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Dismal Wii U performance continues to negatively impact Nintendo financials

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Nintendo revealed the fiscal results for the year ending March 31, 2014 on Wednesday and it marked the third consecutive annual loss. Sales of the Wii U continue to be the albatross around the company’s neck as it recorded a net loss of ¥23.2 billion ($228 million) with the console identified as having a “negative impact.”

The Wii U has sold only 6.17 million consoles worldwide in the year and a half since it launched in November 2012. Even more devastatingly, the console only sold 310,000 units for the quarter that ended March 31. That’s a 20 percent drop in sales from the same period a year ago.

Despite the big name releases like “Mario Kart 8” and “Super Smash Bros.”, Nintendo is forecasting conservative Wii U sales for the upcoming fiscal year. The company expects only 3.6 million consoles to be sold through March 31, 2015. This comes after the company came under fire last year for missing forecasts that predicted 9 million consoles sold.

“Nintendo will focus on efforts that seek to stimulate the platform,” the company wrote in its financial statement. “By providing software that takes advantage of the Wii U GamePad, utilizing its built-in functionality as an NFC reader/writer, and adding Nintendo DS Virtual Console titles to the Wii U software lineup, Nintendo will seek to enrich the value of the Wii U GamePad, the most important differentiator of Wii U, and as a result expand the sales of the Wii U platform.

“In terms of compatible software, by positioning ‘Mario Kart 8’, scheduled to be released globally in May, and ‘Super Smash Bros. for Wii U’, scheduled to be released this winter, as two main drivers, both of which are titles that a wide range of consumers can enjoy either alone or with other players, Nintendo will seek to supply high quality games on a continuous basis. Moreover, Nintendo will also strive to proactively pursue its digital distribution business through the Nintendo eShop,” it concluded.

Unfortunately, with no major third-party support, “Mario Kart 8” and “Super Smash Bros.” are the only titles that can drive Wii U sales. Nintendo plans new announcements at E3 but will be doing a livestream of announcements for a second consecutive year versus a press conference at the convention.

Nintendo does predict a return to profitability for the 2014 fiscal year, however, with an operating profit of ¥40 billion ($394 million) with 12m 3DS consoles sold in addition to the 3.6 million Wii U consoles forecasted. Whether this is another rosy prediction on the part of Nintendo’s leadership team is open for question. The original forecast for the 2013 fiscal year was ¥100 billion profit before backtracking earlier this year to change that to a loss.

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