Nintendo faces profits blow as Wii sales slow

Nintendo on Thursday warned that full-year profits would be far below its previous forecast, as it unveiled a new version of its handheld videogame console in an attempt to recapture consumer interest.

A lack of “software titles which consistently drove hardware sales” for its Wii home console, the impact of cutting the Wii’s price last month, and the rise in the yen drove Nintendo’s net profits for the first half down 52 per cent to Y65.9bn ($721m). The Japanese group cut its full-year net profit forecast by 23 per cent to Y230bn.

The weaker results from Nintendo should give hope to rivals Sony and Microsoft that their PS3 and Xbox 360 machines could still catch up with the Wii. It could also fuel growing speculation in the industry that Nintendo plans to launch a new version of the Wii next year.

The low-cost and innovative motion-sensing Wii controller made it a runaway success on its launch in 2006. Sales, however, have slowed this year. After Microsoft and Sony cut the US prices of their main console models to $299 this summer, Nintendo responded by cutting the Wii’s price to $199 in September.

Nintendo said it was now aiming the Wii at the upcoming holiday season, “with the hardware price reduced and a strong software line-up”. But the group said that first-half sales of the console were down by 43 per cent on last year to 5.75m.

In an indication of just how few hit games Nintendo has had so far this year, sales of Wii software were down by 6 per cent from last year, despite there being a much larger base of consoles to sell to. Popular games are one of the biggest drivers of hardware sales.

On Thursday, the group unveiled the DSi LL – which will be launched in Japan on November 21 priced at Y20,000. The new version of the popular handheld console has a larger touch screen. Nintendo described it as a “new size variation”, rather than an all-new machine.

In addition to extending the lifespan of the DS, the LL’s screen will be able to show text in larger letters, which should make its internet browser more attractive. That highlights Nintendo’s need to stave off the growing threat from Apple’s iPhone and other smartphones that can download and run games from online stores.

Nintendo also indicated that the LL was intended to reach a new demographic. In addition to the easy-to-see screen, the LL has a longer stylus for touch control, and comes in the adult-friendly colours of “dark brown”, “wine red” and “natural white”.

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