- Company plans to launch two new smartphone titles in the fall
- Nintendo's NX game device to go on sale in March 2017
Nintendo Co. is easing into its newfound role as a mobile game publisher, but not fast enough for investors expecting a Mario-scale hit.
The video-gaming company revealed plans to introduce two new smartphone titles in the coming year, even as it forecast net income and revenue short of analysts’ estimates on plunging sales of the Wii U console and 3DS handhelds. Shares fell 8.3 percent to 15,155 yen at the close in Tokyo.
Nintendo, known for popularizing consoles more than three decades ago, is starting to embrace the age of mobile gaming. So far, the signs are encouraging: Miitomo, a new free-to-play messaging app, has attracted more than 10 million users since its debut last month. Still, the company hasn’t committed the most popular characters from its Mario or Zelda franchises to the smartphone effort, and its new NX gaming device won’t debut until 2017. This means that there won’t be a new product for this year’s holiday shopping season, and that has people worried.
“Investors are not going to like that,” said Hideki Yasuda, an analyst at Ace Research Institute in Tokyo. “With the titles coming later in the year, earnings for the first half don’t look so good. And people who expected NX to launch this year will also be disappointed.”
Separately, Nintendo said it’s planning to sell its majority stake in the Seattle Mariners baseball team and a regional sports network to the team’s other owners, including mobile-phone mogul John Stanton. The deal may value the entire business at $1.4 billion. Nintendo said it plans to keep a 10 percent and declined to give the value of its stake.
Net income will probably climb to 35 billion yen ($315 million) on revenue of 500 billion yen in the year ending March 2017, the Kyoto, Japan-based company said in a statement Wednesday. While that’s more than double the previous period, the forecast is below analysts’ projection for 44.1 billion yen, according to the average of estimates compiled by Bloomberg.
Nintendo predicted that Wii U sales will fall to 800,000 units from 3.26 million, while those of 3DS will decline to 5 million from 6.79 million. The company said NX will launch in March 2017 and didn’t give a unit forecast.
President Tatsumi Kimishima said the two new smartphone titles will help bolster profit when they launch in the Japanese fall season. The company didn’t disclose how much mobile games will contribute to profit this fiscal year.
“These two smartphone games will appeal to different user demographics,” Kimishima said at a briefing in Osaka. “We chose two different genres to appeal to as many Nintendo fans as possible.”
Animal Crossing is a community simulation game series where players earn currency by trading and mastering skills like fishing. The franchise sold more than 20 million units on the 3DS and its predecessor, according to Nintendo. Fire Emblem is a role-playing game, also available on the handheld.
Nintendo shares jumped 33 percent in 2015 after the company said it planned to develop titles for iPhones and other mobile devices. Miitomo lets users automatically generate a cartoon-like avatar using a photo taken on the smartphone, and tweak minute facial features, set personality parameters and choose the character’s voice.
Nintendo 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. The company has said it plans to release five smartphone titles by March 2017.
“If Mario is available on smartphones, then why buy into the closed world of Nintendo handheld gaming?” said Pelham Smithers, whose London-based firm offers equity research on Asian technology companies. “Nintendo is going to delay releasing a Mario smartphone game until proven that it’s the only way to monetize its key intellectual properties on mobile.”
Kimishima declined to give details on the NX device, saying only that it shouldn’t be considered a replacement for the Wii U or 3DS. Still, the company may end production of Wii U hardware in the year to March 2018, to focus on NX output, he said.
The company’s forecast for revenue to be almost flat at at 500 billion yen this fiscal year includes NX sales. Analysts expected 618.5 billion yen in revenue.
“Given market hopes that as its famous characters will slowly be imported in games targeting smartphones, we believe its poor forecasts might be ignored,” Amir Anvarzadeh, manager of Japanese equity sales at BGC Partners Inc., wrote in a note on Wednesday. “NX will also keep some investors hoping for a gradual recovery.”