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Dismal Wii U sales plunge Nintendo back into the red

AFP-JIJI

Video game giant Nintendo Co. on Wednesday booked a $229 million annual loss, reversing a year-earlier profit, as dismal sales of its Wii U console during the crucial Christmas holiday period dented results.

Lackluster demand for the console saw the firm move only 2.72 million units globally during the last business year, less than a third of its earlier prediction of 9 million, and dealing a blow to hopes Nintendo would match the blockbuster success of the original Wii.

Nintendo said Wednesday it logged an annual net loss of ¥23.2 billion — reversing a net profit of ¥7.1 billion a year ago — on sales of ¥571.7 billion, down 10 percent. However, it said it expected to creep back into the black with a ¥20 billion net profit in the current year.

The maker of the Donkey Kong and Pokemon franchises has fallen on hard times in recent years, piling up losses as rivals Sony Corp. and Microsoft Corp. outpaced it in console sales. All three companies are having to fight off a trend toward cheap — or sometimes free — downloadable games for smartphones and other mobile devices.

Sales were “not as high as expected,” Nintendo said, adding price cuts and slower demand for the Wii’s high-margin software weighed on results.

The grim results are especially disappointing for a company that scratched its way back to profitability in its previous business year thanks to a sharply weaker yen, which inflates Japanese firms’ repatriated profits. Nintendo has previously blamed weak earnings partly on high development and marketing costs for the Wii U, which was launched in late 2012.

Sales of the 3DS handheld console — the world’s first 3-D video game system that works without special glasses — and related game titles have fared better, but Nintendo cut prices on both consoles to boost sales.

The latest losses highlighted a growing chasm between Nintendo and archrivals Sony and Microsoft. In April, Sony said it sold more than 7 million PlayStation 4 consoles since the product’s launch late last year, and Microsoft said last month it had sold more than 5 million Xbox One consoles since they started hitting shelves in November.

The Wii U took more than a year to sell 5.86 million units.

“The Wii U’s sluggish sales dealt a blow to Nintendo while sales of the 3DS have also lost their momentum,” said Eiji Maeda, an analyst at SMBC Nikko Securities in Tokyo. “There is little Nintendo has currently to turn things around. They need to create a new market with something surprising.”

In January, Nintendo President Satoru Iwata said he would slash his salary in half for five months to atone for the downturn, while other members of the board will take a pay cut of between 20 and 30 percent.

Among the key criticisms leveled at Nintendo has been its long-standing refusal to license some of its iconic brands for use on mobile applications. Iwata has said the firm would look at loosening that policy to promote some of its beloved characters on smartphones and other mobile devices.

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