Nintendo not looking well, cuts their Wii U sales estimate

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Nintendo did no make a good run this holiday season. This time of the year is crucial when it comes to the gaming world, and the Wii U did not live up to the expectations. On Friday, Nintendo said that it is now looking to end the fiscal year on a loss of 25 billion yen, or $240 million.

Nintendo's run is the polar opposite of its rivals, Sony and Microsoft, who are experiencing a huge demand for their latest consoles. The three companies are battling it out for dominance of the video game industry, which has an annual worth of $44 billion.

The expected revenue is set to drop by 36 percent. This means Japanese company's initial forecast of a 55 billion yen profit will change to an expected net loss of 25 billion yen. This is largely due to the downgraded prediction for the Wii U's sales. The estimates were first set to 9 million consoles sold, but that number has now been brought down to just 2.8 million units. The console's poor performance also halved the game sales prediction for the Wii U console from 38 million units to 19 million.

Satoru Iwata, Nintendo President, has said that the company is looking to change their business structure. They are looking into expanding to the smart device market. "The decrease in game software is having the biggest impact [on profits]," Iwata said.

Even before this announcement, on Friday, Nintendo's shares slumped by 2.75% on the Tokyo Stock Exchange, closing at 14,645 yen.

Nintendo's underperformance comes at a time when its rivals are experiencing a great surge in sales. This is somewhat expected as this is the Wii U's second – it launched 2012. While this is the first go for the techically superior Sony's PlayStation 4 and Microsoft's Xbox One, both of which launched in November 2013.

PlayStation 4's sales reached 4.2 million just by the beginning of the year. While the Xbox One made sold one million units in its first 24 hours of release alone. These sales numbers are a great blow for Nintendo as they barely managed to makes a profit last year. This, however, was largely because of the weak yen that Japan had at the time.

In previous years, Nintendo blamed their poor numbers on the high costs of developing and marketing the Wii U. Although their handheld console, the 3DS and its games did manage to do better in regards to sales.

The 3DS is a one-of-a-kind handheld that has a 3D screen that does not require any glasses. Although it does fare better, it still suffers from the limited number of titles it has. This is why demand was not so great abroad at first.

Since its launch in 2012, the Wii U has not lived up to its expectations. It does not even come close to the incredible success that the original Wii had. The slacking sales numbers even warranted a price drop for the console hoping to help it pick up some ground.

Nintendo, Sony, and Microsoft are looking at a tough challenge ahead of them. The US and Europe are not in the best economic state. This along with the cheaper, and even free games, for tablets and smartphones, are something that the three companies will have to learn how to deal with.

In : Console

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