Nintendo profit halved as Wii console sales slow

For the last few years Nintendo has been riding high on the runaway success of the Wii console but now that success appears to slowing considerably. Sales and profit at the Japanese games company fell sharply during the first half of its financial year as demand for the console dropped.

Nintendo sold 5.75 million Wii consoles during the April to September period, down 43 percent on the same period a year earlier, it said Thursday. It also cut its full-year sales forecast for the period from April 2009 to March 2010 to 20 million consoles because of the poor results. It had been hoping to sell 26 million.

The sharp drop in Wii sales was attributed to a lack of big-name games, which often produce a bump in sales as they draw new users to a platform. The strong Japanese yen didn't help the company, because it reduced the value of sales and profits made overseas in yen terms. A price cut for the Wii also hit revenue, but helped unit sales.

Nintendo reported sales of ¥548 billion (US$6 billion) for the period, down 35 percent on the same period a year ago, while net profit crashed 52 percent to ¥69 billion.

The figures mean that Nintendo missed its own targets by a wide margin. In May it forecast sales during the half year would hit ¥700 billion and net profit would come in at ¥100 billion.

Sales of the handheld DS fared better than the Wii, thanks to the launch in April of a new version of the device outside of Japan, but DS sales were still down by 15 percent, at 11.7 million units.

Wii software sales fell 6 percent to 76.2 million units, and sales of DS titles fell 16 percent to 71.1 million units.

Looking ahead the company cut its financial outlook and said it expects to end the financial year in March 2010 with lower sales and profits than last year, although not as low as those reported for the first half. It expects sales of ¥1.5 trillion and net profit of ¥230 billion. Those figures, if achieved, would each represent drops of 18 percent on its results in the previous year.

The IDG News Service is a Network World affiliate.