Nintendo Posts Profit, Outlook Pulled Down by Weak Sales in Software

On Tuesday, Nintendo Co posted its first profit for a quarter in the past year thanks to its mobile games division starting to generate revenue, though not a sufficient enough amount to offset weak software sales that dragged down its outlook for annual earnings.

This result comes only six weeks after the game maker based in Japan released Super Mario Run its first smartphone title after bowing to heavy pressure from investors in 2015 to enter into the market of mobile games.

While the profit for the quarter was an appropriate reward for its move, a cut of a third to its outlook for the full year will disappoint its investors who hoped the mobile profit would increase quick enough in order to offset its drop in earnings from its console business.

Nintendo is now expecting its operating profit to be 20 billion yen or $176 million for its year-end in March. The company said downloads of its console games as well as sale of its amiibo goods will likely end up lower than its forecast earlier.

In its quarter through December, profit was 32.2 billion yen, which was down by 3.7% from the same period one year ago but exceeding analyst’s estimate of 30.7 billion yen.

Launched December 15, Super Mario Run helped revenue for the third quarter from mobile gaming as well as its related merchandise to end the quarter at 7 billion yen.

Downloads at Nintendo were up to 78 million, although less than 10% of its users paid the one-time fee of $9.99, to unlock all its features, said Nintendo.

The company has earned nearly 5 billion yen from its Pokemon Go mobile game through investment with developers, which boosts the net profit at the company.

Fire Emblem its upcoming namesake mobile title is scheduled for release by the start of April, but it pushed Animal Crossing, another title, back until later in 2017 in order to place focus on both Super Mario Run and Fire Emblem, said company officials.

Nintendo eyes mobile as mainly a means of attracting players to its namesake consoles. It is scheduled to release its most recent console, the Switch, during March and is planning to shop over 2 million units before March ends. Initial shipments have already been completely allocated.

This is the first console for Nintendo in four years and has not yet won over the analysts who have doubts about its success in part due to it costing more than rival consoles and not having the same number of games.

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