Nintendo Confirms Wii U Has Flopped, Slashes Sales Forecast By ~70%

Nintendo has confirmed what we knew already: its unhappy controller/console combo, the Wii U, is a flop. The company said hardware sales of the Wii U had failed to reach its target during the year-end, pushing it into a third consecutive annual loss, Reuters reports.

“We failed to reach our target for hardware sales during the year-end, when revenues are the highest,” said Nintendo’s president, Satoru Iwata, at a shareholder briefing on the sales figures.

With the Wii U failing to shift off shelves — and that despite a $50 price cut last September, to $299 — Nintendo has slashed its global sales forecast for the device for the year to March 31 by almost 70%. It said it’s expecting Wii U sales to number just 2.8 million units over that period. It also cut its sales forecast for its handheld 3DS console to 13.5 million units from 18 million.

Both Nintendo’s devices are facing fierce competition from non-specialist consumer hardware fuelled by thousands of often inexpensive games apps — aka the smartphones and tablets running on platforms such as Google’s Android OS and Apple’s iOS. Ownership of app-supporting mobile devices has exploded since the original Wii’s hey-day, of circa 2006, shifting the gaming goalposts from the living room to people’s pockets.

Meanwhile, the home console market has been increasingly dominated by Microsoft’s Xbox and Sony’s PlayStation — leaving Nintendo to be squeezed out by those more powerful home consoles at the higher end, attracting pro gamers with huge franchise titles such as Grand Theft Auto, and driven out at the lower end by the consumerization of portable gaming via mainstream mobile devices. Talk about a rock and a hard place.

The other point to note is that the Wii U itself just isn’t very good. It’s neither fish nor fowl, so to speak. As TC columnist MG Siegler put it back in September, it’s ”a poor concept accentuated by poor hardware”. He also described Nintendo as being “in the beginning of a death spiral”. Today’s sales forecasts pour more fuel on those flames.

Nintendo said it is now expecting an operating loss of 35 billion yen ($335.76 million) this business year vs its initial forecast of a 100 billion yen profit. It also warned of a net loss of 25 billion yen for the year ending on March 31 — having previously projected a 55 billion yen profit. And expects revenues of 590 billion yen, down 36% from its prior forecast.