Nintendo has reported stark declines in its financial performance for the third quarter of the fiscal year 2024, leading to revised annual forecasts as the company prepares for the anticipated launch of its next-generation gaming hardware, the Switch 2.
The report, which covers the period ending December 31, 2023, reveals staggering declines across the board. Nintendo's net profit slid to 237.19 billion yen, marking a 41.87% year-on-year decrease, according to 汇港通讯. The total sales revenue for the period also fell sharply, down 31.4% to 956.22 billion yen. Operating profits were 247.6 billion yen, down 46.69% from the previous year.
These reductions compelled Nintendo to slash its forecasts for the current fiscal year. The company lowered its profit prediction from 300 billion yen to 270 billion yen and adjusted its sales target from 1.28 trillion yen to 1.19 trillion yen. Notably, the anticipated sales of Switch consoles also took a hit, with expected sales for the first-generation console revised downwards from 12.5 million to 11 million units.
During the past nine months, the sales figures paint a troubling picture for the company. Switch hardware sales reached 9.54 million units, down 30.56% from the prior year, and software sales declined by 24.38%, totaling 123.98 million units. Such trends have raised concerns among analysts and investors alike.
Industry analyst Serkan Toto expressed skepticism about the future, saying, "It’s hard to see any positive factors from these figures. The Switch has had its glory, but now it’s time to launch the next generation." His sentiment reflects broader industry worries. Investors appear to be growing impatient as anticipation mounts around the forthcoming release of the Switch 2, expected to invigorate sales.
While Switch 2 is slated for release later this year, details like its price and precise specifications remain undisclosed. Nonetheless, there is optimism among investors. Prior announcements hinted at its backward compatibility with current games, which could ease the transition for users hesitant to upgrade.
The Switch has enjoyed remarkable longevity since its release nearly eight years ago, with software sales exceeding 1.3 billion copies and hardware sales surpassing 150 million units. Despite the lack of recent blockbuster titles, the company has succeeded at maintaining its customer base.
Analysts like Gijashvili emphasized the difficulties Nintendo faces, stating the company's next step involves persuading its substantial existing user base to make the switch to the new console: "The phenomenon of Switch created high standards. Whether Switch 2 can outperform will be a massive challenge."
On the flip side, some experts maintain more favorable views. Kazunori Ito from Morningstar noted, "Even without recent big titles, Nintendo has managed to keep users on the Switch platform, so there’s no need for pessimism." This reflects confidence not only in the brand but also its strategic positioning within the volatile gaming industry.
With expectations for Switch 2 heightening, Nintendo has established promotional plans, including retail events and gameplay demonstrations scheduled to extend through early June. The company hopes to captivate gamers’ attention during this quiet period, maintaining excitement for its iconic lineup of beloved franchises.
Industry experts are hopeful this forthcoming generation could replicate the success seen with flagship titles like The Legend of Zelda: Breath of the Wild, and recent releases such as Animal Crossing, Splatoon, Pokémon, and Super Mario. Gamers are eager to see how Nintendo will leverage its rich gaming library to drive interest once again.
The performance numbers may appear dismal, but the underlying brand loyalty and anticipation of new hardware could trigger significant rebounds. While the gaming titan has clear challenges on the horizon, industry observers remain cautiously optimistic.