Japanese console market expanded by 1.2% in 2012, publishers down but not out

Famitsu has collated all of the financial reports of Japan's biggest games industry players to give an overview of the past financial year. The report found that the Japanese games market grew by 1.2%, and that Nintendo is facing a tough time with Wii U and a lack of big hits overseas.

Polygon reports that by the financial year ended March 31, 2013, the Japanese market's 1.2% growth was the first increase seen in five previous quarters, and that the increase could be attributed to Nintendo's net income of around ¥7.1 billion.

However, Nintendo's dip in operating income, a lack of major overseas hits, together with worldwide sales of around 3.45 million Wii U consoles paint a company facing an uphill battle moving forward. New Super Mario Bros. 2 was Nintendo's biggest success during the period.

Accompanying the report, a note from the Famitsu editors read, "For the next year, Nintendo's goal is to build an overseas market for the 3DS that is at least up to the level of the Japanese one. To do that, Nintendo will be releasing Animal Crossing: New Leaf in June and Pokemon X/Y worldwide in October, both major titles that show Nintendo's active approach to the overseas market.

"With the Wii U as well, Nintendo will attempt to boost its userbase with a barrage of powerful first-party titles from the second half of this year forward to 2014."

The editors added, "Like the previous one, this past year's reports show a game industry in a transition period, which hits the first parties the worst. For this coming year, Nintendo faces two issues: expanding the Wii U's userbase, and doing the same for the 3DS overseas. How much momentum Sony can generate with the PlayStation 4 launch will also dictate how it performs as a company going into 2014."

Elsewhere the report adds that while almost every game publisher saw poor financials, they largely remained in profit, save for Square-Enix. SMBC Nikko Securities senior analyst Eiji Maeda shed light on turmoil in the software market, "This quarter featured tough earnings reports for companies overall.

"One reason for that is the shrinking market for packaged software and the way that new, big-budget IP is failing to sell across the board. Also, downloadable content sales are booming in the US and Europe and publishers are taking advantage of that for their bottom line, but Japanese makers have lagged behind, which is key."

What did you make of the financial reports coming out of Japan's biggest players? Let us know below.