March 4, 2016 6:10 pm JST

Nintendo keeps paying, despite less playing

MASASHI ISAWA, Nikkei staff writer

OSAKA -- Despite bracing for a steep profit decline in the year ending this month, Japanese video game company Nintendo has decided to maintain its annual dividend forecast.

     In late February, the company revised its outlook, predicting group net profit for fiscal 2015 will fall 59% on the year to 17 billion yen ($148 million), a sharp decline from its previous forecast for a 35 billion yen net profit.

     With the new forecast, based on Nintendo's policy of distributing 33% of its group operating income as dividends and maintaining a consolidated payout ratio of 50%, the annual dividend per share for fiscal 2015 comes to 100 yen. Nevertheless, the game-maker kept its annual dividend forecast unchanged at 150 yen.

     Satoshi Tanaka, an analyst at Daiwa Securities, said Nintendo has become more accommodating to investors since Tatsumi Kimishima took over as president last September. But the management team faces bigger tests ahead.

Missing targets

Nintendo also cut its sales target for its key 3DS portable game console to 6.6 million units, compared with its previous goal of 7.6 million. Likewise, the unit-sales target for software titles for the console has been reduced to 47 million copies from 56 million. That translates to a year-on-year decline of 25% for both hardware and software.

     Since 3DS hit the market in February 2011, total sales have reached 57.94 million units, as of the end of last year. That is only about one-third as many as the earlier machine, the DS, which had sales of 154 million units. It also fewer than the 81 million Game Boy Advances sold, the portable game player of two generations back.

     One culprit is Nintendo's struggling U.S. business. The company has sold about twice as many DS and Game Boy Advance machines in the U.S. as in Japan. But U.S. sales of the 3DS, at around 20 million, are similar to those for Japan, which is a much smaller market.

     Hideki Yasuda, an analyst at the Ace Research Institute, said the company was slow to introduce popular titles, such as those featuring "Pokemon". As a result, the company failed to kick-start the market, making developers reluctant to work with Nintendo.

     The Wii U home game console has seen steady sales. "Splatoon," a shooting game for the Wii U, has sold more than 4 million copies.

     In Japan, since late January, signs saying "Wii U is out of stock" have begun appearing at game shops across the country. That has sparked rumors the company might be about to cut prices, though Nintendo denies this. According to the rumors the company has also been restricting supplies to avoid unsold inventory. 

 

Nintendo Co., Ltd.

Japan

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