Nintendo has a lot riding on the Wii U, the successor to the Wii, which revolutionized the gaming industry seven years ago with a casual approach that brought video games to new audiences. The company is banking on the Wii U to revive its fortunes after the disappointing introduction in 2011 of its hand-held gaming machine, the 3DS, which prompted the company to reduce its price sharply to stoke demand.

Nintendo executives had also said the Wii U would prove that dedicated game systems still had a future in a world now teeming with less expensive, more convenient mobile games played on smartphones and tablets.

The latest numbers from Nintendo are not promising. The company said that it had sold 3.06 million Wii U games and that it expected sales to reach just four million units through March, almost 30 percent less than a previous projection of 5.5 million.

Nintendo also downgraded its 3DS sales expectations, saying that it would sell 15 million units through March instead of the 17.5 million units it previously forecast, and that it expected to sell fewer games.

“Nintendo needs a change in strategy,” said Michael Pachter, a gaming research analyst for Wedbush Securities, a Los Angeles-based investment firm. He said that Nintendo had botched the Wii U design — a touch screen used together with a television — and that the device was unimpressive for dedicated gamers and baffling for casual ones.

Nintendo executives need to reorganize the company so it will continue to be profitable even with lower hardware sales, Mr. Pachter said. He also said the company should consider developing smartphone games, a move Nintendo has resisted.

“Smartphones and tablets are nibbling away at the edges of the market for games,” he said. “If they can’t beat it, they should consider making money off it. Why can’t Mario be on the smartphone?”

Still, Nintendo returned to profitability for the first nine months of its business year, largely thanks to the weakening of the yen. That lowers the costs of Japanese exporters and bolsters their earnings.

Nintendo’s profit for the April-to-December period came to 14.55 billion yen, or $160 million, compared with a loss of 48.35 billion yen a year earlier, the company said in an earnings announcement that painted a mixed picture of its prospects.

The company raised its profit forecast for the business year through March to 14 billion yen from 6 billion yen. Nintendo does not break out quarterly results.

Article source: http://www.nytimes.com/2013/01/31/technology/nintendo-warns-of-weak-wii-u-sales.html?partner=rss&emc=rss