Nintendo Profits Fall Sharply As Smartphones Eat Into Console Market

In the six years since the 2005 launch of the Xbox 360 console, much has changed in the gaming industry with the rise of so-called “casual games,” low-priced games often played on mobile devices such as the iPhone and the iPad.

The creator of the Super Mario and Pokemon franchises dominated the videogames industry for years with its DS handheld devices and Wii home consoles, but is now struggling to keep up as sales of more versatile smartphones and tablets boom.

The Japanese video game machine maker behind Super Mario and Pokemon franchises reported Thursday a loss of 48.35 billion yen ($627.9 million) for the first nine months of the fiscal year ending March 2012.

.”to say that [the days of consoles] are over is likely an overstatement, but social-network and internet-delivered games are growing and structurally changing the future of the industry, which is a strong wind against Nintendo,” said Shigeo Sugawara, senior investment manager at asset managers Sompo Japan Nipponkoa.

Nintendo, whose exports have also been hit by the strong yen, now expects an annual operating loss – its first ever – of Â¥45bn (£370m), dwarfing analysts’ expectations of a Â¥4.2bn loss.

The strong yen has also hurt Nintendo’s bottom line.

.”Their time of growth [from consoles] is over, and, while we don’t think the company will cease to exist, if they don’t move into new categories, they will no doubt lose the great scale they’ve amassed,” said Mitsushige Akino, chief fund manager at Ichiyoshi Investment Management in Tokyo.

Nintendo cut its forecast for annual sales of its ageing Wii console to 10m devices from 12m, and for the 3DS handheld device to 14m from 16m.

Factors included a price cut for its 3DS handheld, a strong yen that erodes overseas earnings and competition from mobile devices such as the iPhone, which offer games-on-the-go.

Game software for the 3DS like “Super Mario 3D Land” became million sellers, but games from outside companies did not fare as well, it said.

.”We had higher expectations for the year-end season, but failed to meet them,” the company’s president, Satoru Iwata, said.

The company said it will have Wii U, the successor to the Wii, ready in time for the year-end holiday season.

Nintendo lowers its forecast for 3DS unit sales, despite a price cut in August.

The move ended its record of making profits on its hardware as well as its software, a business model that had taken operating profit to a high of ¥555bn in 2008-09.

The motion-controlled Wii console now also faces tougher competition in its market from rival motion-sensing systems such as Sony’s Move and Microsoft’s Kinect, and Iwata said consumers were more eager than ever to seek out bargains in the harsh economic environment.

As a seventh-generation console, the Wii primarily competes with Microsoft’s Xbox 360 and Sony’s PlayStation 3.

The company plans to launch the Wii’s successor, the Wii U, in Japan, the US, Europe and Australiaat the end of the year, Iwata told reporters.

It says it will have Wii U, the successor to the Wii, ready in time for the year-end holiday season.

But with other threats emerging, Nintendo may have trouble generating excitement about its new product, some analysts say.

Google is taking steps into gaming with Google TV, while Apple is thought to be preparing a new iPad and possibly a smart TV that could transform the industry.

Yet a recent report from game website IGN has gained some attention, most notably for details concerning the rumored consoles graphics processing unit (GPU).

“We think the direction taken by marketing trendsetter Apple will be very important and we will be watching the company’s announcements at future events with interest.”.

Olivia Flynn is a technology journalist based in Chengdu, China. Olivia has a passion for online technology and breaking news stories and loves writing about Nintendo Profits Fall Sharply As Smartphones Eat into Console Market, reviews, and opinion pieces that matters most to its audience. Olivia spends a lot of time discovering and researching latest technology market and industry news stories in order to make sure the latest and greatest stories are brought to you first on IT Gawker.

Nintendo Profits Fall Sharply As Smartphones Eat Into Console Market

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