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Nintendo eyes new areas after Wii U flop

Bloomberg

Nintendo Co. said Thursday it will explore new businesses, including health care-related entertainment, while keeping its existing gaming platform as the main focus, after the video game maker’s Wii U console flopped with consumers.

The new health-related business will start by March 2016, President Satoru Iwata said at a briefing on the company’s strategy in Tokyo, without giving more specifics. Nintendo, the world’s largest maker of video game machines, will also seek partners to expand licensing of its game characters such as Mario and Zelda and boost their use for nongame products.

Iwata is under pressure to find new profit drivers after customers shunned the Wii U, Nintendo’s latest home-gaming machine, causing the company to cut sales forecasts and project an annual net loss. The executive said Thursday he won’t abandon Nintendo’s focus on both hardware and software, even as some analysts and investors have called for the Kyoto-based company to stop making the Wii U.

“I don’t think the market will value this business plan,” Mitsushige Akino, chief fund manager at Ichiyoshi Asset Management Co. in Tokyo, said of Thursday’s briefing. “Nintendo has to find a way to win back casual gamers. The licensing business isn’t new.”

The casual gamers who made Nintendo the leader of a $93 billion industry have abandoned its standalone machines like the Wii U for cheap downloads they can play on a Samsung Electronics Co. Galaxy phone or an Apple Inc. iPad. New, faster consoles from Sony Corp. and Microsoft Corp. ran away with the hard-core players still willing to plunk down $400 for a machine and $60 for a title like “Call of Duty.”

Nintendo on Jan. 17 revised its profit forecast, projecting a ¥25 billion net loss for the fiscal year ending in March, compared with its previous ¥55 billion profit estimate. The company lowered its sales forecast for the Wii U to 2.8 million consoles from 9 million and halved its projection for Wii U game sales to 19 million units.

Iwata has previously ruled out licensing Nintendo’s franchise characters for online games or smartphone applications. Tying Nintendo’s iconic characters to its hardware helped boost demand for the original Wii, which sold more than 100 million units and became the world’s best-selling console.

The company will buy as many as 10 million shares, or about 7.8 percent of outstanding shares, it said in a statement Wednesday. Nintendo had about $8.6 billion in cash and equivalents and zero debt as of Sept. 30.

Iwata will cut his pay from February to June, and other company directors will take pay cuts.