Nintendo profits fall for first time in six years

Lower demand for the Wii and DS pull down sales and profits at the Japanese company

Nintendo saw profits fall for the first time in six years in the 12 months to March as lower demand for its Wii and DS devices, a lack of blockbuster games and the strong Japanese yen all put pressure on its business.

The Kyoto-based company said net profit in the period from April 2009 to March 2010 was ¥228.6 billion (US$2.5 billion), a drop of 18 percent year on year. Net sales were ¥1.4 trillion, a drop of 22 percent.

Nintendo wrestled with slow sales of the Wii during the first half of the year but managed to boost demand with a price cut going into the key year-end sales period. The cut of about 20 percent in the Wii's price helped raise sales but not enough to make up for weakness earlier in the year.

Sales of the Wii console came in at 20.5 million for the year, a drop of almost 6 million consoles compared to a year earlier.

Results for the handheld DS were mixed. The device achieved record sales in North America during the year but those in Japan were unchanged and those in Europe fell by around a third to pull down global sales.

Worldwide DS sales were 27.1 million units during the year, a drop of 13 percent.

Software sales were down almost across the board. DS software sales fell 23 percent to 151.6 million units worldwide with drops registered in all regions. Wii software sales fell 6 percent to 191.8 million units with sales down in all regions except Japan.

Nintendo makes most of its sales overseas, and the strength of the Japanese currency reduced the value in yen of profits made in other currencies.

While the results are poor compared to last year and the year before that, the net sales and profits rank as the third-best ever achieved by the company. They are well above those achieved in the year to March 2007.

Nintendo expects profit to fall again this year. For the 12 months to the end of March 2011 Nintendo expect sales to be largely unchanged at ¥1.4 trillion but net profits to drop by around 12 percent to ¥200 billion.

This year, Nintendo plans to launch a new version of its DS that includes a screen capable of showing images in 3D. The Nintendo 3DS, as it has been dubbed, will make its first appearance at the upcoming E3 show in the U.S. and is expected on sale before the end of this year.

The 3DS is expected to give DS sales a boost this year and Nintendo said it hopes to sell 30 million of the handheld devices, which would be a rise of about 11 percent on shipments in the previous year.

The company expects Wii sales to continue their decline and drop around 12 percent to 18 million.

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Martyn Williams

IDG News Service
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