Photographer: Michael Nagle/Bloomberg

Nintendo Tries to Convince Investors to Wait as Profit Dives

  • Wii U, 3DS hardware sales languish despite Splatoon, Mario
  • President Kimishima affirms first smartphone game in March

Nintendo Co. President Tatsumi Kimishima tried to assure investors the company’s March mobile gaming debut is worth waiting for, even as a 36 percent plunge in quarterly profit highlighted a downward spiral in sales of Wii U and 3DS players.

Nintendo said it will release its Miitomo game for mobile devices next month as anticipated, setting the stage for its biggest shakeup since the 1970s. The company has been forced to acknowledge an industrywide shift toward mobile gaming, while Nintendo’s traditional console business, anchored by legendary hits like Super Mario Brothers and Donkey Kong, struggles.

Net income was 29.1 billion yen ($241 million) in the three months to December after Wii U sales dropped 2.1 percent and those of the 3DS handheld player plunged 28 percent. The stock fell 1.7 percent to 16,885 yen in Tokyo on Wednesday after a briefing to analysts yielded no news on its next console, code-named NX, and small developments on Miitomo.

“More than the immediate earnings results, the markets are looking for hints of Nintendo’s smartphone strategy,” said Tomoaki Kawasaki, an analyst at Iwai Cosmo Securities Co. “There was an initial disappointment when the company unveiled their first title and it wasn’t something that plays to its strengths, like Pokemon or Mario. They have content that can do very well worldwide and the question is how Nintendo plans to capitalize on that potential.”

March Release

The results show how much is riding on Nintendo’s foray into mobile. The shares rose 33 percent last year, fueled by the March announcement that the company planned to develop titles for mobile devices made by other companies. Much of the gains were lost, however, after Nintendo delayed the debut in October.

Kimishima offered few details to illuminate the company’s most important strategic move in years. Nintendo plans to start registration for Miitomo from Feb. 17 and release the app next month in Japan and 15 other countries, according to a transcript of remarks Kimishima gave to analysts. Nintendo targets 100 million users for its My Nintendo membership service, but won’t require an account to play Miitomo, he said.

He also gave a glimpse into other work in progress. The NX remains on track and the company is even exploring possibilities in virtual reality, though no concrete plans exist as yet, he said Tuesday.

Forecast Maintained

The Kyoto-based company has teamed with DeNA Co., operator of the Mobage network, to create mobile games and operate new membership services that will eventually -- though not immediately -- include applications based on Nintendo’s character lineup of plumbers, gorillas and princesses. It came under fire last year for sidelining its iconic Mario and Zelda franchises when it revealed that Miitomo will be a free-to-play messaging application.

Kimishima restored some hope by promising to dip into its stable of beloved characters in some fashion.

“Our second game will not be a communication app. We are going to pick some intellectual property that is very well known to everyone,” he said Tuesday without giving further details. “There are plans for new businesses in the works.”

Nintendo has stuck to a forecast for Wii U sales to be little changed this fiscal year at 3.4 million units even though hits like Splatoon and Super Mario Maker, which lets players design their own game levels, failed to ignite demand for the console. The company maintained its full-year outlook for operating profit of 50 billion yen on sales of 570 billion yen.

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