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Nintendo: Wii are sinking

January 26, 2012 | 11:36 am

Nintendo 3DS

Spurned by consumers who now favor tablets, smartphones and higher-definition consoles, Nintendo Co. posted a 31% sales drop and swung to a loss last year.

The Japanese video game company on Thursday said revenue fell to $7.2 billion in the nine months ended Dec. 31, down from $10.4 billion the same period a year earlier. As result of the steep sales decline, Nintendo suffered a $623.2 million loss for that nine months, compared with a $638.8 million gain for the same period in 2010. The company did not break out quarterly results.

Nintendo saw declines across all of its products. Hard-core gamers abandoned its Wii console for higher-definition machines, including Microsoft Corp.'s Xbox 360 and Sony Corp.'s PlayStation 3, which also plays Blu-ray movies. The company also lost many casual players, many of whom turned to free-to-play social games and games on their mobile phones or tablets. 

Sales of the Wii, which was once so popular that Nintendo had trouble manufacturing enough to meet demand, dropped by more than a third to 896,000 units between April 1 and Dec. 31 last year, down from 1.37 million a year earlier.

Game sales for the Wii, on which Nintendo makes most of its profit, plunged 41%, to 8.9 million copies, from just more than 15 million in 2010. Nintendo saw similar declines for its line of handheld DS consoles and games.

There's more bad news to come. Nintendo also revised its financial forecast, saying sales for its fiscal year ending March 31 would likely be 16.5% lower than it had previously projected in October. It now expects annual revenue to be $8.5 billion, down from its earlier projection of $10.1 billion. Losses are also likely to be wider, growing to $837.8 million. In October, the company said it expected a $257.8 million loss.

But the game is far from over for Nintendo. The company had a formidable war chest at the end of the year -- $2.3 billion in cash and short-term investments. It's also scheduled to begin selling its next-generation game console this year, the Wii U. Sporting a new controller and high-definition graphics, the new device is expected to be more competitive with the Xbox 360 and the PS3.

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-- Alex Pham

Photo: Sales of Nintendo products, such as the handheld DS, fell last year. Credit: Everett Kennedy Brown / EPA

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