Nintendo targets strong launch for Wii U, even as 3DS falters

The Japanese game company said it aims to sell 5.5 million Wii U consoles through March, but slashed its handheld target

Nintendo said Wednesday it aims to sell 5.5 million Wii U consoles globally by March of next year, predicting a strong holiday launch for the new flagship game console that will be on par with that of the original Wii six years ago.

The Kyoto-based firm's targets for the Wii U, which goes on sale in the U.S. and Europe in November and in Japan in December, are close to the 5.8 million units the first Wii sold in its global launch from the holiday season of 2006 through March 2007. That console, which introduced gesture-based gaming to the masses, was a surprise hit and was held back by undersupply in many markets.

But Nintendo's optimism about the Wii U is tempered by its continued struggles with the 3DS handheld, which has failed to achieve the success of its own smash-hit predecessor, the DS. The company on Wednesday cut its annual target for the 3DS by five percent, saying it now expects to sell 17.5 million units and far less software than it previously predicted.

Blaming its new hardware targets and the strong yen, which can hurt profits made outside Japan, Nintendo slashed its profit target for the current fiscal year through March to ¥6 billion (US$80 million), less than a third of the ¥20 billion it forecast three months ago. The company said it expects sales for the fiscal year to be only slightly less than its earlier forecast, meaning its overall profitability will be much lower than expected.

A successful launch of the Wii U could also hurt Nintendo's bottom line in the near-term, as new consoles are often sold at or near a loss until manufacturing techniques and economies of scale bring costs down. The company has shown it will take drastic action to support its consoles: When the 3DS stumbled last year from a lack of titles and tepid interest in its 3D screen, Nintendo slashed prices less than six months after launch and rolled out dozens of new games in time for the holiday shopping season.

Nintendo, which relies heavily on just a few game consoles for its income, said that in the six-month stretch through September, sales and profit were down from the same period last fiscal year, when Nintendo ended up booking an annual net loss of over US$500 million.

The company is facing competition from traditional rivals such as Sony, which is pushing a new version of its PlayStation 3 game console and Vita handheld, but also from manufacturers of tablets and smartphones. By some calculations, Apple devices running iOS have collectively become the world's most popular gaming platform.

In the U.S., the cheapest version of the Wii U will cost about US$300, about the same as Apple's $330 iPad mini announced Tuesday.

The Wii U's main feature is its "GamePad" controller, which is similar to a full-fledged tablet in itself, with a touchscreen, motion detection, camera and stylus. Its small screen can be used to supplement games played on a larger TV, or serve as the main display. 

The main console will use NFC (near field communication) technology that is widely used in mobile payment systems, as well as an expanded online system that includes game play and social networks based around various titles. It can also serve as a home entertainment center, allow users to stream videos from online services such as Hulu, Amazon and Netflix.

Tags Nintendobusiness issuesgamesfinancial results

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Jay Alabaster

IDG News Service

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