Game machines have lost some of their appeal with the arrival of smartphones that also offer gaming, and other pastimes such as social networking that are vying for people's leisure time.
Nintendo has repeatedly boasted it appeals to so-called casual gamers, unlike its rivals Sony Corp. and Microsoft Corp. But those are precisely the people who may be switching to playing games on other devices.
Sony is promising the PlayStation 4 before the year-end holidays, a critical sales period for game makers. Microsoft may also have a new home console.
Nintendo acknowledged it had failed to keep the momentum going on the Wii U because of a lack of game software, and promised to do better in the latter half of the year.
Nintendo posted its second straight annual operating loss, reporting 36 billion yen ($364 million) of red ink for the fiscal year ended March.
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