Switch Sales, Nintendo Profits Drop as Console Successor Awaits

By Kosaku Narioka

Nintendo reported a decline in first-quarter net profit due to weaker sales of its aging Switch console and software.

The Japanese video game maker said Friday that net profit fell 55% from a year earlier to 80.95 billion yen, or $542 million, for the three months ended in June. That missed estimates of 88.33 billion yen by analysts surveyed by data provider FactSet.

First-quarter revenue fell 47% from a year earlier to ¥246.64 billion. Switch console sales fell 46% to 2.1 million units, and Switch software sales fell 41% to 30.6 million units.

Console and software sales during the same period last year increased thanks to the hit “The Legend of Zelda: Tears of the Kingdom.”

Operating profit margin deteriorated to 22% from 40% a year earlier.

Nintendo maintained its Switch console and software sales and profit forecasts for the fiscal year ending March 2025. The company still expects to sell 13.5 million Switch consoles and 165.0 million copies of Switch software this fiscal year. It still forecasts revenue to decline 19% to Y1.350 trillion, and net profit to decline 39% to Y300.00 billion.

The video game industry is struggling to regain the dynamism seen a few years ago during the pandemic-induced boom.

In May, Nintendo said it plans to announce the launch of a successor to its seven-year-old Switch video game console by the end of March 2025.

The Japanese video game developer is looking to diversify its revenue streams by using its popular characters and game series in films and other forms of entertainment outside of the video game space.

First-quarter mobile and intellectual property revenue fell 54% to Y14.7 billion from a high base due to the blockbuster success of last year’s “The Super Mario Bros. Movie.”

Nintendo and Santa Monica, California-based animation studio Illumination announced in March that they would produce a new animated Super Mario film.

The Japanese company also announced that it will develop a live-action film based on the popular action-adventure series “The Legend of Zelda.”

Write to Kosaku Narioka at [email protected]

(END) Dow Jones Newswires

August 2, 2024, 04:05 ET (08:05 GMT)