Nintendo is forecasting a larger full-year loss than expected for the fiscal year ending March 2012, after a drop in quarterly profits over the holiday season. The company's profits brought in only 40.9 billion yen in October-December, instead of the expected 52 billion yen. This has contributed to the company shifting its forecast from a 4.2 billion yen loss to a whopping 45 billion yen loss, based on analyst forecasts. This will be its first full-year loss on an operating level.
"We had higher expectations for the year-end season, but failed to meet them," company President Satoru Iwata said.
The 3DS price drop significantly undercut Nintendo's typically expected hardware profits. Other factors for the lowered earnings expectations include increased competition from mobile devices, Kinect and Move, and the strong yen.
Reuters notes that Nintendo has also shifted its sales expectations. The Wii is now expected to sell 10 million units instead of 12 million, and the 3DS has gone from an expected 16 million to 14 million.
Analysts say this should serve as a sign that Nintendo needs to shift its strategy moving forward. "Their time of growth [from consoles] is over, and, while I don't think the company will cease to exist, if they don't move into new categories, they will no doubt lose the great scale they've amassed," said analyst Mitsushige Akino.
Meanwhile, Citigroup analyst Soichiro Fukuda recently claimed in a report that home consoles "could become a thing of the past."