The Japanese computer game giant reports its first ever annual loss as smartphones eat into its handheld gaming market and a surge in the yen drives up export costs.
The business reported a net loss of Y37.3bn (£283m) in its full-year results this morning, which was slightly ahead of expectations from analysts who expected the surge in popularity of smartphones such as Apple’s iPhone to have hit the console manufacturer harder.
Nintendo itself warned in its Q3 results in December that it could be heading towards a full-year loss of Y45bn.
“They have been beaten by smartphones and tablets, in particular, for consumers spending and, more importantly, time,” David Gibson, an analyst for Macquarie in Tokyo, told Reuters.
Sales of the Wii home console and DS handheld device have disappointed over the last 12 months. Nintendo had hoped to sell 13m Wiis over the period but shifted just 9.8m, while sales of the DS managed to reach just half of the intended 11m.
Nintendo is expected to launch the replacement for its Wii home gaming console, the Wii U, in time for Christmas. But analysts estimate that it will need to be priced around $300, which would make it more expensive than its existing rivals, Sony’s Playstation 3 and Microsoft’s Xbox 360.
The company will have around a year to recruit a solid user base before both Sony and Microsoft replace their consoles with new models in 2013 and a fresh race for market dominance begins.
Nintendo’s president Satoru Iwata claims that the business can return to profit next year as it starts to charge users for downloading additional content within its own games. Currently Nintendo doesn’t produce games for any platform except its own, but analysts suggest it could be forced to diversify in the future.
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