Nintendo Co topped quarterly profit estimates on holiday demand for Pokemon and Super Smash Bros games, but weak Switch demand forced the company to cut its shipments forecast for the gaming device.
Operating profit was ￥158.6 billion (US$1.46 billion) in the final three months of last year, the Kyoto, Japan-based company said in a statement yesterday.
Nintendo is forecasting 17 million Switch shipments for the fiscal year through next month, compared with its prior outlook for 20 million units and analysts’ average prediction of 18 million.
The results underscore how the Switch is struggling to make up for stagnating sales of its Nintendo 3DS handheld console. Having combined its home and handheld products into a single device, it has to carry both business lines on its own.
So far, Nintendo president Shuntaro Furukawa has not succeeded in expanding the Switch beyond a core user base.
“Nintendo needs to expand the audience reach of the Switch,” DFC Intelligence founder and chief executive officer David Cole said in an interview last month. “That is really a marketing challenge.”
Nintendo shares, which last year fell 29 percent, have climbed 16 percent this year on optimism that the company would be able to stage a recovery.
The game maker kept its operating profit outlook of ￥225 billion for the current fiscal year, compared with analysts’ prediction of ￥267 billion.
The question is whether the possibility of price cuts and an improving software lineup will help support confidence among investors that Nintendo would be able to attract more buyers for the hybrid console beyond its core fan base.
Nintendo shipped 9.4 million Switch units in the latest quarter, compared with the 9.1 million projected by analysts.
Nintendo sold 53 million software units during the quarter, more than double from a year ago. The company raised its guidance to sell 110 million games this fiscal year, up from 100 million.
The biggest hits were Super Smash Bros Ultimate, which sold 12 million units since its release on Dec. 7. Let’s Go Pikachu/Eevee, released on Nov. 16, sold 10 million.
Nintendo pushed back the release of Mario Kart Tour to summer in Japan from next month, an unexpected delay.
The smartphone game has the potential to become the company’s highest-earning mobile title, Newzoo analyst Jelle Kooistra said.
“The franchise has more mainstream appeal than any other Nintendo title, and its fast-paced gameplay is a great fit for mobile,” he said, adding that it could generate annual revenue of US$1 billion.
Smartphone revenue during the quarter grew 31 percent to ￥14.6 billion, driven by a new title Dragalia Lost, which was released on Sept. 27.
The game’s codeveloper, CyberAgent Inc, on Wednesday slashed its earnings outlook and froze hiring, saying results were below expectations.
The title generated ￥3 billion in revenue in its first month, but has since struggled to monetize users, executives said.
Nintendo’s 3DS business continued to sputter, with revenue shrinking to ￥27 billion in the latest quarter, down 71 percent from a year earlier. It was the first holiday season for the system without a new Pokemon game, which was instead released on the Switch.
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