Nintendo’s First Operating Loss Raises Alarm Bells

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In 1889 Nintendo put out its first batch of playing cards. Since then, the brand has done all it can to represent good times for the world’s fun seekers. It has adapted and shifted through its 123-year history to keep things moving. 

With the rise of technology, of course, things need to shift a little more quickly but it appears that Nintendo isn’t quite ready to shift away from its last big game-changer, Wii, Reuters reports.

It’s understandable that Nintendo isn’t quite ready to push Wii out the door. After all, it’s made the company about $14 billion, the wire service notes, and completely changed the gaming industry back in 2006 by getting the whole family involved rather than being a segment dominated by kids.

Now, the alarm bells are sounding: On Thursday, Nintendo reported its first-ever operating loss in a market that is now dominated by games designed for smartphones and other mobile devices — an area Nintendo hasn’t made a strong push to join other than the sale of its DS and 3DS handhelds.[more]

“They have been beaten by smartphones and tablets, in particular, for consumers spending and, more importantly, time,” said David Gibson, an analyst for Macquarie in Tokyo, told Reuters. Now the company has no choice but to figure out its digital distribution strategy while not losing favor with retailers.

Nintendo projected last year that it would sell 13 million Wii consoles, 16 million 3DS handhelds and 11 million DS machines this year, but has since shaved threemillion off the Wii sales estimate, two million off the 3DS number, and halved the DS estimate, blaming the rough European market and the high yen. 

While those factors may be part of the problem, others are thinking that Nintendo should try to adjust to the marketplace a little rather than pushing forward with the next edition of Wii, Wii U, which is expected to come out by year’s end and could cost a whopping $350 — $100 more than the original Wii — according to one analyst.

So while Nintendo may be looking at some tough times, it also has a lot of cash in the bank. And that should help it adapt and change — and hopefully re-engage fans of all ages and sort out its mobile and digital strategy.

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