Nintendo reported a significant drop in net profit for the first quarter of its fiscal year, attributing the decline to weaker sales of its aging Switch console and related software. The Japanese video game giant’s net profit fell 55% from the previous year to 80.95 billion yen ($542 million) for the three months ending June, missing analysts’ estimates of 88.33 billion yen. Revenue also saw a sharp decline, falling 47% year-on-year to 246.64 billion yen.
Sales of Nintendo’s flagship Switch console, which is now in its eighth year, dropped 46% to 2.1 million units in the quarter. This significant decline in hardware sales was accompanied by a 41% drop in Switch software sales, totaling 30.6 million copies. The company’s operating profit also took a hit, plummeting 71% to 54.5 billion yen, more than a third below analysts’ forecasts. The operating profit margin deteriorated to 22%, compared to 40% a year earlier.
Despite the downturn, Nintendo maintained its full-year sales forecast for the Switch console, expecting to sell 13.5 million units by the end of the fiscal year in March 2025. The company also upheld its projections for revenue to drop 19% to 1.350 trillion yen and net profit to fall 39% to 300 billion yen for the fiscal year.
The decline in sales and profit reflects the broader challenges faced by the video game industry, which is struggling to regain the momentum seen during the pandemic-driven boom. Nintendo’s pipeline for the year appears thin, with only a few major titles announced, including “The Legend of Zelda: Echoes of Wisdom” and “Mario & Luigi: Brothership.”
In an effort to diversify its revenue streams, Nintendo has been leveraging its popular characters and franchises in movies and other entertainment forms outside of video games. However, revenue from the company’s mobile and intellectual property-related division fell 54% year-on-year to 14.7 billion yen. This decline comes after a high base period boosted by last year’s success of “The Super Mario Bros. Movie.”
Looking ahead, Nintendo has announced plans to introduce a successor to the Switch console by the end of the current financial year. Additionally, a new “Super Mario” film is scheduled for release in April 2026, and a live-action movie based on “The Legend of Zelda” is also in development.
Despite the challenging quarter, Nintendo’s shares have risen 7.6% year-to-date, although they fell 2.3% in Tokyo trading ahead of the earnings announcement. The company remains under pressure to reinvigorate its gaming business and meet its financial targets amidst a rapidly evolving industry landscape.