Nintendo has kept players interested in its ageing Switch console series through key games with characters such as Super Mario and Zelda.
Charly Triballeau | AFP | Getty Images
Nintendo on Tuesday reported weaker-than-expected top and bottom results for its fiscal third quarter, slashing its forecast for the Switch console ahead of the release of its succesor.
Here’s how Nintendo did in its fiscal third quarter ended Dec. 31 versus LSEG estimates:
- Revenue: 432.92 billion Japanese yen ($2.8 billion), compared with 498.22 billion yen expected.
- Net profit: 128.53 billion yen, versus 136.16 billion yen expected.
Net profit fell 6% year-on-year.
While Nintendo’s quarterly results missed expectations, all eyes are on developments regarding the Japanese gaming giant’s Switch 2, the successor to the Switch, which was first released in 2017, and has become one of the Japanese gaming giant’s most popular consoles in history.
Nintendo last month teased the Switch 2 in a trailer showing off the hardware. Notably, Nintendo announced that some Switch games will be compatible with the Switch 2. The company has yet to announce a price or release date for the new console, but said more details will be revealed at its Nintendo Direct event on April 2.
Nintendo has attempted to maintain momentum for the Switch by releasing slightly updated versions of it and by boosting the appeal of its characters like Super Mario through movies. However, interest in the nearly 8-year-old console is beginning to wane.
Ahead of the release of the Switch 2, Nintendo slashed a number of forecasts for its full-year results which ends on March 31.
Nintendo said it now expects to sell 11 million units of its current Switch console, down from a previously-reduced estimate of 12.5 million units. The company also said it sees net profit at 270 billion yen, a 10% reduction from the prior forecast of 300 billion.
In the December quarter, Nintendo sold 4.82 million Switch consoles, bringing the total for the current fiscal year to 9.54 million units. That is down 30.6% year-on-year.
Switch success a ‘double-edged sword’
Nintendo Switch has sold 150.86 million units of the Switch since its launch, making it the company’s second-most successful console, behind the Nintendo DS on 154.02 million units.
Key to the success has been the 129 million annual playing users which have bought the steady stream of hit games that Nintendo has launched, featuring well-known brands like Pokemon and characters like Zelda and Super Mario.
But Nintendo has a careful challenge now convincing its users of the need to upgrade to the Switch 2, according to George Jijiashvili, senior principal analyst at Omdia.
“The phenomenal success of the Switch is a double-edged sword,” Jijiashvili said by email, adding that Nintendo is “well-positioned for its second-generation hardware launch” given its huge user base.
“However, the biggest challenge will be managing the transition effectively – convincing users to upgrade to the Switch 2 while ensuring those sticking with the original Switch remain supported and engaged.”
Omdia expects the Switch 2 to launch in the first half of 2025 with Nintendo selling 14.7 million units of the new console this year.
“Switch 2 outselling and outpacing the original Switch is a very tall order – this will be a huge challenge for Nintendo to navigate,” Jijiashvili said.