Nintendo said it had continued its strategy of “putting smiles on many people’s faces… regardless of age, gender or gaming experience” this year. Yet there would have been few smiles in its boardroom as the gaming giant reported that net income had fallen from ¥144.8bn (£950m) to ¥69.4bn.

The falling profits were largely attributed to a fall in sales of the Wii console, as well as recent price cuts and the appreciation of the yen. The group cut its forecast for the full year from ¥300bn to ¥230bn.

The company sold 5.7 million Wii consoles in the first six months of its financial year, down from 10.1 million a year earlier. The number of games sold fell from 81.4 million to 76.2 million over the same period. Piers Harding-Rolls, a senior analyst at Screen Digest, said: “Nintendo had such a spectacular year in 2008, that the comparatives are really tough. But the Wii’s adoption curve has steeply declined.”

Nintendo admitted it released fewer game titles in the first six months that “briskly” drove hardware sales in the same way as the previous year. “The software hasn’t been there in the first half and content has been hugely important,” Mr Harding-Rolls said.

The Wii was a huge success as it expanded the computer game market beyond the “core” group of 18- to 35-year-old men with its innovative motion sensing game play, but there was talk the console had hit saturation point.

Mr Harding-Rolls said: “They have cut prices but there might be further to go. As a company they feel they can sell more consoles, but there is some saturation at the existing price. A little bit of the buzz may have subsided.”

The Japanese group hopes a first cut in the console’s price in September will drive sales, and has put its faith in the launch of three games: Wii Sports Resort, a new Wii Fit and an updated version of Super Mario Bros.

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The company added that third quarter trading was “less worse” than the previous three months, with revenue declines slowing to 8.7 per cent.

But it said: “Confidence remains fragile amongst consumers, because of the shadow of high unemployment levels and amongst corporates, because Armageddon and Apocalypse Now were barely avoided in September 2008.”

The firm, which owns famous names such as Ogilvy & Mather and J Walter Thompson, slashed costs by cutting 10 per cent of its worldwide staff – more than 12,000 posts – since the start of the year.

WPP’s shares rose more than 4 per cent today as it also kept its guidance for 2010 intact.

The firm saw signs of improvement in US, Asia and Continental Europe, but detected softening markets in the UK, Middle East and Latin America.

In a colourfully-worded update, WPP added that increased confidence among senior management in the corporate world “is still not transferring to their cheque-writing hands” with firms reluctant to invest in brands during recession.

It expects its quarter-on-quarter improvement in trading to continue into 2010 due to weaker comparisons, but warned: “The real test may come when governments and independent central banks decide to reduce or withdraw fiscal and monetary support to avoid higher interest rates and inflation.”

The end of schemes such as car scrappage initiatives in the US and the UK could have the “impact of reducing demand dramatically”, it warned.

WPP also predicted a ‘LUV’-shaped recovery from recession for the global economy – an L-shaped recovery for Western Europe, a U-shape for the US, and a faster V-shaped fightback for emerging economies such as Brazil, Russia and India.

Numis analyst Lorna Tilbian said: “We are encouraged that the statement is more confident in the outlook than the Q2 release, where greater than anticipated revenue declines in Western Europe impacted margins.”