Nintendo Profits Drop Dramatically, Devonshire & Douglas Capital Partners Questions The Future Of Console Based Gaming

Online, April 29, 2011 (Newswire.com) - Nintendo has reported that their net profit for the fiscal year ending March 2011 has dropped from 228.6bn yen the previous year, to 77.6bn yen.

The colossal drop in profits is not attributed to the earthquake and consequent tsunami that has devastated Japan. Instead, the loss is party credited to a dive in consumer spending in Japan.

Nintendo however is confident its new Wii will turn profits around by beating competition. The next generation of Wii, the Wii 2, will be unveiled at the E3 summit in June. The memory capabilities of the new Wii combined with high definition visuals is expected to quash competition.

Nintendo has also recently released an innovative 3DS console that doesn't require special 3D glasses. Nintendo has clearly come a long way since the NES and the days of 16 bit platform gaming. The new 3DS console, that was released last month, is reportedly selling steadily. 440,000 3DS units were sold in its opening week in the US alone and it is also proving popular in Japan.

Experts at Devonshire and Douglas Capital Partners however are concerned about the future of gaming in general. Consumers are buying fewer consoles on the whole due to the advancement of mobile phone technology. With phones like the iphone 4 and various Android models containing relatively advanced games, there is less need for consoles such as the 3DS, particularly for those are purely interested in owning a console for brain training purposes. In addition, consumers have less expendable income to use on gaming; consequently a phone that has built in gaming capabilities is going to prove much more cost effective.

Nintendo needs to ensure the 3DS is worth the extra money and at $250, with an additional $30-40 per game it is a lot of money. If Nintendo fails to achieve this, gaming may return once again to the predominantly 18-30 year old male demographic that was so revolutionary for the industry to expand upon. Family orientated games like the Wii in addition to brain training games helped introduce gaming to a new generation of users and also made it a more sociable activity. If the gaming industry returns once again to an 18-30 demographic due to the price of new consoles, it could be a costly mistake.

Competition including Microsoft and Sony are already altering their business strategy to cope with the altering gaming industry. Sony intelligently leases specific games for use on other platforms in order to maximize profits. Though the innovative 3DS accompanied by the Wii 2 should help to increase profits in the short term, Nintendo will need to come up with a similarly innovative business strategy if the gaming industry continues to change.