Nintendo Co Ltd’s hardware and software sales seem to be staying relatively stable, but that did not stop the Japanese company’s third quarter profits from taking a more than 30 percent cut over last year.

According to Nintendo’s recently released third quarter 2015 earnings report, its profits dropped from 59.5 billion Yen (roughly $494.4 million USD) to just 40.5 billion Yen (roughly $336.5 million USD) compared to the third quarter of the previous year. This drop in profits is enormous compared to the relatively small drop in overall sales, which were only about 3.9 percent lower compared to 2014.

While Nintendo continues to dominate the handheld market with nearly 60 million 3DS devices sold, its Wii U system has fallen far behind Xbox One and PlayStation 4 in the console war.

According to Nintendo, the Wii U has sold a total of 12.6 million units. This puts it far behind PlayStation 4, which according to Sony has sold over 35.9 million units. Microsoft has not released exact figures for Xbox One sales in some time, but according to a recent statement by Electronic Arts Inc CFO Blake Jorgensen, that number seems to be around 19 million, which is still significantly ahead of Wii U.

The weak sales performance of the Wii U is made even more disappointing when compared to the breakaway success of Nintendo’s previous console, the Wii, which sold over 100 million units in its lifetime.

This is likely why Nintendo is already hard at work on its next console, which the company has given the codename “NX.”

So far there are very few official details about what we can expect from NX, but the rumor mill has been churning about the system for well over a year. Thanks to a patent application filed last year, there has been speculation that Nintendo may be opting for another gimmicky controller design, this time with one that looks a lot like a smartphone with handles on it.

Image from US Patent Application US20150355768

While Nintendo may not be looking great compared to last year’s third quarter, its overall performance is still on track for its projected 35 billion Yen in full year profits, and the studio did manage to get a few successes under its belt in 2015.

For example, its team-based shooter Splatoon sold over 4.06 million units, which is roughly a third of all Wii U owners. It also had a solid performance from Super Mario Maker, which sold over 3.34 million units and captured the attention of the Twitch livestreaming community.

Image courtesy of Nintendo Co Ltd