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Nintendo, battered by slow Wii sales, to unveil new game console at E3

April 25, 2011 | 10:28 am

Wiiconsole Battered by declining sales of its Wii video-game console, Nintendo on Monday announced it would introduce a new console in 2012. The announcement came as Nintendo posted double-digit declines in both sales and profit for its fiscal year ended March 31.

The Japanese game company said its revenue slumped 29% to just over one trillion yen, or roughly $12.4 billion, last year. Profit slid 66% to 77.6 billion yen, or $948 million. Nintendo had forecast for the year, issued last May, for sales of 1.4 trillion yen and net income of 200 billion yen.

It was the second year that Nintendo's earnings took a beating. During the previous fiscal year ended March 2010, sales were down 22% while profit fell 18%.

Losses due to the strong yen, which meant sales outside of Japan converted to fewer yen, accounted for $604 million of Nintendo's annual loss.

But the company's core sales of consoles and games also were to blame. After enjoying a massive wave of popularity, sales of the Wii fell 25% to just over 15 million units last year, compared with 20.5 million the prior year.

Sales of its DS series of handheld consoles also took a nosedive. In the fiscal year just ended, DS sales dropped 22% to 21.1 million units, including 3.6 million units of Nintendo's new 3DS console, which was introduced toward the end of March. The year before, Nintendo sold 27.1 million DS consoles.

The waning popularity of the Wii has sparked rumors several weeks ago that Nintendo would introduce a successor console. The company on Monday issued a terse statement on its investor relations site confirming the rumors, saying it will show a playable model of its new console at the industry's E3 conference in Los Angeles in June and will start selling the device next year.

Nintendo declined to reveal details of its new console, code named "Project Café." But game analysts are expecting that the device will sport more powerful processors, making up for one of the key weaknesses of the Wii –- its lack of high-definition graphics, which has made Wii games appear old-fashioned compared to its beefier rivals, Sony Corp.’s PlayStation 3 and Microsoft Corp.’s Xbox 360.

In addition, similar to the PS3 and Xbox 360, Nintendo's new console is expected to have a bigger emphasis on online games than the Wii, said Edward Williams, analyst with BMO Capital Markets.

"The key will be figuring out what Nintendo’s vision for the next 5 years will be and how they plan to bridge a physical world of discs with a digital world" in which games are sold online, either as a streaming service or as downloads, Williams said.  

-- Alex Pham

Photo: The Nintendo Wii console will be getting an update. (Nintendo)

Related:

Nintendo adds 3-D video channel, Netflix streaming to 3DS

Nintendo forecasts lower Wii and DS sales than previously thought

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