The untouchable Wii may finally have come back down to earth. 1UPnews is reporting (via Times Online) that Nintendo has cut its 2008 sales forecast by 33 percent from its previous estimates. This is not to say that Nintendo is in need of a bailout. The heroic Wii and its strong 2008 lineup of Mario Galaxy and Super Smash Brothers gave Nintendo some of the best profit margins it has seen in years during the first three fiscal quarters. However, Nintendo’s fourth quarter has been awful, and it will close the financial year ending March 31 with a profit of Y230 billion ($2.5 billion US), not the Y345 Billion ($3.8 Billion US) it predicted six months ago.
The news hit the Tokyo Stock Exchange hard, and caused Nintendo’s stock to fall 12 percent on Friday. It also triggered an avalanche of commentary from analysts on both sides of the picture. Hiroshi Kamide, an analyst for KBC Financial Products, noted, “Today’s revision suggests that the roaring pace of Wii growth that we’ve seen until now may be over.” Contrastingly, Goldman Sachs defended Nintendo as one of Japan’s strongest electronics manufacturers, saying, “We believe the stock will almost certainly react negatively in the near-term. However, we would see a drop in price as a chance to buy on weakness.”
Nintendo is blaming the steep dropoff of sales on the rise of the Japanese Yen compared to other currencies, which is cutting into the company’s overseas profit. This, along with the international economic situation, may account for the loss in net gain, but there could be other causes. Nintendo also announced that they will sell 1 million fewer Wiis than they had originally anticipated. That is not merely the result of currency fluctuation.
I can’t help but wonder if the lack of blockbuster titles on the Wii have dropped off since Smash Brothers. Maybe Super Mario RPG kept up the momentum a little bit, but in a holiday season that featured Gears of War 2, LittleBigPlanet, Fallout 3, and a host of others, where was the hype for the next Wii game? What title could consumers rally around…Mega Man 3? Undoubtedly, many factors are contributing to bring down Nintendo’s sales, but they could use a big hit, and soon.