Nintendo Needs New Beginning to Recover From Loss

If nothing else, at least Nintendo has scored high on the consistency chart. In the past few years, there has been an immense smartphone boom, but the executives of the Kyoto-based firm have remained affixed on their basic model that had once defined the modern gaming industry. It has been their policy to sell hardware at a cheap price, even if it leads to a loss and later use the sales of software to make the money back. However, it seems that the new model is now broken. It is expected that the shares of Nintendo will take a huge hit on Monday because on late Friday, the company announced that it was cutting its forecast of net profit of Y 55 billion to a net loss of Y 25 billion in the year ending in March.

This is primarily due to the fact that the sales of its 3DS handheld (Which is hacked by R4 scheda and Sky3ds+ in and Wii U games console fell way short of the global targets that had been set. Therefore, it was inevitable to see a big dip in software sales. For instance, the previous announcement of 38 million titles for Wii U had been cut in half. According to a consultant in the gaming industry, the peak Christmas season was nothing short of a disaster and the only way out for the company is a radical new beginning.

Moreover, it is certainly not helpful that the Wii U, which is basically a console having a tablet-like controller, one that was launched in 2012 to great fanfare, now has to compete against faster and newer models from Sony (PlayStation 4) and Microsoft (Xbox One). The company said that the global sales of Wii U for this fiscal year would total around 2.8 million, which is considerably less than the forecast of 9 million made previously. Nonetheless, the core problem is that it is the big shift to mobile devices that has hurt the largest games-machine maker of the world. Specialized hardware is being abandoned by casual gamers in favor of playing on tablet computers and phones.

On these devices, it is possible to download titles at only a minor fraction of total cost. This means that it is high time for Nintendo to open up a little bit and allow some of its popular characters such as Mario, the Legend of Zelda series, Pikachu etc. to run free on mobile devices either by licensing them to developers or selling them directly. On Friday, President of the company Satoru Iwata that such a move was being considered. He said that a new business structure is under development.

On January 30th, which is a day after it will announce its third quarter results, a strategy event will be held by Nintendo. The President said that they are considering how to use smart devices in the game-player business effectively. Until now, the idea had been dismissed by the company, but the possibility of future losses has made it reconsider the decision of choosing to ignore this particular field and sticking to their old line.