* Nintendo shares slide after warning of 3rd year of
* Nintendo head has resisted licensing games like Mario for
* Investors, analysts mostly expect modest proposals at Jan
* Shares pare losses to end down 6.2 pct, had fallen as much
as 18 pct
(Adds background context, quotes from company, analysts)
By Sophie Knight
TOKYO, Jan 20 Nintendo Co Ltd will
likely be reluctant to make radical changes such as allowing its
games to be played on rivals' devices as it grapples with poor
sales of its flagship Wii U game console, which forced it to
slash its outlook and sent its shares tumbling.
Unlike rivals Microsoft Corp and Sony Corp
, whose recently released XBox One and PlayStation 4
have seen strong sales, the creator of "Super Mario" has
resisted pressure to open up game development to other firms.
Nintendo relies on the popularity of its franchises, such as
Mario and Zelda, to drive sales of its hardware. Some analysts
say Nintendo is missing out, however, by not releasing a version
of its games for smartphones or tablets, which now exceed 1
billion in use and account for a rising proportion of games
But there are no signs that Nintendo, which plans to unveil
a new management strategy on Jan. 30 after releasing quarterly
results, is likely to soften its stance.
"I think the company needs to see more failure before
anything more radical is considered," said David Gibson, senior
research analyst of games at Macquarie Securities in Tokyo.
"It's like a couple of wheels stuck in the mud. We all think
they're heading for deeper mud but they're not convinced as
such. They're going to try to change a little bit and move this
way and that and do a new strategy."
The company, which warned on Friday that it now expects its
third successive year of operating losses after previously
forecasting a profit of 100 billion yen ($960 million) for the
year to end-March, promised changes.
"It's right to question whether Nintendo should continue to
use the same model of selling a console for 20,000 yen to 30,000
yen and games for several thousand yen each, and so if you ask
if we are thinking about a new business structure, the answer is
'yes'," CEO Satoru Iwata told reporters in Osaka on Friday.
But he dismissed the idea that the rise of games on
smartphones and tablets would usher in the decline of game
"It's not something as simple as the spread of smart devices
meaning that game machines won't sell," he said. "If we offer
something that is in line with the changes around us today, I
think people will still need game machines."
Iwata, who has long opposed relinquishing control over
software, also said he would not be stepping down and there
would be no management reshuffle.
A more subtle change in gear could involve selling Wii U or
3DS games for as little as $1 or a free-to-play model,
Macquarie's Gibson suggested, or creating a lower-priced
handheld device to attract a younger audience.
Iwata has long maintained that the value of Nintendo's games
and consoles comes from their simultaneous in-house development
and that allowing other companies to develop games or licensing
their own to be played on other devices would affect their
"If we were going to provide Mario for other platforms and
if Nintendo stops being the hardware manufacturer, then actually
in terms of sales and profit, it might make sense for us in this
fiscal year but Mario is going to lose its inherent value," he
told media at the Electronic Entertainment Expo (E3) last June.
Analysts attributed weak Wii U sales to its lack of
differentiation from its predecessor, Wii, which propelled
Nintendo shares to a record high of 73,200 yen in November 2007.
The stock has lost more than 80 percent since then.
Nintendo shares closed down 6.2 pct on Monday, wiping off
about $1.2 billion from its market capitalisation, although this
was a substantial recovery from the open when it fell 18.4
percent. Nintendo suppliers also came under pressure, with
Hosiden Corp down 6.4 percent, MegaChips Corp
off 4 percent and Mitsumi Electric Co Ltd down 4.3
($1 = 104.2700 Japanese yen)
(Additional reporting by Dominic Lau and Yoshiyuki Osada;
Editing by Ed Klamann and Alex Richardson)