Gaming giant Nintendo's Q1 net profit declines by 55% as Switch sales fall

Japanese video game giant Nintendo announced a significant 55% decline in profits for the April-June quarter of 2024, primarily due to falling sales of both its gaming consoles and software, with Switch sales falling considerably. 

The period saw Nintendo's profit drop to 80.95 billion yen ($543 million) from 181 billion yen a year earlier, while quarterly sales plunged 46.5% to 246.6 billion yen ($1.7 billion).

The Nintendo Switch, now in its eighth year, has surpassed 140 million units sold globally. However, as often happens with gaming consoles as they age, sales are beginning to taper off.

Switch sales fall, decrease in sales from movie drags down earnings

The latest quarter reported a sharp 46% year-on-year decline in Switch sales, from 3.9 million units to just 2.1 million.

Similarly, software sales also experienced a notable decline of 41%. 

Despite the successful launches of games like "Paper Mario: The Thousand-Year Door" and "Luigi's Mansion 2 HD," which sold 1.76 million and 1.19 million units respectively, overall software sales could not match the previous year's performance, Nintendo said. 

It added that last year’s exceptional results were also driven by the release of "The Super Mario Bros. Movie," which substantially increased audience engagement and related sales.

However, a decrease in the revenue related to the movie in Q1 dragged down sales in the mobile and IP-related business by 53.8% to 14.7 billion yen.

In terms of digital sales, Nintendo reported a 32.6% decline year-on-year, totalling 80.7 billion yen. This drop was primarily attributed to decreased sales of downloadable versions of packaged software for the Nintendo Switch.

Nintendo did not release any new information about a promised Switch successor. Earlier this year, its president, Shuntaro Furukawa, said an announcement would be made before April 2025.

Nintendo shares fall

Nintendo's shares fell by 2.3% in Tokyo trading shortly before the earnings announcement. The overall Nikkei benchmark saw a larger drop of 5.8% on the same day.

The weakening of the US dollar against the yen, now trading at about 149 yen after previously being above 160 yen, has also impacted Nintendo's financial results. 

A weaker yen generally benefits exporters like Nintendo by enhancing the value of overseas earnings.

Future outlook 

Nintendo did not offer any changes to its financial forecast published on May 7, 2024. 

For the fiscal year ending in March 2025, Nintendo has maintained its profit forecast at 300 billion yen ($2 billion). 

Nintendo is planning to release new titles in popular franchises such as Mario Party, Donkey Kong, and Zelda over the next several months. 

Additionally, another Super Mario film is set for release in 2026, as the company continues to leverage its valuable intellectual properties.

To further engage its fan base, Nintendo is also expanding its physical presence. A new Nintendo Museum is slated to open later this year in Kyoto, Japan, the company's headquarters.

Moreover, a new Nintendo store is scheduled to open in San Francisco’s Union Square next year, aiming to attract more customers and boost brand loyalty.