Old model Switch sales are sluggish! Nintendo's Q3 profit plummets 69%, marking the fifth consecutive quarter of decline

Wallstreetcn
2024.11.05 08:46
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Nintendo's net profit for this fiscal quarter was 27.7 billion yen, which is almost half of the market estimate of 49.4 billion yen. The company also lowered its full-year operating profit forecast from 400 billion yen to 360 billion yen, and its annual Switch sales forecast from 13.5 million units to 12.5 million units. Analysts believe that it is becoming increasingly difficult for Nintendo to persuade new users to purchase the Switch

Due to weakened consumer demand for the old Switch game console, Japanese gaming giant Nintendo's profits plummeted in the second fiscal quarter, far below market expectations, marking the company's fifth consecutive quarter of profit decline, with a larger drop in annual profits anticipated.

On Tuesday, November 5th, Nintendo disclosed its second fiscal quarter financial report, which showed that the company's operating revenue for the quarter was 276.7 billion yen, a year-on-year decrease of 17% and a quarter-on-quarter increase of 12.2%; net profit was 27.7 billion yen, a year-on-year decrease of 69% and a quarter-on-quarter decrease of 65.78%, falling short of the market estimate of 49.4 billion yen.

In its performance forecast, the company has lowered its full-year operating profit expectation from the previous 400 billion yen to 360 billion yen (approximately 2.4 billion USD), and the annual sales expectation for the Switch has also been revised down from 13.5 million units to 12.5 million units. Notably, such a downward revision of expectations before the crucial year-end shopping season is uncommon in the gaming industry.

Nintendo's Switch game console has been on the market for seven years, and to sustain its growth momentum, the company has committed to releasing a new flagship console by March next year.

However, analysts point out that the tightening of wallets by consumers waiting for the next-generation console release is very unfavorable for Nintendo, making it difficult for the company to maintain sales of both hardware and software. In the second fiscal quarter ending in September, Nintendo's operating profit was only 67 billion yen, below the market expectation of 71.8 billion yen.

In addition, the company is also facing challenges from competitors like Sony and Microsoft, which are launching more stylish and powerful new products.

In fact, even before the financial report was released, Tokyo analyst Serkan Toto had stated:

"For Nintendo, it is becoming increasingly difficult to persuade new users to buy the Switch."

He also added that Nintendo has not prepared new Pokémon or other major games for the holiday season but is instead gearing up for the launch of new hardware. Recently, Nintendo has launched a series of products related to its intellectual property, including a $99 Alarmo clock that features Nintendo's game characters and music, as well as the Nintendo Music APP aimed at online service subscribers.

Additionally, Nintendo has opened a museum near its headquarters and collaborated with its subsidiary Pokémon Company to launch a popular card game APP to increase revenue