A couple years ago Nintendo seemed to be riding an unstoppable juggernaut of sales based on the popularity of the Nintendo Wii, its DS series of handheld gaming devices, and (of course) its plethora of in-house titles like the Mario and Zelda franchises. But times have changed: today the company announced (PDF) it has lost some ¥70.3 billion—about US$925 million— in the six months ending September 2011.
Nintendo expects to be buoyed a bit by end-of-year holiday sales, a time that traditionally sees a strong uptick in both gaming hardware and software. However, where the company was previously forecasting it would make a ¥20 billion profit for its fiscal year, the company now expects to lose ¥20 billion for the year, or roughly US$264 million.
Nintendo is being hit by weaker-than-expected software sales. Nintendo America has published a revised sales forecast shows the company expects hardware sales to be roughly what they expected, but software sales for all its major platforms (Wii, DS, and 3DS) to be lower than expected. The company now believes sales of 3DS titles will be more than 28 percent off its original forecast, totaling 50 million units—although going forward Nintendo doesn’t plan to include software titles bundled with hardware in its forecast—it did for the first part of the year.
Nintendo—which owes some of its popularity to titles that appeal to casual and non-traditional gamers—has also been facing competition from the likes of Apple and Android device makers, whose tablets, smartphones, and media player often provide users access to a plethora of casual games via the iTunes App Store, Android Market, and similar venues. So far, Nintendo has ruled out porting any of its key franchises to iOS, Android, or other platforms, hoping their long-standing appeal will continue to draw customers to its platform. Nintendo’s financials have also been impacted by a relatively strong yen.
Although Nintendo had a strong hit with the Wii, sales have dropped off sharply due to market saturation, and the Nintendo 3DS handheld—which offers a 3D display that doesn’t require glasses—hasn’t resonated strongly with consumers, and Nintendo has admitted that no 3DS title has really taken off. For the first six months of its fiscal year, the company says it has sold 3.07 million 3DS units worldwide. At the same time, sales of its previous Nintendo DS handheld (and software titles to go with it) have dropped sharply from a year ago.