Japanese game console firm Nintendo has warned that earnings this year will suffer amid strong competition.
Nintendo wants to lure consumers with its shiny new products
However, profits rose in the year to 31 March with net income doubling to 87.42bn yen ($810m; £443m).
Demand for Nintendo's GameCube console and related software is suffering as Sony and Microsoft launch new versions of their Playstation and Xbox products.
Nintendo will have to rely more on sales of handheld players until it puts out its Revolution console next year.
Demand for Nintendo's DS portable game machine is expected to pick up from last year after sales of the two-screen player did not live up to expectations.
Nintendo said it expected to sell 12.4 million DS devices, up from 5.3 million in the previous 12 months.
As a result, it is forecasting a rise in operating profits to 115bn yen in the current fiscal year. However, that is less than the 122bn that many analysts had been expecting.
As the games industry gets bigger, so does competition for profits
Gaming has become an increasingly profitable business, and has moved into the mainstream with adults as keen to play as children.
Games are multi-million dollar production efforts and companies are looking at ways of attracting more users, especially women.
Nintendo, one of the pioneers of the industry with characters such as Donkey Kong and Mario, has lagged its rivals in recent years.
According to analyst firm Jupiter Research, Sony's PlayStation 2 is market leader in the US with 43% of the console market.
Microsoft's Xbox is in second place with 19%, and Nintendo's GameCube has 14% of the market.
As with elsewhere in the technology industry, getting new products onto the shelves first can help companies establish themselves as the industry standard.
Microsoft is rushing to be the first with its new console and the Xbox 360 is due to hit stores worldwide before Christmas. Sony is planning to release its PlayStation 3 in the spring of 2006.
Nintendo has said the Revolution will follow in 2006.