Nintendo reports a drop in profits and plans a successor to the Switch console

Nintendo reports a slump in profits in the first quarter and plans to introduce a successor to the Switch console by March 2025.

8/2/2024, 1:12 PM
Eulerpool News Aug 2, 2024, 1:12 PM

Nintendo has reported a significant drop in net profit in the first quarter due to weaker sales of the aging Switch console and its software. The Japanese video game manufacturer announced on Friday that net profit had fallen by 55% year-over-year to 80.95 billion yen (542 million dollars). This was below the estimates of 88.33 billion yen projected by FactSet analysts.

The quarterly revenue fell by 47% to 246.64 billion yen as sales of the Switch console dropped by 46% to 2.1 million units and software sales decreased by 41% to 30.6 million copies. In the same period last year, sales had significantly increased due to the hit title "The Legend of Zelda: Tears of the Kingdom." The operating profit margin deteriorated from 40% in the previous year to 22%.

Nintendo maintains its sales forecasts for the Switch console and software, as well as its profit projections for the fiscal year through March 2025, despite the decline. The company continues to expect to sell 13.5 million Switch consoles and 165.0 million Switch software copies. Revenue is expected to decrease by 19% to 1.350 trillion yen and net profit by 39% to 300.00 billion yen.

The video game industry is currently struggling to regain the momentum achieved during the pandemic boom. In May, Nintendo announced that a successor to the seven-year-old Switch console will be unveiled by the end of March 2025.

To diversify its revenue sources, Nintendo leverages its popular characters and game series in movies and other forms of entertainment outside the video game sector. However, mobile and IP-related revenues in the first quarter fell by 54% to 14.7 billion yen, which is attributed to the high comparison values due to the success of "The Super Mario Bros. Movie" last year.

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