By Isabel Reynolds
(OSAKA, Japan ) - Nintendo Co Ltd will launch a successor to its aging Wii game console in 2012 as it bets on a new hit games platform to win back users lured away by rivals Microsoft and Sony, and reverse a fall in profits.
The maker of the DS handheld games device, which is also facing competition from smartphone makers including Apple Inc, said on Monday it will demonstrate a prototype of the new Wii in Los Angeles on June 7 at the E3 game show.
Nintendo is looking to repeat past successes in the gaming market. The Wii took the industry by storm five years ago by offering family games such as tennis and bowling that appealed to non-traditional gamers.
This time around, however, Nintendo will find it harder to sidestep its competitors and must also contend with a burgeoning smartphone market that didn't exist in 2006, said Mitsushige Akino, Chief Fund Manager at Ichiyoshi Investment Management.
"Core users and game lovers that will certainly buy it, but I think it will be hard to capture buyers outside of that group," he said.
On Monday, Nintendo also reported its second straight fall in annual profit, which was half of a year ago, as demand for Wii games console fell. Having sold 86 million units since launching in 2006, sales last business year slipped by five million units to 15 million.
Nintendo company declined to provide further details of the new Wii.
"As for the details of exactly what it will be, we have decided that it is best to let people experience it for themselves at E3," Nintendo CEO Satoru Iwata, told a news conference.
"So I won't talk about specific details today, but it will offer a new way of playing games within the home," said Iwata, a former game designer.
Nintendo launched a glasses-free 3D-capable handheld games device, the 3DS, this year, to fend off increased competition from other game console makers and smartphone makers. It must also contend with Microsoft and Sony which have brought new products to the market since the Wii's debut.
In March, Microsoft said it had sold more than 10 million Kinect motion-sensing game system units worldwide in just over four months, making it the fastest-selling consumer device on record. The infrared camera add-on for the Xbox game console tracks body gestures for video games. Sony's rival motion sensing device is dubbed Move.
DECLINING SALES
In the business year just ended, Wii console sales fell to 15.1 million units from 20.1 million a year earlier. It expects sales to fall by a further 2 million units this business year.
Sales of its non-3D handheld DS shrank by almost 10 million units to 17.5 million, and the company expects that to slide to 11 million this term.
Nintendo' operating profit fell 52 percent to 171.1 billion yen ($2.09 billion) in the year ended in March from 356.8 billion yen the previous year, below a Thomson Reuters SmartEstimate of 200.8 billion yen.
SmartEstimates put more weight on recent forecasts by highly rated analysts.
Nintendo expects operating profit of 175 billion yen for the year to March 2012, compared with a consensus of 215.8 billion yen, based on eight analysts polled by Thomson Reuters I/B/E/S after the March 11 disaster.
Nintendo shares closed up 0.9 percent ahead of the earnings report in a flat broader market. ($1 = 81.845 Japanese Yen)