Aayush Pathak
In a stark contrast to its previous success, Nintendo has reported a significant downturn in both sales and profits for its aging Switch console during the first quarter of fiscal year 2025. The Kyoto-based gaming giant sold just 2.1 million units of the Switch, which is now in its eighth year, marking a staggering 46% decline compared to the same period last year.
Despite maintaining its full-year sales forecast of 13.5 million units for the Switch, Nintendo’s financial performance has fallen far short of analysts’ estimates. Operating profit tumbled 71% to 54.5 billion yen ($365 million), more than a third below expectations.
Pressure Mounts for Nintendo’s Next-Gen Console
The dismal results have intensified the pressure on Nintendo to reveal its long-awaited successor to the Switch. The company has already announced plans to make an announcement about a next-generation device within the current fiscal year, which concludes in March 2025.
“Nintendo were too optimistic about the current year,” said Serkan Toto, founder of game industry consultancy Kantan Games. “The numbers increase the pressure on Nintendo regarding a Switch 2 reveal.”
Toto added that the July-September quarter is also likely to be weak for Nintendo, further underscoring the urgency for the company to unveil its next-generation console.
Weak Pipeline of Titles and Intellectual Property Struggles
Nintendo’s woes extend beyond the aging Switch console. The company’s mobile and intellectual property-related division also experienced a significant decline, with revenue sliding to 14.7 billion yen, down 54% from the same period a year earlier.
The weak performance was partly attributed to the lack of a major hit like the “Super Mario Bros.” movie, which boosted profits in the previous year.
Nintendo’s modest pipeline of announced titles for the current year, including “The Legend of Zelda: Echoes of Wisdom” and “Mario & Luigi: Brothership,” is unlikely to provide a significant boost to sales.
Industry-Wide Challenges
The gaming industry as a whole is grappling with rising costs and weak pricing power. Earlier this week, Sony-owned developer Bungie announced it would be cutting nearly a fifth of its workforce, citing “rising costs” and “economic conditions.”
Despite the challenges, Nintendo’s stock is up 7.6% year-to-date. However, shares fell 2.3% in Tokyo ahead of the earnings announcement.
As Nintendo navigates these turbulent times, the pressure to deliver a successful next-generation console has never been higher. The company’s ability to reinvent itself and capture the imagination of gamers worldwide will be crucial in determining its future success.
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