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Nintendo reports huge quarterly loss amid plummeting Wii U sales

The NX can’t come soon enough

Nintendo logo floating above the company's E3 booth
Samit Sarkar (he/him) is Polygon’s deputy managing editor. He has more than 15 years of experience covering video games, movies, television, and technology.

The first quarter of Nintendo’s current fiscal year wasn’t pretty, as a massive drop in Wii U sales led to a significant decrease in sales and an operating loss of 5.13 billion yen ($48.7 million), the company said today in an earnings report.

Net sales for the quarter, which ran from April 1 through June 30, totaled 62 billion yen ($587.8 million) — a drop of 31.3 percent compared to the same period in 2015. Nintendo attributed its massive operating loss partly to a stronger Japanese yen, the appreciation of which caused exchange losses totaling 35 billion yen ($332 million).

Poor hardware performance also contributed to Nintendo’s troubles in the quarter. Wii U sales were anemic at just 220,000 units worldwide, a 53 percent year-over-year drop, meaning the company sold less than half as many Wii U consoles as in the same period a year ago. Nintendo 3DS sales dropped by 7 percent to 940,000 units.

The news wasn’t all bad. Software sales were up in the first quarter on both 3DS and Wii U. Nintendo released Fire Emblem Fates in Europe and Bravely Second: End Layer in the U.S. during the quarter. The company said "both titles got off to a good start," and that the global release of Kirby: Planet Robobot resulted in "steady sales." Worldwide software sales on 3DS rose by 7 percent to 8.47 million copies.

On the Wii U side, global software sales were essentially flat: up 3 percent year-over-year to 4.68 million units. Nintendo didn’t release any big Wii U titles during the quarter — the most notable games were Star Fox Zero and Mario & Sonic at the Rio 2016 Olympic Games — but the company reported "steady sales" of two of its biggest titles from 2015, Splatoon (now up to 4.42 million lifetime sales) and Super Mario Maker (3.65 million copies since launch).

Nintendo today reiterated its message from last week, when it said that it wasn’t adjusting its forecast for its current fiscal year even with the runaway success of Pokémon Go. The company’s guidance calls for operating income of 45 billion yen (up 36.9 percent) for the fiscal year, which ends March 31, 2017.

Nintendo’s second fiscal quarter, which ends Sept. 30, will be relatively quiet — except for the release of the Pokémon Go Plus, which Nintendo delayed today from July to September. The company is banking on a big second half for its fiscal year. Pokémon Sun and Moon are scheduled to be released globally on 3DS in November. Nintendo and DeNA are also working on mobile games for Fire Emblem and Animal Crossing, following the companies’ first collaboration, the app Miitomo.

Finally, Nintendo plans to launch its next hardware platform, codenamed the NX, worldwide in March 2017. The system will reportedly be a hybrid console/handheld system with games on cartridges.