KYOTO, Japan – Japanese video game maker Nintendo Co. Ltd. said it may beat its earnings forecasts for the year to March as well as its sales target for the DS handheld games device.
Analysts have been concerned that the DS and the Wii, both of which offer easy-to-play games, could end up grabbing potential customers from each other, hurting Nintendo's sales.
The Wii, which competes with Sony Corp.'s (SNE) PlayStation 3 and Microsoft Corp.'s (MSFT) Xbox 360, features a motion-sensitive controller that allows players to control the game by swinging the device like a tennis racket or wielding it like a sword, opening up new avenues for game playing.
"Some analysts say the largest rival of the Wii is the DS. But if you take a look at DS sales in the United States in the Thanksgiving week or DS sales in Japan in the week of the Wii launch, there has been little impact," Iwata said.
The Wii went on sale on November 19 in the Americas and on December 2 in Japan. Nintendo, known for such game characters as Mario and Pokemon, aims to sell 4 million units of the Wii by the end of December and an additional 2 million by March.
The Kyoto-based company has forecast operating profit in the business year to next March to grow 60.5 percent from last year to 145 billion yen ($1.26 billion) on sales of 740 billion yen, which would be up 45 percent.
"We had come up with the current earnings forecasts before we sold even a single unit of the Wii and when we were not so sure about the cannibalisation effect between the Wii and the DS," Iwata said. "Confidence could be too strong a word, but there is an emerging possibility (to beat those forecasts)."
Analysts on average expect Nintendo to post an operating profit of 153.8 billion yen for the year to March, according to Reuters Estimates.
FURTHER DS GROWTH
The DS, which is behind Nintendo's sharp earnings growth this year, has two screens, opens like a book and allows gamers to control play with a stylus, instead of manipulating a keypad.
Its intuitive play style coupled with software that does not alienate game novices, such as the "Nintendog" pet training game, have helped Nintendo expand its clientele beyond a young male audience to include women and the elderly, leaving many Japanese electronics stores repeatedly out of stock of the DS this year.
The company in October raised its sales forecast for the DS to 20 million units from 17 million for the year to March, while Sony cut its shipment target for competing PlayStation Portable by 25 percent to 9 million for the same period.
Iwata sees a further expansion in the DS business in the coming year starting April 2007 as overseas demand picks up, he said, shrugging off market worries that the handheld machine's best period could already be behind it.
"What happened in Japan this year is a bit out of the ordinary. It would be too optimistic to expect a situation like that to last long," Iwata said.
"But the DS is just now gathering full strength in Europe and the United States ... I think it still has room for growth globally."
Nintendo, which dominates the handheld game sector but lags far behind Sony in the console market, aims to repeat the success of its hot-selling DS portable machine with the Wii, bringing both of the game maker's two growth engines to full throttle.
The company sold about 600,000 units of the Wii in the first eight days after its release in the Americas. The console is set to hit store shelves in Europe on Friday.
Prior to Iwata's comments, shares in Nintendo closed up 0.2 percent at 26,920 yen, while the benchmark Nikkei average dipped 0.23 percent.
Nintendo shares have doubled in value over the past year, buoyed by strong DS sales and soaring expectations for the Wii, outshining a 4.6 percent gain in the Nikkei.