Nintendo raises profit forecast on strong Switch sales

TOKYO, Japan – Nintendo raised its annual net profit forecast by more than 40% on Wednesday, January 31, after its popular Switch console flew off the shelves during the holiday season, fuelled by a cheaper yen.

The Kyoto-based video game giant said it now expects annual net profit of 120 billion yen ($1.1 billion), a 41.2% rise from a forecast last October when it nearly doubled its previous net profit projection. 

Nintendo now expects to sell 15 million Switch units by March, an increase of one million from the previous forecast – which was already an upgrade from an earlier projection of as many as 10 million units.

“For the nine months ended December 31, 2017, the Nintendo Switch hardware sold well following the launch and sales volume rose substantially during the holiday season,” the company said in a brief statement.

The company now expects annual sales of 1.02 trillion yen and an operating profit of 160 billion yen, again marking sizable increases from earlier estimates.

Analysts were quick to praise the firm, which gave the world Super Mario and Pokemon.

“Switch is in excellent shape. Its demand remained strong during the Christmas season,” said Hideki Yasuda, an analyst at Ace Research Institute in Tokyo, before the latest figures were announced.

“Nintendo has been back in full force,” he told the Agence France-Presse.

‘Big hit’

The Switch, which can be played both at home and on the move, blends Nintendo’s console and handheld device business with its fledgling mobile gaming strategy, which scored a big brand win with Pokemon Go’s success in the summer of 2016.

Since its launch in March last year, Switch has become a pillar of the company, also known for its Nintendo 3DS handheld console as well as the household Wii console franchise.

Among Switch game titles, Super Mario Odyssey “has been a big hit with global sales reaching 9.07 million units” since its debut in October, the company said. (READ: Rappler Game Night: Super Mario Odyssey)

Mario Kart 8 Deluxe sold 7.33 million units and Splatoon 2 sold 4.91 million, Nintendo said.

During the April-December period, Switch’s unit sales marked 12.13 million, while software sales totalled 47.10 million units.

Nintendo also managed to maintain solid sales of other key products.

“Nintendo 3DS hardware sales did not weaken after the launch of Nintendo Switch,” the company said, adding that 3DS sales even rose in the US during the holiday season.

While applauding Switch’s successes, analysts said Nintendo should also delve further into smartphone operations to broaden its customer base.

“We want to focus on how Nintendo will develop apps for smartphones, which can make up for a slump when it transfers to new consoles,” Yasuo Imanaka, an analyst at Rakuten Securities in Tokyo, told AFP before the latest earnings announcement.

For the April-December period, Nintendo said net profit reached 135 billion yen, up 31.3 percent from the same period in the previous financial year.

During the nine months, the firm’s operating profit soared to 156 billion yen from 26 billion yen in the previous year.

Sales during the period also more than doubled to 857 billion yen. – Rappler.com