Nintendo recently announced less than stellar profits after disappointing Wii U sales. The company's President Satoru Iwata, stated that he will cut his salary in half for at least five months to make up for the company's poor performance.
Nintendo suffered a 30 percent decrease in profits this quarter. The company reported just 499.1 billion yen ($4.8 billion) in revenue, down 8 percent from the same time frame last year and 10.2 billion yen ($99.6 million) in profit. In recent years, Nintendo has struggled in the face of mounting competition from Microsoft's Xbox, Sony's PlayStation and the overall trend towards mobile gaming.
"Nintendo's worse-than-expected performance is mainly due to a slump in the Wii U," said Hideki Yasuda, an analyst at Ace Securities in Tokyo. "They haven't released attractive games titles which slammed the brakes on console sales. Also, its rivals have seen strong demand for their consoles which is taking market share away from Nintendo."
The very portable and mobile-friendly Wii U fell flat worldwide. Nintendo sold only 2.4 million Wii U consoles this quarter, bringing its grand total up to a mere 5.9 million units sold--not very impressive in comparison with the one million PS4s Sony sold just 24 hours after launching the popular console. Even worse is the fact that analysts estimate that Nintendo will sell only 400,000 more Wii U consoles in the first quarter of 2014.
Nintendo was aware that the Wii U's poor sales would have an adverse effect on the company's profits. Earlier last year Nintendo acknowledged that the Wii U "still has a negative impact on Nintendo's profits, owning mainly to its [price] markdown in the U.S. and Europe and software of software, which has high profit margins, did not grow sufficiently."
Additionally, Nintendo's game selection is very limited in comparison to that of Sony's and Microsoft's. In an industry where your console is only as good as the games your company offers, Nintendo has been losing heavily. During a press conference, Iwata stated that Nintendo may push into mobile gaming now that it has suffered such big losses in the console market. Iwata stated that "how to utilize smart devices is the theme of our [upcoming] management policy conference."
In the meantime, Nintendo is working to minimize its losses. The company announced that it will buy back 8 percent of shares, in response to the 12 percent drop in Nintendo's shares.
