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Nintendo Cuts Full Year Profit View on Wii U Woes

Nintendo Cuts Full-Year Profit View on Wii U Woes

By Agence France-Presse | Updated: 26 October 2016 16:44 IST

Nintendo cut its full-year outlook Wednesday blaming disappointing Wii U game sales and a strong yen, but it remained profitable thanks to the sale of the Seattle Mariners baseball team.

The warning came despite the immense global popularity of the Pokemon Go app this summer, which was downloaded by millions, as the franchise-creator does not own the game's licence.

The Japanese videogame firm warned its fiscal year operating profit would come in at JPY 30 billion, about one-third less than an earlier forecast, while sales would also be lower than expected.

On Wednesday, Kyoto-based Nintendo reported a JPY 5.95 billion ($57 million or roughly Rs. 381 crores) operating loss in the April-September period, the first half of its fiscal year, while revenue dived 33 percent from a year ago.

But the Super Mario maker's net profit in the latest period jumped more than three-fold to JPY 38.3 billion, as it booked a one-time gain from the sale of its controlling stake in the US baseball team in the summer.

Facing stiff competition from PlayStation 4 maker Sony and the rise in online gaming, Nintendo said earlier this year it would sell the team as it tries to repair its battered finances.

It has owned a stake in the Mariners since the early 1990s.

Nintendo's latest results come days after its shares sank as a sneak peak at its long-awaited new console left gamers and analysts underwhelmed.

In a three-minute video posted on its YouTube channel last week, the firm unveiled its hybrid Nintendo Switch which can be played at home and on the go, thanks to a removable screen with the controllers attached.

(Also see: Nintendo's Too Many Strikes Show the Need for a Home Run)

The device is due to be released in March, although Nintendo has yet to supply a specific date.

Reviews were mixed, but some described the console as disappointing.

Limited impact
Nintendo is looking for a hit product to offset disappointing sales of its Wii U and related games, as well as its 3DS handheld device.

Six-month sales of the Wii U console more than halved from a year ago, while related game sales were off 33 percent, Nintendo said.

"Income from the sale of its stake in the Mariners is a one-time thing," Hideki Yasuda, an analyst at Ace Research Institute in Tokyo, told AFP before Wednesday's results.

"The environment surrounding Nintendo's main business remains tough (and) it will be some time before the Nintendo Switch hits store shelves."

Japanese firms that do business overseas such as Nintendo have been hit hard by a rally in the yen in recent months, shrinking the value of their foreign-earned income when repatriated.

After years of pressure, Nintendo abandoned its consoles-only policy and entered into the smartphone game market earlier this year.

In March, it released "Miitomo" - a free-to-play and interactive game - as it tries to compete in an industry that has increasingly gone online.

This summer it scored another hit with the Pokemon Go app, but the impact on Nintendo's profits will be limited.

The company is the creator of the Pokemon franchise but the game, released in July, was developed and distributed by US-based Niantic, a spinoff of Google.

Nintendo has invested in Niantic and owns about one-third of the Pokemon Company, which receives licensing fees for loaning out the brand.

The Pokemon Go phenomenon helped boost Nintendo's share price, pushing it above JPY 30,000 at one stage, as markets cheered the app's global success as a positive sign for the long-awaited move into mobile gaming.

Nintendo shares ended down 0.7 percent at JPY 24,520 Wednesday, before the earnings release.

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