Is it time to retire game consoles? That’s the question buzzing around in the wake of Nintendo announcing its first yearly loss, forcing a downgrade of the 3DS future. The creator of Super Mario said it lost $575 million (45 billion yen), surprising experts forecasting a $52 million (4.2 billion yen) deficit. The unspoken push over the precipice: the iPad and iTunes App Store games.
Coming just a day after Apple announced monster profits, Nintendo revealed profits that fell to $529 million (40.9 billion yen) for the usually strong holiday 2011 fourth quarter which ended Dec. 31. Analysts polled by Reuters were expecting $670 million in profits, or 52 billion yen.
As a result, Nintendo cut its annual sales forecast for the Wii console to 10 million units, down from 12 million devices. Likewise, the company announced a lower forecast for the 3DS handheld gaming system to 14 million units, down from 16 million. Already the company has chopped the price of the 3DS system. The move is similar to other devices, such as Android tablets, that have been forced to drastically lower prices to compete with Apple.
But now experts are questioning whether traditional game consoles can even survive competition from the Cupertino, Calif. tech giant. “We think we need to consider the possibility that home consoles could become a thing of the past,” Citigroup analyst Soichiro Fukuda recently told investors.
However, Apple isn’t the only threat to Nintendo’s future. Along with the growth of Apple’s iPod touch as a gaming system and the App Store becoming a prime source for game shoppers, there is Microsoft’s Kinect and Google TV. As Apple prepares its next-generation iPad 3, eyes are on the tablet leader’s next move.
“We think the direction taken by marketing trendsetter Apple will be important and we will be watching the company’s announcements at future events with interest,” Kukuda said.