While nobody in Nintendo's ranks is freaking out just yet, the company did post an annual profit decline for the first time in six years, the Wall Street Journal reports. What's more, Nintendo said it expects the backwards trend to continue again this fiscal year while the company focuses on new products to spur growth.
Sales of Nintendo's Wii and DS handheld consoles have finally started to slow down. For the fiscal year ended March 31, Nintendo said it sold 20.53 million Wii consoles world-wide, down 21 percent from the previous year. And for this fiscal year, Nintendo expects sales to drop yet again, this time to 18 million units.
"There's a lot of expectation that Nintendo will continue to dominate. And that's a tall order in this industry, which is characterized by changes in leadership in every generation," said Jay Defibaugh, equities research director at MF Global FXA Securities.
Going forward, Nintendo will face increased competition from Microsoft and Sony, both of which are planning to introduce motion-sensing controllers for their own respective consoles. Combined with the Wii's inability to play back high-definition content, Nintendo has reason to be concerned.
On the handheld front, Nintendo will release the 3DS next year, which won't require any goofy looking glasses. If it works as well as Nintendo anticipates, the company will be better prepared to fend off increasing competition from mobile phones, which have started to make a harder push into the casual gaming segment.