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Nintendo's profit plunges on weak Wii sales

First-half profit falls 52 percent, forcing the company to warn that overall 2009 earnings will likely drop for the first time in six years.

Lance Whitney Contributing Writer
Lance Whitney is a freelance technology writer and trainer and a former IT professional. He's written for Time, CNET, PCMag, and several other publications. He's the author of two tech books--one on Windows and another on LinkedIn.
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Lance Whitney
2 min read

Sinking sales and a price cut for the Wii knocked Nintendo's first-half earnings by 52 percent.

On Thursday, the game maker reported a profit of 69.5 billion yen ($767.8 million) for the six-month period ended September 30, compared with 144.83 billion yen for the same period last year.

Sales for the period also tumbled, falling 34 percent to 548 billion yen.

Nintendo blamed the shortfall on weak sales of its Wii combined with its recent price cut for the game console. In September, the company trimmed the cost of the Wii in the U.S. by $50 to $199.99. Nintendo said it sold 5.75 million Wii machines globally during the first half of its fiscal 2009, a huge decline from the 10 million units that flew off the shelves for the same period last year.

The Wii continues to face competitive pressure from both Sony's PlayStation and Microsoft's Xbox, which have benefited from their own price cuts.

Nintendo was also hurt by a lack of hot new games for the Wii and portable DS game console. For the Wii, the company's only major releases were Wii Sports Resort in July and Wii Fit Plus in early September. As one of the few bright spots, Wii Sports Resort has enjoyed brisk sales.

The weak earnings fell short of Nintendo's earlier estimate of a 100 billion yen profit for the first half and prompted the company to lower its forecast for fiscal 2009. Nintendo now expects annual earnings to fall to 230 billion yen, lower than its May estimate of 300 billion yen, and down from the 279.1 billion yen it earned in 2008. This would mark the first annual earnings decline in six years.

Nintendo also slashed its sales forecast for the full year, now expecting revenue of 1.5 trillion yen, down from its prior estimate of 1.8 trillion yen, an 18.4 percent drop from 2008.

The game maker is hoping for a brighter holiday season when gift-seeking shoppers may take advantage of the Wii's lower price. Nintendo is also eager to see whether its upcoming New Super Mario Bros. Wii game proves to be a hot seller.

Reports have even surfaced that the Wii may follow in the footsteps of Sony's PlayStation 3 by offering a Netflix streaming option.