Nintendo slashed its full-year outlook after reporting its fifth straight quarter of profit declines on flagging demand for its Switch console.
The Kyoto-based company cut its operating profit outlook by 10% to JPY360 billion ($3.12 billion) and said it now expects to sell only 12.5 million units of the Switch this fiscal year, versus a previously forecast 13.5 million units.
It’s unusual for game companies to lower their guidance before the all-important year-end shopping season.
The company’s struggled to maintain sales of game hardware and software as consumers await an announcement on a successor for the seven-year-old Switch. For the September quarter, Nintendo’s operating profit fell a bigger-than-expected 29% to JPY67 billion.
“The Switch is at the end of its shelf life, and even software sales are weak,” said Toyo Securities analyst Hideki Yasuda. “If this trend continues, the Switch’s momentum will drop even further.”
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That’s as the Switch faces sleeker and more powerful updates from rivals Sony Group and Microsoft ahead of the holiday shopping season.
Instead, Nintendo’s launched a number of products geared at capitalising on its intellectual property. That includes Alarmo, a US$99 ($130.43) alarm clock featuring Nintendo’s game characters and music, as well as a Nintendo Music smartphone app for online service subscribers.
It also opened a museum near its headquarters last month. Its affiliate Pokémon, meanwhile, released a smartphone app version of its highly-popular trading card game in a bid to boost revenue.
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The company’s also putting more resources behind a push into Hollywood. Encouraged by the blockbuster success of The Super Mario Bros. Movie last year, Nintendo’s teaming up with Illumination to produce another animated film based on the hit franchise. It’s also developing a live-action film based on the The Legend of Zelda.
“Nintendo overestimated the appeal of their 2024 software pipeline, which has no real blockbusters but several filler games,” said Tokyo-based analyst Serkan Toto. “Looking at the software still coming out this fiscal year, I believe the adjusted hardware and software sales forecast is still too high.”
Chart: Bloomberg
