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Nintendo Reports Loss After 3DS Price Slash

(c) Sky News 2012

Nintendo has reported a net loss of 17.2 billion yen (£142.7m) for the April-June quarter, hurt by product discounts and the strong yen.

That was smaller than the net loss of 25.5 billion yen (£208.2m) in the same quarter a year earlier.

But the console gaming company admitted its first quarter sales had still fallen nearly 10% to 84.8 billion yen (£700.7m).

Nintendo, the creator of the Mario franchise, is the world's largest videogame firm by revenue, but is struggling to repeat the profit growth it once earned from its Wii and DS consoles.

It faces growing competition from Apple (NasdaqGS: AAPL - news) and other makers of mobile phones and tablet PCs, forcing it and its traditional rivals Microsoft (NasdaqGS: MSFT - news) and Sony (Stuttgart: 853687 - news) to look for ways to retain gamers.

As Nintendo's mascot, Mario is said by many to be the most famous character in video game history.

The Italian plumber, occasionally joined by his brother Luigi, has appeared in more than 200 games.

But the shift in gaming habits may eventually force the Japanese company to let Mario appear on devices built by other firms rather than its own consoles.

Sales of its 3DS handheld, launched in February last year, had initially disappointed the company.

But 3DS sales have now more than doubled to 1.86 million from 710,000 after Nintendo slashed its price by a third in August, although that meant it was selling the device at a loss.

The 3DS lets users play games in 3D - but without the need for special glasses.

However, some users feel sick while viewing the device in 3D, and the console features a control that can reduce the 3D effect or shut it off together - negating what is supposed to be the 3DS's key selling point.

Nintendo official Yasuhiro Minagawa said that as of this week, the company was no longer selling the 3DS at a loss because mass production had brought down production costs.

The Kyoto-based company hopes for strong sales of two new products to be launched this year.

The 3DS XL, a larger-screen version of the 3DS, goes on sale this Saturday in Japan (EUREX: FMJP.EX - news) and Europe (Chicago Options: ^REURUSD - news) , and on August 19 in the US.

And Nintendo is expected to release its successor to the six-year old Wii, the Wii U, later this year.

The Wii U, which will launch with a Mario title, features a gamepad controller that functions like a tablet.

It also comes with a social gaming network dubbed Miiverse in an attempt to catch-up with the online strategy of rivals such as Sony.

Since the start of the business year, Nintendo's shares have dipped by a third and almost halved in value in the past year.

Its (Euronext: ALITS.NX - news) shares on Wednesday dipped 1.6% to close at 8,150 yen (£67.27) before the release of its earnings.

But Nintendo is maintaining its sales outlook for its Wii games console at 10.5 million for the year, with its older DS handheld consoles at 2.5 million.

It also stuck to its sales forecast for the 3DS handheld, saying it expects to sell 18.5 million by March 31.