Nintendo revised its full-year forecast down after profit and revenue plummeted over the holiday period, with gamers increasingly looking forward to the release of its next-generation console.
The Kyoto-based company now expects 280 billion yen (S$2.44 billion) in operating income in the fiscal year to March, slashing more than a fifth from its prior forecast. It also expects to sell 11 million units of the original Switch console, down from the 12.5 million previously.
Profit and sales in the three months to December were both down by around a third, with Nintendo reporting operating income of 126.1 billion yen, short of the average analyst estimate of 161.2 billion yen. Revenue, at 432.9 billion yen, also missed consensus expectations.
“It is hard to see anything positive in these numbers,” said industry analyst Serkan Toto. “The Switch had a great run, but now it’s really high time for a successor. However, I really ask myself with what software they’re going to fill the time until the successor is out.”
Nintendo is on track to release its Switch 2 console later this year, which has driven its shares to a new high as investors look past a fallow season for its existing hardware. The company teased the console in January and has set the date for its full unveiling in early April. Bets on the next iteration firing up sales are mixing with game industry names becoming a safe haven from volatile chip-industry names in Japan and supporting the stock even as sales plunge.
Now nearly eight years old, the Switch has sold more than 1.3 billion copies of software and over 150 million units of the beloved hybrid handheld hardware. In November, President Shuntaro Furukawa said the Switch 2 successor will be backward-compatible, meaning it’ll be able to play games for the current platform. That sets up the new device for a fast start with the benefit of Nintendo’s rich library of games developed in-house. Ahead of the Switch 2 going on sale, Nintendo is hosting worldwide hands-on experience events up until the start of June.
The company has managed to keep users engaged on its Switch platform even with a dearth of recent blockbuster announcements, said Kazunori Ito, director of investment research firm Morningstar. “There’s nothing to be pessimistic about.”
The Switch got a strong start with The Legend of Zelda: Breath of the Wild as a launch title. Subsequent years saw major franchise updates – from Animal Crossing to Splatoon, Pokémon, Super Mario and another Zelda game – injecting fresh sales momentum every few months. Expectations of a similar trajectory for the Switch 2 appear to be outweighing any concern about slumping sales in the near term. BLOOMBERG
