Nintendo sees profit doubling, helped by smartphone game entry
TOKYO/OSAKA (Reuters) – Japanese videogame maker Nintendo Co Ltd forecast its long-awaited entry into smartphone games would help it double annual operating profit in the year through March, offsetting weak sales growth in its traditional consoles.
Nintendo repeatedly resisted investor calls to shift focus to smartphone games to boost profitability, until it unveiled a gaming app partnership in March with DeNA Co Ltd. On Thursday, it said would also branch out to theme parks through a tie-up with Universal Parks & Resorts.
The newly venturesome approach comes as Nintendo’s Wii U console lags behind Sony Corp’s PlayStation and Microsoft Corp’s XBox, while the rise of smartphone games has also led to a decline in customers.
Though console sales are slowing, Nintendo forecast operating profit would roughly double to 50 billion yen (£275.5 million) in the year through next March, ahead of the 39 billion yen average forecast of 20 analysts to Thomson Reuters data.
Nintendo Chief Executive Satoru Iwata said that outlook assumed a "certain level of profit" from the DeNA partnership.
"We definitely want one game this year. And after that we want to come out with new applications, and make sure each one is a hit," he told reporters at an earnings briefing in Osaka.
DeNA Chief Executive Isao Moriyasu said in April that he hopes the pair can come up with titles that bring in over 3 billion yen a month.
In a sign of further diversification, Nintendo also said on Thursday that it would allow Universal Parks & Resorts, a subsidiary of Comcast NBCUniversal, to use its characters for new theme park attractions.
The two companies did not provide details on the timing or scale of the partnership. Iwata said they could collaborate at Universal Studios Japan in Osaka or other Universal theme parks.
Earlier on Thursday, Nintendo said it booked operating profit of 24.8 billion yen for the year ended March 31, turning into the black for the first time in four years due to the lower cost of sales.
For the year ahead, the company forecast Wii U sales to be roughly flat at around 3.4 million consoles, with those of its 3DS portable console likely to fall to 7.6 million from 8.7 million a year earlier.
Shares of Nintendo closed 2.5 percent lower ahead of the earnings release, versus a 1.2 percent fall in the broader market.