Nintendo has significantly lowered its sales forecasts for the fiscal year 2024-2025 amid disappointing console sales and increasing consumer fatigue with the current Switch. Expected operating profits have dropped by 47%, alongside a projected 45% decrease in net profit. The company anticipates selling 11 million Switch units, down from 12.5 million. With the upcoming Switch 2 launch, which aims to revitalize interest, Nintendo is focusing on expanding its audience through various initiatives while preparing for detailed console specifications to be revealed in April.
Disappointing Sales Lead to Revised Forecasts for Nintendo
Nintendo is facing a challenging period as it has drastically reduced its sales projections for the staggered fiscal year 2024-2025. On February 4, the iconic Japanese video game company announced a significant drop in console sales, all while anticipation builds for the upcoming launch of the Switch 2, which is expected to rejuvenate interest among gamers.
For the fiscal year ending in March, Nintendo now forecasts an operating profit decline of 47% year-on-year, estimating it will reach 280 billion yen (approximately 1.75 billion euros). This figure represents a 22% drop from earlier expectations. Additionally, the company anticipates a 45% decrease in net annual profit, predicting it will total 270 billion yen. Revenue is expected to plummet nearly 30%, dropping to 1,190 billion yen, with these projections also considerably lowered.
The Future of the Switch and Upcoming Launch of Switch 2
The pressure is mounting for Nintendo as it gears up for the highly anticipated release of the Switch 2, which aims to reverse the downward trend in sales. This new console is set to succeed the immensely popular Switch, which debuted in March 2017 and has sold over 146 million units worldwide. Although it has enjoyed remarkable longevity, with eight years of success, sales have noticeably declined, leading to growing consumer fatigue.
In fact, Nintendo acknowledged that sales of the Switch and its games during the third quarter (October-December) fell short of expectations. The company now expects to sell 11 million Switch consoles this fiscal year, a reduction from its previous estimate of 12.5 million. The sales decline is particularly evident when compared to the previous year, which was bolstered by hits like “Zelda: Tears of the Kingdom” and the “Super Mario Bros.” movie. Consequently, net profits for the first nine months have dropped by 42% to 237 billion yen, while revenue has decreased by 31% to 956 billion yen.
Despite regular releases of new titles from beloved franchises, such as “The Legend of Zelda: Echoes of Wisdom” and “Super Mario Party Jamboree,” Nintendo has struggled to mitigate the sales decline. The company, whose gaming and console sales made up over 93% of its revenue last year, has been pursuing a broader audience with various strategies. These efforts include opening merchandise stores featuring its iconic characters, creating themed areas in Universal parks in Japan and the U.S., and inaugurating a museum in Kyoto to celebrate its rich history spanning nearly 130 years.
However, the primary objective remains to attract more consumers to purchase consoles and games, which form the foundation of its business. With the launch of the Switch 2 on the horizon, Nintendo is placing its hopes on this new console. A brief video released in mid-January showcased its external design, showing similarities to its predecessor while featuring a larger screen, an improved removable stand, and retaining the popular “joy-con” controllers. More detailed specifications are set to be unveiled on April 2, followed by demonstration sessions shortly after.