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Nintendo, the Japanese game giant, has reported its first annual loss after disappointing sales of its Wii game console and a strong yen hit revenues.

<link> <caption>The company reported</caption> <altText>Nintendo full-year results</altText> <url href="http://www.nintendo.co.jp/ir/pdf/2012/120426e.pdf" platform="highweb"/> </link> a net loss of 43.2bn yen ($533m; £329m) for the year, compared with net income of 77.6bn yen the year before.

The Kyoto-based company had expected losses of 65bn yen as the strong yen made exports dearer.

But it now expects to return to profit in 2012 as the yen weakens.

Nintendo, which once led the video games world with titles such as Pokemon and Super Mario, has suffered increasing competition from casual gamers playing on their smartphones instead.

The company had also been selling its 3DS handheld device below cost during the year thanks to a price cut it was forced to make in response to intensifying competition in the sector.

But it hopes to reverse this situation later this year and plans to launch a new 2D version of its Super Mario Bros. game this August.

While sales of Nintendo's Wii console have been slowing of late, the company still shifted 9.84m units for the year to March 2012 and has sold over 95m in total.

It is hoping an updated version, the Wii U, due for launch at the end of this calendar year, will help revive the flagging console market.

The new tablet-sized console will feature a touch-screen, HD graphics and motion sensors. It will allow players to view different perspectives on the controller screen while seeing another viewpoint on the big TV screen.

But some analysts believe that competition from online social-networking games and smartphone apps is denting the console market irrevocably.

"The games console market is declining altogether because mobile phone devices are allowing casual gamers to play much more easily wherever they happen to be," said Stuart Miles, head of Pocket-lint, the technology review site.

"I don't think Nintendo's Wii U is likely to change that trend."

Nintendo is likely to launch the Wii U at the E3 gaming expo in Los Angeles this June.