Flagging Wii Sales Drag Nintendo Profits Down 61 Pct

The bubble looks to have finally burst on Nintendo's Wii game console: a sharp fall in global Wii sales helped drag Nintendo's profits down 61 percent last quarter.

When Nintendo launched its Wii game console all the way back in November 2006, few anticipated the system would turn into the dominant “next-generation” gaming console with sales vastly eclipsing the more-powerful Xbox 360 and PlayStation 3. But the sales bubble may finally have burst for the Wii: Nintendo’s financial results for its April-through-June quarter show a sharp decline in global sales for the Wii, which helped drag Nintendo’s profits down 61 percent compared to the same quarter a year ago.

According to Nintendo, sales of the Wii were less than half what they were in the same quarter of 2008, dropping to a mere 2.2 million units. The falloff in sales was most significant in the Americas and Japan, where sales dropped some 65 percent and 60 percent, respectively, suggesting those countries are approaching market saturation on the system. Unit sales in other markets were down as well, with Europe marking a 47 falloff in Wii console sales for the quarter. Sales of Nintendo DS handheld units also fell to a total of 6 million units, despite the introduction of the Nintendo DSi.

Software sales for the Wii and Ds also dropped off, with the company moving 29 million Wii games and 31 million DS games during the quarter: the numbers represent declines of 20 and 23 percent, respectively, compared to a year ago.

Nintendo’s profits also suffered in part due to the relative strength of the Japanese yen relative to the U.S. dollar, making the company’s products more expensive overseas. Nintendo also faces increased competition on the handheld front from smartphones and other portable devices, particularly Apple’s iPhone and iPod touch.

Despite the slump, Nintendo hasn’t changed its profit forecasts for the year, anticipating some $3.1 billion in profits on revenue of almost $19 billion.