Lack of new games causes slow software growth, while Pokémon Go Plus is delayed.
While Nintendo tried to temper expectations and the impact of augmented reality game Pokémon Go ahead of its financial results, its latest quarterly earnings still make for surprisingly bad reading. Compared to the same quarter last year, Nintendo saw net sales drop 31 percent from ¥90 billion (£651 million, $853 million) to ¥62 billion (£448 million, $587 million) with an operating loss of ¥5.1 billion (£37 million, $48 million).

While the company blames "foreign exchange rates" and "significant yen appreciation" for the loss, the reality is that hardware and software were down across the board, and software growth has been minimal. Nintendo sold 220,000 Wii U consoles, a 53 percent decrease year-on-year, bringing the total number of consoles sold to just over 13 million. Wii U software sales rose a mere three percent to 4.7 million units.

Meanwhile, 3DS hardware sales dropped seven percent to 940,000 units, but software fared a little better, rising seven percent to 8.5 million units off the back of games like Kirby: Planet Robobot and Fire Emblem Fates: Birthright/Conquest. Even Amiibo sales, which have been a bright spot for the company of late, remained flat due to "a lack of new titles that are compatible with Amiibo." Sales of downloadable games and content were also down year-on-year.

That no single game in Nintendo's library sold over a million units in the past three months highlights just how badly poor Wii U sales have affected the company's primary income stream. And while the 3DS remains the most popular handheld console, it's beginning to look tired after five years on the market. Nintendo's great smartphone play Miitomo hasn't entirely worked out either, with the smart devices section of the company bringing in just ¥1.6 billion (£11 million, $15 million) for the quarter.

Nintendo recently said in a profit warning to investors that whatever revenue it generated from the smash hit augmented reality game Pokémon Go—it only owns a 32 percent stake in the Pokémon Company and developer Niantic—is not reflected in these latest financial results. The company is, however, behind the Pokémon Go Plus accessory, which will let players know when they've encountered a Pokémon without having to constantly look at their phone. However, the device has been delayed until September, which means Nintendo will miss out on the current hype surrounding the game.

Despite the poor results, Nintendo remains bullish about the future. It reaffirmed that it is working on versions of Fire Emblem and Animal Crossing for mobile, as well as sticking to the March 2017 release date for its next console, currently codenamed NX. Recent reports claim that the Nintendo NX will be based on an Nvidia Tegra chip, which is used in the company's Shield Android TV device, as well as Google's Pixel C tablet.

If the report holds true, the NX will be a portable console hybrid with detachable controllers, allowing players to play games on the go and then dock the system into a TV at home, thus refreshing both Nintendo's handheld and home systems in one fell swoop.