Nintendo has been forced to cut the price of its Wii console
Nintendo has reported a near 10% fall in profits between April and December last year after sales of its most popular games consoles slowed.
Net profit came in at 192.6bn yen ($2.1bn; £1.3bn), a fall of 9.4% on the 212.5bn yen the firm made a year ago.
Overall sales fell by 23%, from 1.54tn yen to 1.18tn yen.
Increased competition during the downturn meant that Nintendo cut the price of its Wii console to try to halt a decline in sales.
It made the cuts after rivals Sony and Microsoft reduced the price of their PlayStation and Xbox consoles.
The price cut, along with new games launches, including Super Mario Brothers and Wii Sports Resort, helped to boost Wii sales over Christmas.
"These strong software titles, coupled with the price reduction on Wii hardware and other factors, combined to drive sales of Wii hardware strongly in the holiday season," the company said.
Analysts said the longer term outlook for Nintendo was more uncertain as Sony and Microsoft provide increasingly strong competition.
"Nintendo had better come out with a new console or else it may lose its position," said Yuki Nakayasu at UBS.
"It will all depend on who comes out with a next-generation game console."