Nintendo first-quarter net profit sinks as Switch sales slow

REDMOND, WASHINGTON – JULY 3: A sign is seen outside of the Nintendo of America headquarters on July 3, 2024 in Redmond, Washington. David Ryder/Getty Images/AFP (Photo by David Ryder / GETTY IMAGES NORTH AMERICA / Getty Images via AFP)

Tokyo, Japan — Nintendo said Friday that first-quarter net profit more than halved as sales for the seven-year-old Switch slowed down and fans keenly awaited news on the hit console’s successor.

The Japanese video game giant left its downbeat annual net profit forecast unchanged, even as the relative weakness of the yen continues to boost its earnings.

“During the first quarter of the previous fiscal year, unit sales of both hardware and software were extremely high for a first quarter,” Nintendo said.

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A year ago, the huge success of the “Super Mario Bros” film and the release of “Legend of Zelda: Tears of the Kingdom” — the fastest-selling game in the history of the nearly four-decade old Zelda franchise — helped energise business.

But “there were no such special factors in the first quarter of this fiscal year, and with Nintendo Switch now in its eighth year since launch, unit sales of both hardware and software decreased significantly year-on-year”.

In April-June, net profit plunged 55 percent on-year to 80.95 billion yen ($543 million).

Nintendo kept its annual net profit forecast unchanged at 300 billion yen, a drop of nearly 40 percent from the 490 billion yen in 2023-24.

Unit sales for the blockbuster Switch console, which became a must-have to pass time during pandemic lockdowns, declined 46 percent on-year to 2.1 million during the quarter.

Players and investors are hungry for news about a Switch successor, and Nintendo has said an announcement will come by the end of March 2025.

“Overall Nintendo is in a little bit of an awkward situation at the moment,” Serkan Toto of Tokyo-based Kantan Games told AFP ahead of the earnings announcement.

“It’s a transitional year for them with no big releases planned,” because “they have to keep the blockbusters for the next platform”.

He predicted Nintendo will announce the new console at the end of 2024 or the beginning of 2025, an expectation echoed by Darang Candra, director for East Asia and Southeast Asia research at Niko Partners.

Candra told AFP that Nintendo’s game line-up to the end of March 2025 is “only so-so” although new “Zelda” and “Mario & Luigi” titles “may tide fans over until then”.

“The last year has seen several remakes and re-releases like ‘Paper Mario’ and ‘Luigi’s Mansion’ which would also suggest that the company is focusing its development on new, original titles to release with the next console,” he said.