Nintendo cuts sales forecast as Wii U and 3DS lose traction

Nintendo has released its first set of financials [PDF link] since announcing the Switch, and the Japanese giant has cut its sales forecast for the fiscal year after a hit-and-miss six months. 

In its consolidated results for the six months ended September 30, 2016, Nintendo saw net sales fall by 33 percent to 136.8 billion yen ($1.3 billion). 

Year-over-year operating income also tumbled downwards, with the company posting an operating loss of 5.9 billion yen ($56.5 million) -- a sharp contrast to the 9 billion yen ($86.2 million) operating profit it posted this time last year. 

The good news is that, following the sale of its stake in the Seattle Mariners earlier this year and the success of Pokemon Go, which the company receives a revenue share of thanks to its part ownership of the Pokemon Company, Nintendo has seen its year-over-year profits soar to 38.2 billion yen ($365.8 million) from 11.4 billion yen ($109.2 million). 

Digging into hardware and software sales, the Nintendo 3DS looks to be in stasis, with the handheld's software sales around the same at 19.23 million units over the past 6 months. 

The outlook for the Wii U is much worse, with the half-yearly software sales on the soon-to-be-replaced home console falling to 8.3 million units -- a year-over-year decrease of 33 percent. 

It's a similar story on the hardware front, and although 3DS hardware sales actually climbed by 19 percent to 2.71 million units, sales of the Wii U fell by 53 percent to 560,000 units.

In its earnings report, Nintendo blamed the Wii U's wobbly performance on a lack of killer releases. 

"Activity has conformed to our expectations from the start of the fiscal year," explained the company. "There were no hit titles this period to compare with Splatoon and Super Mario Maker last year."

With those stuttering sales in mind, the console maker has tempered its end-of-year sales expectations, and is now predicting net sales of 470 billion yen ($4.5 billion) -- down from 500 billion yen ($4.78 billion). Although Nintendo's new Switch console/handheld will launch in the final month of the fiscal year (March 2017), it won't ship sufficient copies to make a major difference to the company.

Nintendo also expects end-of-year operating income to hit 30 billion yen ($287 million), rather than 45 billion yen ($431 million) originally forecast. Profits once again proved to be the silver lining, with Nintendo now anticipating improved profits of 50 billion yen ($478 million) - up on the previous prediction of 35 billion yen ($335 million), and largely thanks to the Seattle Mariners sale.