In this article, Nintendo reported weaker-than-expected top and bottom results for its fiscal third quarter, reducing its forecast for the Switch console before the launch of its successor.
Nintendo’s net profit dropped by 6% year-on-year in the fiscal third quarter that ended on Dec. 31, missing LSEG estimates. Despite the quarterly results falling short of expectations, attention is focused on the upcoming release of the Switch 2, the successor to the popular Switch console released in 2017.
Nintendo recently teased the Switch 2 in a hardware trailer and revealed that some Switch games will be compatible with the new console. Details such as pricing and release date are yet to be announced, with more information expected at the Nintendo Direct event on April 2.
To maintain interest in the current Switch console, Nintendo has released updated versions and enhanced the appeal of characters like Super Mario through movies. However, interest in the aging console is declining as anticipation builds for the Switch 2.
In preparation for the Switch 2 launch, Nintendo revised down several forecasts for its full-year results ending on March 31. The company now anticipates selling 11 million units of the current Switch console, down from the previous estimate of 12.5 million units. Net profit is expected to reach 270 billion yen, a 10% decrease from the earlier forecast of 300 billion.
During the December quarter, Nintendo sold 4.82 million Switch consoles, totaling 9.54 million units for the fiscal year, a 30.6% decrease year-on-year. Since its launch, the Nintendo Switch has sold 150.86 million units, becoming the company’s second-most successful console after the Nintendo DS.
The success of the Switch is attributed to the 129 million annual playing users who have purchased hit games featuring popular brands like Pokemon, Zelda, and Super Mario. However, Nintendo faces the challenge of persuading users to upgrade to the Switch 2 while maintaining support for those sticking with the original Switch.
According to George Jijiashvili, senior principal analyst at Omdia, Nintendo is well-positioned for the launch of its second-generation hardware given its large user base. Omdia predicts the Switch 2 will be released in the first half of 2025, with Nintendo expected to sell 14.7 million units of the new console this year. Jijiashvili notes that outselling and surpassing the original Switch will be a significant challenge for Nintendo to navigate.
