Nintendo is looking to increase profitability by modifying its consoles to be compatible with smartphone applications, company sources told The Japan Times.

According to the Times, Nintendo has offered developers professional conversion software for use with mobile devices and consoles, and is encouraging them to develop smartphone software playable on the Wii U. The company hopes to boost sales of the console by growing the Wii U's gaming library with the addition of these games, the sources said.

Nintendo will also renew focus on developing new, first-party software, according to the sources.

Last month Nintendo announced its financial results for the fiscal year ending March 31, 2013, reporting a $366 million operating loss, with net sales for the year lower than the company expected. In a briefing Nintendo global president Satoru Iwata said the time gaps between first-party software releases and a lack of clear marketing for the Wii U contributed to the loss. Iwata said some consumers believe the Wii U is just a peripheral for its previous console, the Nintendo Wii.

"Some have the misunderstanding that Wii U is just Wii with a pad for games, and others even consider Wii U GamePad as a peripheral device connectable to Wii," he said. "We feel deeply responsible for not having tried hard enough to have consumers understand the product."

The company did report a spike in digital sales, led by the popularity of downloadable copies of Animal Crossing: New Leaf, which launched in Japan last fall. Download sales for the last fiscal year doubled from the previous fiscal year, and surpassed Nintendo's record high of 12 billion yen in digital sales from fiscal year 2010. The company cited the launch of DLC and making most titles available digitally as major contributions to the spike.