Volkswacht Bodensee - Nintendo lowers sales forecast as first-half profits plunge

Last year, the Japanese video game giant scored with the smash-hit "Super Mario Bros" film and the release of "Legend of Zelda: Tears of the Kingdom", the fastest-selling game in nearly four decades of the Zelda franchise.

But times are now tighter for the company, which has promised news on the successor to its popular but ageing Switch console by the end of March 2025.

"Unit sales of both hardware and software were extremely high for the first half of the previous fiscal year," Nintendo said, adding that the Mario movie had "energised our dedicated video game platform business".

"There were no such special factors in the first half of this fiscal year, and with Nintendo Switch now in its eighth year since launch, unit sales of both hardware and software decreased significantly," it added.

In the April-September period, Nintendo logged net profit of 108.7 billion yen ($710 million), down 60 percent from the same period a year earlier.

The Kyoto-based company kept unchanged its downbeat full-year net profit forecast of 300 billion yen -- a drop of nearly 40 percent from the 490 billion yen in 2023-24.

It now expects sales of 1.28 trillion yen, down from the previous estimate of 1.35 trillion yen, and also issued a less optimistic operating profit forecast.

The Switch, both a handheld and TV-compatible device, became a must-have distraction among all age groups during the Covid pandemic, but buzz around the console is fading.

"Unit sales for the entire Nintendo Switch family of systems decreased 31 percent year-on-year to 4.72 million units" in the first half, Nintendo said on Tuesday.

Software unit sales were down nearly 28 percent on-year, it added.

For now "the company is focused on increasing sales of the current Switch console in 2024, so a lot of news flow about the next console may happen in mid-January 2025 and later", Takeshi Koyama of Mizuho Securities said ahead of the results.

For several years, Nintendo has been pursuing a strategy to reach a wider audience, analysts say.

The company last month opened its first museum in a renovated factory in Kyoto, showcasing its long history since starting life in 1889 producing playing cards.

T.Zimmermann--VB