New gaming console has to get Nintendo back on track

Nintendo is to launch a new gaming console in March 2017, but the pressure is on: this device will have to make people forget about the Japanese technology company’s abysmal past fiscal year.

Net profit dropped 60 %

Nintendo will want to forget its fiscal year 2015-2016 quickly: turnover dropped 8.2 % to 504.45 billion yen (4 billion euro), while its operational profit plummeted 32.7 % to 32.88 billion yen (250 million euro). Net profit also fell sharply, down 60.6 % to 16.5 billion yen (130 million euro). The weak numbers were no surprise: the board had already altered its full-year forecast downward in February.

There are a number of reasons for these disappointing results: firstly, Nintendo is facing huge competition from smartphone manufacturers. These create cheaper (albeit less spectacular) forms of entertainment, which eat up spare time from Nintendo’s potential gamers. The Super Mario creators also had to deal with a more expensive yen, which is a big deal as Nintendo generates 75 % of its turnover abroad.

Nintendo’s previous gaming console, the Wii U, also performed in a lackluster fashion: it never appealed to the masses and only 12.8 million devices were sold since its launch in 2012. The company now hopes its new console, preliminary called the Nintendo NX, will be able to double net profit in its 2016-2017 fiscal year to 35 billion yen (260 million euro). The Wii U successor is expected to launch, both in Japan and abroad, in March 2017.