Beleaguered Nintendo has big plans for 'new' Wii

Published on Monday 25 April 2011 15:17

Nintendo will launch a successor to its ageing Wii games console next year as it looks to win back users lured away by rivals Microsoft and Sony, and attempts to reverse a slump in profits.

The Japanese firm, which created the Super Mario franchise and handheld Nintendo DS and 3DS consoles, plans to show a playable model at a trade fair in Los Angeles in June ahead of a consumer launch sometime in 2012.

It made the announcement yesterday after reporting a 66 per cent slide in annual profits. Those earnings are expected to pick up in the current financial year helped by the recent launch of a much-touted 3D handheld games device.

The company will hope its new home games console - replacing the five-year-old Wii - can further boost sales after net profit for the year ending 31 March came in at 77.6 billion (572.4 million) compared with 228.6bn the previous year.

Analysts highlight the challenges facing the group, as it looks to sidestep its competitors and contend with a burgeoning smartphone market that didn't exist in 2006.

Mitsushige Akino, chief fund manager at Ichiyoshi Investment Management, said: "Core users and game lovers will certainly buy it, but I think it will be hard to capture buyers outside of that group."

Nintendo, which does not break down quarterly numbers, said annual sales dropped 29 per cent to 1.014 trillion (7.4bn).

The firm is also facing a decline in Japanese consumer spending following last month's devastating earthquake and tsunami.

"Nintendo has not suffered any direct damage which will significantly affect our production. However, it can be predicted that there will be an indirect impact from individual consumption patterns," it warned yesterday.

It forecasts sales to rise 8.4 per cent to 1.1tn for the year through to March 2012 and expects earnings to increase 41.7 per cent to 110bn.

But sales of its new home gaming system - which is yet to be named - have not been included in any of its financial forecasts, the company added.

Nintendo hopes the 3DS, which lets users play 3D games without wearing special glasses, will stoke similar enthusiasm as its Wii console did five years ago with its motion-based controller.

The 3DS, which also takes 3D pictures and will eventually offer 3D movie streaming, went on sale in February in Japan and in March in the US, Europe and Australia.

Nintendo said the 3DS had a smooth start to sales since its launch and it expects to move 16 million of the machines in the current fiscal year.

Nintendo sold 15 million Wii consoles last year, down 27 per cent, and expects to sell 13 million in the current fiscal year.

The standard DS, meanwhile, dropped 35 per cent to 18 million units over the last fiscal year and is expected to drop to 11 million units this year.Jay Defibaugh, an analyst at MF Global, said: "We believe that the share price will come under pressure as the market digests the weak results and company projection for the year to March 2012."

In March, rival Microsoft said it had sold more than ten million Kinect motion-sensing game system units worldwide in just over four months, making it the fastest-selling consumer device on record.