Nintendo fell the most in more than 12 years in the U.S. yesterday. The company had previously projected profit of 55 billion yen for the year ending March as it counted on Christmas shoppers to revive sales of the Wii U console featuring games with iconic characters Mario and Zelda. Nintendo cut its forecasts for Wii U console sales to 2.8 million units from 9 million and for Wii U game sales to 19 million units from 38 million.
Game delays, the popularity of mobile devices, and competition from the Sony PlayStation4 and Microsoft Xbox One are some of the reasons Nintendo is losing its appeal.
“We are thinking about a new business structure,” Iwata said at a press conference yesterday in Osaka, Japan. “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.”
Analysts have long pushed for the company to make the move to mobile operating systems such as iOS and Android.
"The video-game market has moved into smartphones and tablets,” says Mitsushige Akino of Ichiyoshi Asset Management Co. “Nintendo needs to expand from their current hardware business model. It’s a structural problem.”
“The revision is much worse than expected,” Yusuke Tsunoda, an analyst at Tokai Tokyo Securities Co. “It’s going to be a third consecutive annual operating loss and that raises a serious management issue.”
President Iwata said there are no plans to reshuffle management in the near term and any announcement about a pay cut would come later this month.