Nintendo, also behind the Donkey Kong and Zelda games, lowered its full year sales forecast for Wii U game software units to 16 million from 24 million.
Iwata said last year holiday sales quickly dissipated in the U.S. and some European nations, including Great Britain, the key market. He said the U.S. home console sales were the worst for Nintendo in nearly a decade.
He said Nintendo needs hit games to push console sales, and the company remains confident Wii U will prove more popular with time.
"The chicken-and-game problem has not been solved," he said of the need for both game software and machine hardware.
"I feel a deep sense of responsibility for not being able to produce results for our year-end business," said Iwata.
He declined to say what he would do if the company failed to attain the promised operating profits.
Nintendo sank into a loss the previous fiscal year largely because of price cuts for its hand-held 3DS game machine, which shows three-dimensional imagery without special glasses. That machine is also struggling in most global markets.
Shigeru Miyamoto, Nintendo's famed game designer, said what was missing were games for the Wii U that made its appeal clear. The progress in smartphones has also posed a challenge for Nintendo, he said.
"People have to try it to see it is fun," Miyamoto said of Wii U.
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