Nintendo's president Thursday ruled out price cuts for its new Wii U
home console as a way to boost sales, vowing to become profitable again
in its core businesses as smartphones and tablets increasingly threaten
specialized game machines.
Satoru Iwata, speaking at a Tokyo hotel to
investors and reporters a day after earnings were released, acknowledged
the sales momentum for the Wii U, as well as the 3DS hand-held game
machine, had run out of steam during the key year-end shopping season,
especially in the U.S.
But he said no price cuts were in the
works. Price cuts are common in the gaming industry to woo buyers, but
the move can backfire by trimming revenue. The Wii U now sells for about
$300 in the U.S. and 25,000 yen in Japan.
"We are already offering it at a good price," he said.
Iwata
said he expects operating profit of more than 100 billion yen in the 12
months ending March 2014, promising that as "a commitment."
But
he acknowledged more work was needed to have consumers understand the
Wii U, which went on sale globally late last year, as well as producing
more game software to draw buyers.
All game machines have suffered
in recent years from the advent of smartphones and other mobile devices
that have become more sophisticated and offer games and other forms of
entertainment.
Nintendo returned to net profit for the
April-December period of 2012 from deep losses the previous year, but
that was due to a perk from a weaker yen, which helps Japanese exporters
such as Nintendo.
Its operating result, which removes currency
fluctuations, was a loss of 5.86 billion yen ($64 million), and Nintendo
expects that to swell to a 20 billion yen ($220 million) loss for the
full business year ending March 2013 as sales of its game consoles fall
short of expectations.
Iwata said Nintendo is preparing more game software, including those developed in-house, for the end of this year.
Kyoto-based
Nintendo, which makes Super Mario and Pokemon games, lowered its full
year sales forecast Wednesday to 670 billion yen ($7.4 billion) from 810
billion yen ($8.9 billion). It also said it was going to sell fewer Wii
U consoles for the fiscal year through March than its previous
projection. The Wii U has a touch-screen tablet controller called
GamePad and a TV-watching feature called TVii.
The company
forecasts it will sell 4 million Wii U consoles for the current fiscal
year, ending March 31, down from its earlier estimate of 5.5 million
units. The Wii U, which went on sale late last year, was the first major
new game console to arrive in stores in years.
Nintendo, also
behind the Donkey Kong and Zelda games, lowered its full year sales
forecast for Wii U game software units to 16 million from 24 million.
Iwata
said last year holiday sales quickly dissipated in the U.S. and some
European nations, including Great Britain, the key market. He said the
U.S. home console sales were the worst for Nintendo in nearly a decade.
He
said Nintendo needs hit games to push console sales, and the company
remains confident Wii U will prove more popular with time.
"The chicken-and-game problem has not been solved," he said of the need for both game software and machine hardware.
"I feel a deep sense of responsibility for not being able to produce results for our year-end business," said Iwata.
He declined to say what he would do if the company failed to attain the promised operating profits.
Nintendo
sank into a loss the previous fiscal year largely because of price cuts
for its hand-held 3DS game machine, which shows three-dimensional
imagery without special glasses. That machine is also struggling in most
global markets.
Shigeru Miyamoto, Nintendo's famed game designer,
said what was missing were games for the Wii U that made its appeal
clear. The progress in smartphones has also posed a challenge for
Nintendo, he said.
"People have to try it to see it is fun," Miyamoto said of Wii U.