There are two reasons to be excited about Nintendo Co. today. The game maker posted its first profit in four years and reveals there is a new mobile app game in the works.
The Japanese video game maker beat analyst expectations, not by a long shot, but enough to decrease costs amidst slowing revenue gains. It reported a profit of $207.6 million and is getting ready to push out a smartphone app sometime this year. It also has plans to move into theme parks and has made a deal with Universal Parks & Resorts to have its licensed characters involved in the theme parks.
In March, Nintendo announced it was forming a partnership with DeNA to create a gaming app. The product strategy comes as Nintendo is facing great competitive pressure from players such as Microsoft's Xbox and Sony's PlayStation.
Despite the fact that its console business is not rapidly growing, Nintendo expects profit will double this year and hit about $419.71 million, which is much more than analysts are expecting.
"We definitely want one game this year. And after that we want to come out with new applications, and make sure each one is a hit," said Nintendo CEO Satoru Iwata.
"A new source of revenue is expected from a gaming application for smart devices which will be released this year," said Nintendo in its earnings report.
When it comes to Wii U sales, Nintendo isn't super optimistic and expects them to remain at status quo, selling about 3.4 million and expects to see a dip in its 3DS portable console sales, hitting 7.6 million from 8.7 million a year ago.
Over the past few years Nintendo has skirted getting into mobile gaming and smartphone game apps, as it wasn't convinced it was a viable gaming market segment. But now it's viewing the new product foray as way to stem losses on its legacy gaming portfolio, especially in light of some misses and challenges it is facing with game products such as Legend of Zelda for Wii U, which has been delayed. Competitors Sony and Microsoft have already moved deep into the mobile game segment.