Nintendo reports grim financials, but it has a plan to bounce back!

Source: Nintendo

Nintendo is having a rough week.

First, there was a kerfuffle about the company making a decision to start using mobile platforms to market its games. This rumor seemed to start from an article at Nikkei. That post is in Japanese but it has been translated at serkantoto.com. The translation suggests Nintendo would create mini-games to introduce users to its console titles.

For some time now, armchair analysts and gamers have been suggesting that Nintendo should bring its iconic characters to mobile platforms, either as a replacement for, or a supplement to, it's DS handheld line. Was Nintendo finally taking the suggestion to heart?

No, it was not. The company reached out to Engadget to crush this rumor, saying "...we can confirm that there are no plans to offer mini-games on smartphone devices."

With that storm weathered, it was time for the company to talk financials, and the news there was grim. While the company did post a ¥21.7 billion ($210 million) profit in the holiday-fueled 3rd quarter, its prediction for the fourth quarter is a loss of ¥33.4 billion ($323 million), for a total operating loss of ¥35 billion ($339 million) for the 2013 fiscal year.

The company initially predicted it would sell 9 million units of the Wii U in 2013; it has revised that number downward drastically, to 2.8 million. That number immediately invites comparison with the PS4 and XB1, both of which have sold more than that number by a comfortable margin in spite of only being on the market for a bit over two months.

In response to the Wii U's struggles, Nintendo President and CEO Satoru Iwata announced he would take a 50% pay cut for 5 months, while other members of the board will take a 20%-30% pay cut.

The 3DS is doing fine (7.76 million units sold in the last quarter), but Nintendo just can't seem to get the Wii U turned around. But the company seems to have a plan.

Last night (well, from the point of view of those of us in the US) Nintendo held a business strategy meeting and The Wall Street Journal was there live-blogging it.

The takeaway points from the WSJ liveblog that seemed most important to me:

  • Nintendo has no plans to get out of the hardware business
  • A change in marketing and making games that make better use of the Wii U tablet controller, particularly it's NFC capabilities.
  • A reiteration that Nintendo games won't show up on mobile

Kind of "meh" isn't it? Apparently Nintendo share prices were dropping throughout the presentation.

But that wasn't the whole story and Twitter user David Gibson was live tweeting the meeting and he picked up a couple of important points that the WSJ missed.

First seems to be an acknowledgement that Nintendo will FINALLY decouple software sales from hardware, moving to an account-based system. It is about time, Nintendo! (Currently if you purchase a digital game on a Nintendo game system and that game system gets destroyed, you can't just replace the system and re-download your games. You have to contact Nintendo customer support and convince them that your request is legit and then they do something on their end to let you get access to your games again.)

Second is that Nintendo is planning a Virtual Console for DS games. That could bring a lot of interesting content to the Wii U. Smart move Nintendo but you know what would be even better? Bring out an adapter that lets us play current generation 3DS games on the Wii U. Back in the old days the Nintendo GameCube had an adapter that let you plug in Game Boy Advance games and it was pretty neat.

Last week there was a rumor going around that Nintendo was working on a new pair of consoles, calling them "Nintendo Fusion" (VentureBeat has good coverage). I didn't report on this because it didn't seem plausible to me, and the rumor died out pretty quickly.

But some of what was said at the meeting lends credibility to the rumor.

Gibson tweeted:

"Iwata= next time propose hardware will utilise what done on WiiU, cannot have console and portable separate systems,they are brother/sister"

"Iwata=cannot have 2 to 3 different architectures, Apple has one iOS platform as does android, Nintendo has to do the same"

So at the very least the next 'set' of consoles will share on OS. Very interesting.

Oh yeah, one last point: Mario Kart 8 launches in May!

So what do you think? Is this enough to turn the Wii U around?

Read more of Peter Smith's TechnoFile blog and follow the latest IT news at ITworld. Follow Peter on Twitter at @pasmith. For the latest IT news, analysis and how-tos, follow ITworld on Twitter and Facebook.

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