Nintendo has blamed lacklustre Wii U sales after the company finished its financial year $464m in the red. But it does have a rescue plan in mind – fresh gear for China and emerging markets.
The games icon said that for the 12 months to March 2014, its flagship home console plodded along at just 2.72 million hardware units sold, a rate slower than Wario afflicted with a thunderbolt.
By comparison, the Wii U's two primary competitors, the Playstation 4 and Xbox One, have sold upwards of 7 million and 5 million units, respectively. Both have been on the market for less time than the Wii U.
"The Wii U hardware still has a negative impact on Nintendo's profits owing mainly to its markdown in the United States and Europe, and unit sales of software, which has high profit margins, did not grow sufficiently, leading to a gross profit of 163.2 billion yen ($1.6bn)," the company said in its annual filing [PDF].
"Total selling, general and administrative expenses exceeded gross profit, resulting in an operating loss of 46.4 billion yen ($464m)."
That figure is bigger than the 36.4 billion yen ($357.6m) operating loss it recorded the previous year; net income for 2014 was negative 23.2 billion yen ($227.9m) versus a positive 7.099 billion yen ($69.7m) net income for the year before.
Sales for the 12 months to March 2014 were 571.7 billion yen ($5.616bn), down from 635.4 billion yen ($6.242bn) in fiscal 2013.
The Japanese entertainment giant had previously warned of a disappointing turnout for the Wii U. Designed as the next-generation successor to the wildly popular Wii home console, Nintendo's latest effort has failed to strike a chord with the family and casual players who propelled Wii sales, while falling well short of the hardware expectations of the hardcore gamers who form Sony and Microsoft's core markets.
The company noted that other areas of its business remain strong, particularly the 3DS handheld console and its associated software market. The company hopes that upcoming big game releases for the 3DS, including Tomodachi Life and Mario Golf: World Tour will further help to boost sales.
"We would like to further grow the Nintendo 3DS business," Nintendo president Satoru Iwata said in a briefing today.
"As for Wii U, we were unable to recover the momentum sufficiently even in the last year-end sales season. We would like to spend one full year to leverage Nintendo’s own strength in order to regain momentum.
"Of course, we are making efforts to continue selling the titles already released for Wii U and turn them into evergreen titles. For this fiscal year, we will release two flagship Nintendo titles that are known as games that can be enjoyed alone or with others, namely the latest installment from the Mario Kart series, Mario Kart 8, at the end of this month ... and this winter Super Smash Bros. for Wii U."
In an interview with Reuters today, Iwata indicated his gaming biz hopes to flog new console hardware in emerging markets, including China: "It would be difficult to enter those markets if we didn't create something new ... For the mass market you need to provide something that most of the middle class can afford."
Nintendo has also announced plans to expand its business into other areas of home entertainment. Earlier this year, Iwata said in a letter to shareholders that his firm would look to push into the home health and fitness markets as part of an effort to focus on "improving people's quality of life in enjoyable ways" as a business model. ®