Nintendo cuts Wii U forecast from 9 million to 2.8 million, will likely record the third annual loss in company history

wii u console

Nintendo’s Wii successor is not doing too hot.

Nintendo’s President Satoru Iwata announced today that Nintendo will be cutting it’s expected Wii U shipments from 9 million to 2.8 million for this fiscal year.  Nintendo blames this drastic cut in shipments on “significantly lower” sales then expected overseas, as well as less profit received from the price cut.

This cut was followed by news that the strong selling 3DS’ projections would also be cut back by 4.5 million, from 18 to 13.5 million units.  These cut backs have caused Nintendo to revise it’s overall forecasts for the fiscal year.  Originally expecting to post a ¥55 billion ($530 million) net profit, the Japaneses giant is now anticipating a net loss of ¥25 billion ($240 million).  If this forecast hold true, it will be third consecutive year of losses for Nintendo.

Despite these cuts and annual losses, Nintendo President Satoru Iwata says he will not resign, and will give more information on how the company plans to turn it’s fortunes in both the short and middle term later this month.  There was also talk of a potential new business model, as Iwata spoke at a press conference today in Osaka, Japan, saying “We are thinking about a new business structure.  Given the expansion of smart devices, we are naturally studying how smart devices can be used to grow the game-player business. It’s not as simple as enabling Mario to move on a smartphone.”

iwata

Nintendo President Satoru Iwata (image credit: CNN Money)

Wii U’s struggle this year can be attributed to lack of games, and high price for most of the year.  The Wii U continues to lose 3rd party support from companies like EA, who has bowed out due to it’s lack of online community for sports titles, and lack of power for games like Battlefield 4.  Nintendo has released some great titles for the Wii U during the year, like Super Mario 3D World and Pikmin 3, alongside exclusives like Lego City: Undercover and The Wonderful 101, though these have failed to greatly increase sales.

The 3DS on the other-hand has had a banner year for games and growth in the mobile gaming marketplace.  Games like Pokemon X/Y, Fire Emblem Awakening and Animal Crossing: New Leaf have been major system sellers for Nintendo, and with more big games on the way in 2014, this trend is likely to continue.  Nintendo has noted that the 3DS has under-performed in Europe.

While the things may be looking bleak for the Wii U, it’s not looking nearly as bad for Nintendo in general.  Nintendo has roughly $14 billion in the bank, and no debt, so they are in decent shape as a company.  On top of that, Nintendo’s IPs are probably some of the single most valuable in not just gaming, but entertainment.  Unfortunately, they company’s stockprice took over $3 in hit today, with it’s current price being near $15, down from yesterday’s $18.

 

The Wii U needs games like Zelda for it to sell (image credit: gamengadgets.com

The Wii U needs games like Zelda for it to sell (image credit: gamengadgets.com)

This reporter’s opinion:  This isn’t good for Nintendo, though I personally don’t think it’s time to panic yet.  Nintendo’s mega cash reserves prove that the decision to save while things were good was the right move, and they can probably ride out the Wii U’s life (another three or four years or so) without having to pull a Sega and quickly release a new console.  Many gamers are also waiting for the killer apps to buy a Wii U.  Games like Super Smash Bros, Mario Kart 8, and the Legend of Zelda Wii U are the system sellers that Nintendo needs.  If none of those games release in 2014, then they will be in major trouble, but I would be legitimately surprised to not see all three games out in fiscal year 2014.  In the words of Reggie Reggie Fils-Aime “Software sells hardware” and Nintendo needs to remember that gamers need good games to play on there system.  This also means courting third party developers, including getting sports titles like Madden and FIFA back onto the Wii U, even if they are current-gen equivalents.

The talk of potentially putting Nintendo games on mobile is an interesting idea, though it is worrying.  Nintendo’s hardware is sold because of it’s software and IPs.  If gamers can just play a new Mario on their iPhone or Android, why even bother buying a 3DS or Wii U?  Most likely, if it amounts to anything, this move will be used to add classic games like the original Legend of Zelda and Mario to smart devices.

by, Bobby Marquardt

Sources: Nintendo (1, 2), Eurogamer, Bloomberg, Reuters and The Verge.

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