Nintendo sees 3DS halting falling profits

Strong sales of Nintendo’s recently released 3DS handheld device should put an end to i ts run of falling profits this year, the company has said.

The game console maker also announced plans for a new version of its Wii console in 2012 as it reported its second year of falling profits.

Operating profit dropped 52 per cent to Y171.1bn for the 12 months to March 31, but the company said it expected that to rise 2.3 per cent to Y175bn ($2.13bn) this year.

The 3D-version of its handheld console does not require glasses and was released in Japan, the US, Europe and Australia in February and March, meaning that it had little impact on the financial year just ended.

The outlook suggested that Nintendo was expecting good Christmas sales with the product that just “hardcore gamers” had likely bought for now, one analyst said.

As the new version of the Wii console will not be released until after March, Nintendo will be a one-product group this fiscal year.

It did not provide details on the version of its Wii console, except that a playable model would be unveiled at the June E3 Expo in Los Angeles.

Despite the Wii’s success since its 2006 launch, Nintendo has faced increasing competition from Sony and Microsoft with their respective PlayStation 3 and Xbox 360. Competition became even stronger when Microsoft released its Kinect motion-controlling sensor for the Xbox ahead of Christmas last year.

The timing of the release of the new Wii had positive and negative elements for Nintendo, said Pelham Smithers, an analyst at Pelham Smithers Associates.

“On the positive side, this gives Nintendo time to build up a decent software library upon release plus also it gives a clean run for the 3DS this Christmas,” Mr Smithers said.

“On the negative side, it gives Kinect a second Christmas with little to no competition.” Nintendo said the year ahead in Japan would be unpredictable following the effects of the March 11 earthquake and tsunami.

The company said it had not suffered any direct hit to its production. “However, it can be predicted that there will be an indirect impact from individual consumption patterns or economic conditions in the future.”

Revenues at Nintendo, which relied on overseas markets for 83.4 per cent of its sales, were hit in the year by the strong yen and its decision to cut the price of its DS handheld gaming device. Analysts said the results might have looked worse than in reality as data suggest that retailers sold off inventory.