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Nintendo records $49 million operating loss as Wii U sales crumble

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Nintendo made an operating loss of 5.13 billion yen ($48.6 million) in the first quarter of its 2016 fiscal year as Wii U sales plunged 53 percent year over year to just 220,000 units. Nintendo cited the strengthening yen as one reason for its 31.3 percent slide to 62 billion yen ($587 million) revenue; about 72 percent of its sales are overseas, though exchange rates can't totally account for the decline in a quarter with no new hit games of note.

12 months ago Nintendo recorded its best first-quarter figures since 2012, a year in which the company was winding down the Wii and preparing for its successor. This year Nintendo finds itself in a similar position, with the Wii U all but a thing of a past — The Legend of Zelda: Breath of the Wild notwithstanding — and the new NX console set for release in March.

Nintendo is winding down Wii U in preparation for NX

The NX is yet to be unveiled, but yesterday Eurogamer reported that it would be a tablet-console hybrid device with detachable controllers, a TV docking station, and Nvidia mobile hardware inside. If accurate, the report would suggest that Nintendo is continuing its strategy of using unique design and less powerful technology to compete on different ground to Sony and Microsoft.

Nintendo is also making inroads into mobile, which could provide significant additional revenue for the company. Its efforts are off to a slow start, however; income from smart devices and IP licensing together accounted for just 1.65 billion yen ($15.6 million) last quarter, which began soon after the launch of its debut app Miitomo. Revenue for Miitomo wasn't broken out separately.

The wild success of Pokémon Go is unlikely to affect the bottom line too much, either; Nintendo was forced to issue a statement last week clarifying its 32-percent stake in The Pokémon Company, which is responsible for the game alongside US developer Niantic.

In today's earnings release, however, Nintendo does cite the upcoming launch of its watch-style Pokémon Go Plus peripheral, as well as the retro NES Classic Edition, as products to watch out for in the future, though there's no change to the company's forecast of 45 billion yen in operating income for the year. Pokémon Go Plus has been also delayed from July until September in Japan at least, according to the game's Japanese website.