TOKYO (Reuters) - Nintendo’s 7974.OS attempt to rescue its failed 3DS handheld games gadget with a raft of new games content fell short of expectations and left investors pessimistic about the outlook for the long-time industry champion.
Nintendo's shares slid 5 percent on Tuesday in a strong broader market .N225 as investors said content would not enable the 3DS to fight off growing competition from smartphones and tablets.
The Kyoto-based company has already been forced to slash prices to try to boost slumping demand, leaving only its famed content, never made available on other firms’ hardware, to revive sales.
At a subdued event held two days ahead of the Tokyo Game Show, Nintendo President Satoru Iwata unveiled what he said was an unprecedented range of games, including some featuring the company’s much-loved Mario character and others aimed at attracting women customers.
Analysts said the line-up lacked a “wow” factor, while investors said it was largely irrelevant.
“I don’t think the new games will make any difference,” said Mitsuhige Akino, chief fund manager at Ichiyoshi Investment.
“Nintendo succeeded by pulling in people who weren’t gamers and their needs now are no longer being filled by Nintendo, they are happy playing games on their mobile phones,” he said.
With sales of its DS and Wii fading, Nintendo was relying on the new 3D model to revive profits and fend off renewed competition from motion-gaming peripherals of Sony Corp (6758.T) and Microsoft (MSFT.O). Many casual gamers are also flocking to devices such as Apple’s (AAPL.O) blockbuster iPhone and iPad.
As of Monday’s close, Nintendo’s shares had sunk 46 percent since the start of the year, hit by the slump in sales of its glasses-free 3D-capable games device and doubts that it can replicate the success of its Wii home console.
Analysts have cut their full-year operating profit forecasts by an average of 45 percent in the past 30 days and the stock is now trading at 45 times its estimated forward 12-month earnings, according to Thomson Reuters data.
In July, Nintendo slashed its outlook for the business year to end-March to its lowest in 27 years as it braced for losses from the 3D gadget, increased competition from mobile games and a stronger yen.
“From the end of this year to the beginning of next, we are planning the kind of extensive line-up that has probably never been seen before in the history of video games,” Iwata told reporters and guests at the event on Tuesday.
“We will make an all-out effort to see that the 3DS sells enough to become the successor to the DS,” he said.
That will be no easy task, given that earlier models of the DS had sold a cumulative total of about 148 million units by the end of June this year. The gadget, along with the motion-controlled Wii home console, enabled Nintendo to dominate the industry for years.
Iwata took a 50 percent pay cut, and other executives took 20-30 percent cuts to take responsibility for the poor performance.
“The only possible way for Nintendo to revive would be to stop concentrating on mobile games and switch to Wii-type games for the whole family,” said Makoto Kikuchi, CEO of Myojo Asset Management. “However, at the moment, I can’t see this change coming.”
Tech website C-NET had reported that Nintendo was set to launch an accessory for the 3DS that would provide an extra control button, but this was not mentioned at Tuesday’s event.
In August, Nintendo slashed the price of the 3DS, which features glasses-free 3D images, after sales shrivelled to just 710,000 units in April-June from 3.6 million in the first month after its launch, and a tiny fraction of the 16 million unit target for the year.
Macquarie Securities analyst David Gibson said he still expected the 3DS gadget to sell about 14.5 million units.
Additional reporting by Tim Kelly and Natalia Konstantinovskaya; Editing by Joseph Radford and Anshuman Daga