Nintendo Co. (7974) President Satoru Iwata said the maker of video-game machines is considering a new business model after forecasting a surprise 25 billion-yen ($240 million) annual loss because of tepid demand for the Wii U. 
 
 Nintendo fell the most in more than 12 years in the U.S. yesterday. The company had previously projected profit of 55 billion yen for the year ending March as it counted on Christmas shoppers to revive sales of the Wii U console featuring games with iconic characters Mario and Zelda. Nintendo cut its forecasts for Wii U console sales to 2.8 million units from 9 million and for Wii U game sales to 19 million units from 38 million. 
 
 The family-focused content of Nintendo is losing its appeal as titles were delayed, casual gamers migrate to mobile devices, and hardcore players opt for the faster Sony PlayStation 4 and Microsoft Xbox One. The owner of Pokemon and Donkey Kong also refuses to offer games with its characters on mobile devices, limiting its ability to profit online players’ surging demand. 
 
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 “We are thinking about a new business structure,” Iwata said at a press conference yesterday in Osaka, Japan. “Given the expansion of smart devices, we are naturally studying how smart devices can be used to grow the game-player business. It’s not as simple as enabling Mario to move on a smartphone.” 
 
 Photographer: Patrick Fallon/Bloomberg Attendees use the Nintendo Co. Wii U console at the E3 Expo in Los Angeles. Close Attendees use the Nintendo Co. Wii U console at the E3 Expo in Los Angeles. Close Open Photographer: Patrick Fallon/Bloomberg Attendees use the Nintendo Co. Wii U console at the E3 Expo in Los Angeles. 
 
 Nintendo American depositary receipts fell 17 percent to $14.90 yesterday New York, their biggest decline since September 2001. Each ADR equals 0.125 underlying shares. 
 
 Nintendo declined 2.8 percent to 14,645 yen yesterday in Tokyo, before the announcement. The shares advanced 54 percent last year. 
 
 Apple, Samsung 
 
 The new forecast for the Wii U is less than the 3.45 million units sold the previous fiscal year. The Kyoto, Japan-based company also cut its forecast for operating income to a 35 billion-yen loss from the prior 100 million-yen profit. 
 
 Projections for sales of its handheld 3DS player were cut to 13.5 million units from 18 million, and for sales of 3DS games to 66 million units from 80 million. 
 
 Nintendo posted a quarterly loss of 8 billion yen in October after cutting the price of the console in the face of new machines from Sony Corp. (6758) and Microsoft Corp. Iwata is trying to lure consumers who prefer playing games on mobile devices from Apple Inc. and Samsung Electronics Co. (005930) 
 
 More Pressure 
 
 “The video-game market has moved into smartphones and tablets,” said Mitsushige Akino, chief fund manager at Ichiyoshi Asset Management Co. in Tokyo. “Nintendo needs to expand from their current hardware business model. It’s a structural problem.” 
 
 Photographer: Scott Eells/Bloomberg Customers play Nintendo Co. Wii U video games inside a Nintendo World store in New York. Close Customers play Nintendo Co. Wii U video games inside a Nintendo World store in New York. Close Open Photographer: Scott Eells/Bloomberg Customers play Nintendo Co. Wii U video games inside a Nintendo World store in New York. 
 
 The revisions increase the pressure on Iwata, who vowed in October to meet a forecast of 100 billion yen in full-year operating profit and 9 million units in Wii U sales. Nintendo has lost about 80 percent of its market value since the introduction of the original Wii drove shares to a record high of 72,100 yen in November 2007, according to data compiled by Bloomberg. 
 
 Its market capitalization is about $20 billion -- less than Samsung’s previously announced capital expenditures. 
 
 “The revision is much worse than expected,” Yusuke Tsunoda, an analyst at Tokai Tokyo Securities Co. in Tokyo, said by phone. “It’s going to be a third consecutive annual operating loss and that raises a serious management issue.” 
 
 Iwata said any announcement about a pay cut would come later this month when the company releases third-quarter earnings. There are no plans to reshuffle management in the near term, he said. 
 
 Lower Dividend 
 
 The company reduced its planned dividend for the fiscal year to 100 yen from 260 yen. Nintendo revised its foreign-exchange assumptions to 100 yen to the dollar from 90 yen, and to 140 yen per euro from 120 yen. 
 
 “We were unable to sufficiently take advantage of the weaker yen,” Iwata said. 
 
 Even with new titles including “Pikmin 3,” Nintendo failed to capitalize on U.S. video-game product sales that surged to their highest in three years in December. 
 
 Hardware sales increased 28 percent to $1.37 billion from a year earlier, Port Washington, New York-based NPD Group Inc. said on Jan. 16. The tally, the highest since spending hit $1.84 billion in December 2010, drove total retail sales for the industry to their fifth straight monthly gain. 
 
 Price Cut 
 
 The Wii U features a tablet-like, 6.2-inch touchscreen controller that lets players connect wirelessly to the console and shift the display between the device and a television. The consoles compete in a market where smartphone sales are on track to exceed 1 billion units this year, researcher IDC said Oct. 29. 
 
 The Wii U’s price in the U.S. was cut by $50 to $299.99 on Sept. 20, while the Japanese price remained a suggested 30,000 yen. 
 
 Nintendo introduced the 2DS portable machine, resembling a tablet, in October for $129.99 to lure first-time and casual gamers. 
 
 The global video-game market may reach $111 billion by 2015, researcher Gartner Inc. said Oct. 29. Mobile games are the fastest-growing segment, with revenue set to reach $22 billion by 2015 from $13.2 billion this year, Gartner said. 
 
 “We cannot continue a business without winning,” Iwata said. “We must take a skeptical approach whether we can still simply make game players, offer them in the same way as in the past for 20,000 yen or 30,000 yen, and sell titles for a couple of thousand yen each.” 
 
 To contact the reporters on this story: Masatsugu Horie in Osaka at mhorie3@bloomberg.net; Takashi Amano in Tokyo at tamano6@bloomberg.net 
 
 To contact the editor responsible for this story: Michael Tighe at mtighe4@bloomberg.net ||||| Logos are seen on Nintendo Co's Wii U game console (bottom) and its controller at the company's headquarters in Kyoto, western Japan in this January 7, 2013 file photo. 
 
 TOKYO Nintendo Co Ltd said on Friday that sales of its Wii U consoles had flopped, pushing it to a third consecutive annual loss and raising a question mark over its future in a home console market increasingly dominated by Sony Corp and Microsoft Corp. 
 
 The company that got its start making playing cards more than a century ago slashed its global Wii U sales forecast for the year to March 31 by almost 70 percent to 2.8 million units. It cut its sales forecast for its handheld 3DS to 13.5 million units from 18 million. The Wii U is the successor to its hit Wii console. 
 
 Nintendo's president, Satoru Iwata, who last year pledged to return the hobbled game maker to profit this business year, apologized to shareholders at a briefing in Osaka, but said his failure to fulfill his promise did not mean he had to resign. 
 
 "There will be no major management shake-up in the short term," Iwata told reporters. 
 
 Pressure will likely mount on the architect of the Wii success in 2006 to step aside or shift course to focus on making money from "Super Mario" and other software titles. Nintendo so far has refused to allow its games to be played on machines built by competitors or on tablets or other mobile devices that are used by gamers. 
 
 In the past the company has blamed a lack of titles for poor sales, but even its popular family-friendly games are losing out on sales to more hard-core titles like "Grand Theft Auto" played on rival machines. 
 
 "The fact that the 'Wii U strategy' has failed is disappointing and will likely trigger a sell-off as soon as the market opens," said Makoto Kikuchi, chief executive of Myojo Asset Management. 
 
 Nintendo this business year now expects an operating loss of 35 billion yen ($335.76 million) compared with an initial forecast for a 100 billion yen profit. The new estimate also falls drastically short of the average forecast of a 54.7 billion yen profit in a survey of 18 analysts by Thomson Reuters I/B/E/S. 
 
 The latest warning comes just three months after the Japanese company reiterated its sales projections for the Wii U, counting on the console to revive its fortunes as Microsoft released its new XBox One and Sony released its PlayStation 4 to the public. 
 
 "We failed to reach our target for hardware sales during the year-end, when revenues are the highest," said Iwata. 
 
 In 2006, Iwata was celebrated worldwide after creating a new niche with the Wii console designed for the whole family to use rather than hardcore gamers. That success boosted Nintendo's cash pile to around $14 billion, money it will have to dip into again to help cover its latest deficit. 
 
 Nintendo on Friday also warned of a net loss of 25 billion yen for the year ending on March 31, a substantial reversal from its prior projection of a 55 billion yen profit. It now expects revenues of 590 billion yen, down 36 percent from its prior forecast. It cut its full-year dividend to 100 yen from 260 yen. 
 
 Nintendo shares have fallen almost 10 percent since hitting a two-and-a-half year high of 15,880 yen on January 10. The stock climbed 55 percent in 2013, in line with a 57 percent rally by the benchmark Nikkei average but underperforming a 91 percent surge by rival Sony. 
 
 ($1 = 104.2400 Japanese yen) 
 
 (Additional reporting by Ayai Tomisawa, Dominic Lau and Reiji Murai; Writing by Tim Kelly; Editing by Edmund Klamann and Matt Driskill) ||||| SHARE THIS ARTICLE Share Tweet Post Email 
 
 Nintendo Co. President Satoru Iwata, who led the Japanese gamemaker back to ascendancy in the early 2000s with the Wii console, has died. He was 55. 
 
 Iwata passed away July 11 from bile duct cancer, the Kyoto, Japan-based company said in a statement Monday. Genyo Takeda and Shigeru Miyamoto will lead management while a formal successor is decided, spokesman Yasuhiro Minagawa said by phone. 
 
 The first president from outside the Yamauchi family since it started selling cards in the late 19th century, Iwata led Nintendo since 2002 and helped oversee a tripling of revenue with hits including the Game Boy Advance SP and the Wii. The rise of smartphones ate into sales of its handheld game players and the Wii U failed to match its predecessor’s success. Iwata was away from the public eye for two months last year because of surgery to remove a bile-duct growth. 
 
 Iwata led Nintendo since 2002 and helped oversee a tripling of revenue with hits including the Game Boy Advance SP and the Wii 
 
 
 
 
 
 “Iwata made a great contribution to the industry,” said Hideki Yasuda, an analyst at Ace Research Institute in Tokyo. “It’s a great loss for Nintendo.” 
 
 In March, Iwata ended his hold-out against making Nintendo’s iconic characters available on smartphones and tablet computers, agreeing to form a venture with DeNA Co. as it tried to recapture casual players. 
 
 Nintendo rose 1.5 percent to close at 19,805 yen in Tokyo, tracking a 1.9 percent jump on the benchmark Topix index. 
 
 Game Programmer 
 
 Born and raised in the northern Japanese city of Sapporo, Iwata began programming games in high school and studied computer science at the Tokyo Institute of Technology, one of Japan’s top universities, according to the book “1000 CEOs,” compiled by Andrew Davidson. 
 
 Iwata was a teenager when Nintendo entered the video-game business. He desperately wanted into the industry, against his parents’ wishes, according to the book. In 1982, after working as a freelance game programmer, he joined HAL Laboratory, a Nintendo unit created in 1980 to make games for the parent company’s consoles. He eventually became president of HAL, before moving to Nintendo as head of corporate planning in 2000. 
 
 In 2002, the year Iwata took the post of president, Nintendo had annual sales of 555 billion yen ($4.5 billion). 
 
 Iwata subsequently oversaw a winning streak that included the Game Boy Advance SP, the Nintendo DS handheld player, the Nintendo DS Lite, the Wii, the DSi, the DSi XL and the 3DS. The company also opened its first retail store in New York’s Rockefeller Center, selling machines, games and merchandise featuring its Pokemon collection and Donkey Kong. 
 
 Smartphone Competition 
 
 In 2009, Nintendo posted 555 billion yen in operating profit as revenue more than tripled to 1.8 trillion yen on demand for the original Wii console and software. The Wii shipped more than 100 million units and became the world’s best-selling console. 
 
 Iwata followed in November 2012 with the Wii U, which has struggled to recapture gamers who have shifted to other entertainment. In the period between the Wii and Wii U releases, Apple unveiled its iPhone and iPad; Samsung Electronics Co. its Galaxy line of smartphones and tablets; and Google Inc. its Android operating system used by most mobile-phone makers. 
 
 Nintendo Says Move Into Mobile Will Help Double Earnings 
 
 Sony, Microsoft 
 
 Nintendo has also faced new competition in consoles from Microsoft Corp.’s Xbox and Sony Corp.’s PlayStation, which have lured hardcore gamers with with advanced graphics and shooter-style software. 
 
 Those were body blows to Nintendo. Sales have fallen for six straight years, dropping to 550 billion yen in the 12 months ended March, or less than when Iwata took the role. 
 
 The company forecast operating profit will double this fiscal year helped by its move into mobile phone gaming. The smartphone service begins this year and Iwata has said Nintendo is preparing to release a new console, code-named NX. 
 
 “The trajectory given Nintendo by Iwata isn’t likely to change,” said Tomoaki Kawasaki, an analyst at Iwai Cosmo Securities Co. “The successor’s challenge will be to make the smartphone business a reality and create meaningful synergies with the new NX console to strengthen the company’s finances.” 
 
 News of Iwata’s death prompted an outpouring of condolences from Nintendo fans and industry executives across Twitter. Many linked to past interviews and recalled their favorite Nintendo moments, including Microsoft Xbox director Mike Ybarra, who posted an image of iconic gaming character Mario, hat in hand, eyes downcast. 
 
 Good picture on GAF about how I feel right now. Sad day, but team Nintendo will be strong. pic.twitter.com/Jy4PEupDmg — Mike Ybarra (@XboxQwik) July 13, 2015 
 
 “What a terribly sad day,” Peter Moore, chief operating officer of Electronic Arts Inc, said on Twitter. “Iwata-San was such a gentleman. Huge loss for the industry.” 
 
 What a terribly sad day. Iwata-San was such a gentleman. Huge loss for the industry. https://t.co/kkNvoU6Mlt — Peter Moore (@petermooreEA) July 13, 2015 
 
 
 
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– Nintendo's console business might be on its last life. The company today slashed its Wii U sales forecast for the year ending in March by a staggering 70%, anticipating sales of just 2.8 million units, Reuters reports. It also halved its projection for Wii U game sales to 19 million units, and dropped its 3DS forecast from 18 million to 13.5 million. The numbers are especially bad, because the second year of sales is typically a peak period for consoles, the Wall Street Journal points out. "We are thinking about a new business structure," President Satoru Iwata said in an apologetic news conference, according to Bloomberg. He said the company wanted to take advantage of mobile gaming, but "it's not as simple as enabling Mario to move on a smartphone." Some analysts say the company is investing heavily in research and development, and could even have a new console in the works. Despite losing money for now three years in a row, the company is sitting on $4.44 billion in cash.