Nintendo Co. has revised its full-year outlook downwards after experiencing its fifth consecutive quarter of profit declines due to weakening demand for its Switch console. The Kyoto-based company has lowered its operating profit forecast by 10% to ¥360 billion (approximately $2.4 billion) and now anticipates selling only 12.5 million units of the Switch this fiscal year, a decrease from its previous estimate of 13.5 million units. It’s atypical for gaming companies to adjust their forecasts ahead of the crucial year-end shopping season.
The company has struggled to sustain sales of both hardware and software as consumers await news of a successor to the aging seven-year-old Switch. For the September quarter, Nintendo reported an unexpected 29% drop in operating profit to ¥67 billion.
“The Switch is at the end of its shelf life, and even software sales are weak,” noted Toyo Securities analyst Hideki Yasuda. “If this trend continues, the Switch’s momentum will drop even further.” This decline comes as the Switch faces competition from more advanced offerings by rivals Sony Group Corp. and Microsoft Corp. in time for the holiday season.
In response, Nintendo has launched several products leveraging its intellectual property, including Alarmo, a $99 alarm clock featuring beloved game characters and music, and a Nintendo Music smartphone app for online service subscribers. The company also recently opened a museum near its headquarters and is increasing its investment in Hollywood, collaborating with Illumination on a new animated film based on its popular franchises, and developing a live-action adaptation of The Legend of Zelda.
“Nintendo overestimated the appeal of their 2024 software pipeline, which has no real blockbusters but several filler games,” remarked 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.”