Nintendo’s financial report shows Wii U problem isn’t getting better

The console manufacturer posts a huge loss while sales fall short of even reduced projections
Nintendo Wii U

Nintendo Wii U

How’s the Wii U doing in the wake of the PlayStation 4 and Xbox One launches? Still pretty poorly, as Nintendo’s latest earnings report demonstrates.

Nintendo posted an annual operating loss of £268.9 million (46.4 billion yen) for the fiscal year ending on March 31, 2014, the third consecutive year the company has been in the red. Nintendo previously expected a loss of £202.8 million (35 billion yen) as of January, which is a far cry from its original projection of operating income of £579.6 million (100 billion yen).

The continued slump is due largely to the middling performance of its Wii U console, which moved 2.72 million units in the fiscal year for a total of just 6.17 million systems sold since launching in late 2012. By contrast, Sony has sold more than 7 million PlayStation 4 consoles to consumers since its November 2013 release.

Both hardware and software sales just missed their latest projections, although games like New Super Luigi U and the brilliant Super Mario 3D World sold more than a million units apiece. Despite its unique second-screen GamePad controller, the underpowered Wii U hardware has failed to catch on with players and has spurned many major game publishers—notably Electronic Arts.

“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,” reads the company’s report to investors. It'll be interesting to see how.

Sales for Nintendo’s 3DS handheld also missed their target, with 12.24 million units sold against a projection of 13.5 million. But it's not all doom and gloom - 3DS software sales (67.89 million) beat their expectations (66 million) on the back of strong titles like Pokémon X & Y, which together sold 12.26 million copies. Given that these games sell for proper money—the polar opposite of smartphone offerings—these numbers aren't to be sniffed at.

[Source: Nintendo via Polygon]

READ MORE: The 5 best Nintendo Wii U games so far

Analysis: Don't count Nintendo out

Some have speculated that Nintendo will follow the path of Sega and focus on making software for competitors’ consoles, but that seems unlikely. Despite its recent woes, Nintendo has a large supply of cash on hand and seems intent on doing its own thing for as long as it can.

Considering the lack of software support, it seems unlikely that the Wii U will be able to compete against the latest Sony and Microsoft hardware. When the Nintendo 3DS started slow, Nintendo quickly cut its price and started bouncing back. With no such move for the Wii U, it’s languished for months and major non-Nintendo games are mostly M.I.A.

But Nintendo’s been here before. Despite some beloved games, the GameCube was a misfire, but Nintendo rebounded by taking a huge risk on the original Wii. Attempting that move again with the Wii U hasn’t exactly worked out thus far, but if any company can find a new and exciting way to change home gaming for the better, it’s likely Nintendo. Don’t count them out over the long haul.

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