vita sold 34,695 units in the same period, Tokyo-based Enterbrain said this week.

The global video-game market will reach $93 billion this year, up from $79 billion last year, researcher Gartner Inc. said Oct. 29. Sales may total $111 billion by 2015.

Mobile games are the fastest-growing segment, with revenue set to reach $22 billion by 2015 from $13.2 billion this year, Gartner said.

Nintendo said earlier this month it will soon halt production of the Wii gaming console for Japan, the only major market where its new machine outsells the seven-year-old device. There are no plans to end output for markets outside Japan, Yasuhiro Minagawa, a spokesman for the company, said Oct. 2.

Talk to us

> Give us your news tips.

> Send us a letter to the editor.

> More Herald contact information.

More in Business

Black Press Media operates Sound Publishing, the largest community news organization in Washington State with dailies and community news outlets in Alaska.
Black Press Media concludes transition of ownership

Black Press Media, which operates Sound Publishing, completed its sale Monday (March 25), following the formerly announced corporate restructuring.

Maygen Hetherington, executive director of the Historic Downtown Snohomish Association, laughs during an interview in her office on Thursday, Feb. 15, 2024, in Snohomish, Washington. (Ryan Berry / The Herald)
Maygen Hetherington: tireless advocate for the city of Snohomish

Historic Downtown Snohomish Association receives the Opportunity Lives Here award from Economic Alliance.

FILE - Washington Secretary of State Steve Hobbs poses in front of photos of the 15 people who previously held the office on Nov. 22, 2021, after he was sworn in at the Capitol in Olympia, Wash. Hobbs faces several challengers as he runs for election to the office he was appointed to last fall. (AP Photo/Ted S. Warren, File)
Secretary of State Steve Hobbs: ‘I wanted to serve my country’

Hobbs, a former Lake Stevens senator, is the recipient of the Henry M. Jackson Award from Economic Alliance Snohomish County.

Mark Duffy poses for a photo in his office at the Mountain Pacific Bank headquarters on Wednesday, Feb. 14, 2024 in Everett, Washington. (Annie Barker / The Herald)
Mark Duffy: Building a hometown bank; giving kids an opportunity

Mountain Pacific Bank’s founder is the recipient of the Fluke Award from Economic Alliance Snohomish County.

Barb Tolbert poses for a photo at Silver Scoop Ice Cream on Thursday, Feb. 29, 2024 in Arlington, Washington. (Annie Barker / The Herald)
Barb Tolbert: Former mayor piloted Arlington out of economic brink

Tolbert won the Elson S. Floyd Award, honoring a leader who has “created lasting opportunities” for the underserved.

Photo provided by 
Economic Alliance
Economic Alliance presented one of the Washington Rising Stem Awards to Katie Larios, a senior at Mountlake Terrace High School.
Mountlake Terrace High School senior wins state STEM award

Katie Larios was honored at an Economic Alliance gathering: “A champion for other young women of color in STEM.”

The Westwood Rainier is one of the seven ships in the Westwood line. The ships serve ports in the Pacific Northwest and Northeast Asia. (Photo provided by Swire Shipping)
Westwood Shipping Lines, an Everett mainstay, has new name

The four green-hulled Westwood vessels will keep their names, but the ships will display the Swire Shipping flag.

A Keyport ship docked at Lake Union in Seattle in June 2018. The ship spends most of the year in Alaska harvesting Golden King crab in the Bering Sea. During the summer it ties up for maintenance and repairs at Lake Union. (Keyport LLC)
In crabbers’ turbulent moment, Edmonds seafood processor ‘saved our season’

When a processing plant in Alaska closed, Edmonds-based business Keyport stepped up to solve a “no-win situation.”

Angela Harris, Executive Director of the Port of Edmonds, stands at the port’s marina on Wednesday, Jan. 24, 2024, in Edmonds, Washington. (Ryan Berry / The Herald)
Leadership, love for the Port of Edmonds got exec the job

Shoring up an aging seawall is the first order of business for Angela Harris, the first woman to lead the Edmonds port.

The Cascade Warbirds fly over Naval Station Everett. (Sue Misao / The Herald file)
Bothell High School senior awarded $2,500 to keep on flying

Cascade Warbirds scholarship helps students 16-21 continue flight training and earn a private pilot’s certificate.

Rachel Gardner, the owner of Musicology Co., a new music boutique record store on Thursday, Jan. 18, 2024 in Edmonds, Washington. Musicology Co. will open in February, selling used and new vinyl, CDs and other music-related merchandise. (Olivia Vanni / The Herald)
New Edmonds record shop intends to be a ‘destination for every musician’

Rachel Gardner opened Musicology Co. this month, filling a record store gap in Edmonds.

MyMyToyStore.com owner Tom Harrison at his brick and mortar storefront on Tuesday, Sept. 6, 2022 in Everett, Washington. (Olivia Vanni / The Herald)
Burst pipe permanently closes downtown Everett toy store

After a pipe flooded the store, MyMyToystore in downtown Everett closed. Owner Tom Harrison is already on to his next venture.

Support local journalism

If you value local news, make a gift now to support the trusted journalism you get in The Daily Herald. Donations processed in this system are not tax deductible.