Satoru Iwata, Nintendo Corporation President has promised that “Super Mario” will make a 1 billion dollar operating profit this year as new game titles boost sales - the analysts think not. Iwata will announce Nintendo’s second straight annual loss tomorrow, having lost 18.7 billion yen in the last 12 months.
The Nintendo Wii U has fallen short of meeting sales targets due to a delay of software releases, the same problem that initially plagued the 3DS. Not only has business been slow for the Wii U, Nintendo is also faced with the challenge of competing with games on tablets, Android devices and iPhones.
Not convinced that Nintendo is struggling? In the last year, Nintendo fell 1.8 percent - cutting its gain this year to 25 per cent, as opposed to Sony’s jump to 70 per cent in Tokyo.
Although the weaker yen value boosts the overseas earnings for Nintendo, it may not be enough to reach Iwata’s profit target of 100 billion yen (1 billion dollars). Yoshikazu Shimada, an analyst at Tachibana Securities Co. said
“I don’t think Nintendo can achieve 100 billion yen, it’s hard for Nintendo to meet the target despite the weak yen’s tailwind.”
In order to avoid repeating the mistake Nintendo made with the 3DS, which had its sale price cut only six months after being released due to a lack of software, Iwata promised to keep the flow of Wii U games going strong.
Unfortunately, he simply couldn't maintain it as Nintendo stopped new software for the Wii U at the beginning of this year because of development delays, Iwata said Jan. 31.
The Japanese release of Pikmin 3 was delayed to July from this spring, and Game & Wario was pushed back to March 28 from the beginning of the year.
Nintendo also faces tougher competition for game players from rival console makers in a market that is shrinking amid the shift to mobile devices. Sony is releasing its PlayStation 4 before the holiday season, and Microsoft may unveil the successor to its Xbox 360 at E3 in June.
Although Nintendo struggles with its main business, the sliding yen may give some relief. The Japanese currency has depreciated about 12 per cent against the U.S. dollar this year. While the currency helps, keeping the game developments fresh is essential to a sustained turnaround. Yasuda at Ace Securities said,
“Nintendo can achieve the target if it can release the game software as planned."
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