Nintendo's Future Uncertain Amid Falling Wii U Sales

Nintendo's Future Uncertain Amid Falling Wii U Sales

On 17th January 2014, Nintendo slashed its annual sales forecast for their Wii U console from 9 million units to 2.8 million units. Correspondingly the projected game sales for the console were also halved to 19 million units. The news followed a 25 percent cut to the forecast of 3DS sales, which are now pegged at 13.5 million units. Most worryingly though, Nintendo also projected an operating loss for the year ending in March 2014.

Taking into account the new figures Nintendo's stock fell by 6.2 percent to 13,745 Yen. The drop has resulted in Nintendo losing approximately US$ 1.2 billion of its market value. However, Nintendo President Satoru Iwata has decided to remain at the helm and help the company device a new strategy.

It seems that Nintendo has struggled to remain competitive in a new gaming landscape. A quick glance at the console market reveals that the Wii U is not on par with the PlayStation 4 or the Xbox One. With the rise of gaming on smart device platforms, such as smartphones and tablets, Nintendo has also been unable to capitalize on the casual gaming market segment which had once been their bread and butter.

According to data compiled by Bloomberg, Nintendo generated US$ 2.9 billion from software and US$ 4.8 billion from hardware in the most recent fiscal year. With hardware sales falling, now may be the time to switch focus to software. Nintendo games, which include the Zelda and Super Mario franchises, have a dedicated core of fans. Opening these games up and making them available on platforms other than Nintendo's might be a move that the erstwhile gaming giants might have to seriously consider.

Source: Bloomberg

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