Friday, December 3rd, 2021

Nintendo’s profits are declining but on track despite the decline in Switch sales forecasts

Image: Nintendo Life / Zion Grasle

Earlier this week, Nikkei reported that Nintendo was facing production problems related to an ongoing chip shortage. This was also a problem for Sony and Microsoft with the latest hardware. The latest Nintendo financial report for the second quarter confirms the report effectively, but the impact on the company’s bottom line seems to be minimal.

As Nikkei reported, Nintendo has reduced the estimated number of switch systems shipped from 25.5 million to 24 million, providing the following explanation:

For Nintendo Switch hardware, we reduced our forecast by 1.5 million units to 24 million units. Due to changes in production planning due to the impact of global semiconductor shortages, shipment forecasts for the second half of the year declined. Meanwhile, Nintendo Switch’s software forecast has been revised to 200 million units, an increase of 1 billion units, based on sales results in the first half of the year.

As you can see, the software sales have been revised Up -Advance Wars 1 + 2: Re-Boot Camp reflects higher game sales than previously expected, even though it may be delayed for the next fiscal year. Major holiday releases include Pokemon Brilliant Diamonds and Shining Pearls and Grand Theft Auto: Trilogy-The Definitive Edition.at this point Kirby of the Stars and the Forgotten Land Is fixed in the spring of 2022, so it will be interesting to see if it squeaks this fiscal year with a March release that will help increase the number.

Moving on to Nintendo’s profit earnings, as in the first quarter, with different degrees of global blockade, profits are significantly below the level of last year. Animal Crossing: New Horizons Sales have reached an astonishing level. However, as you can see from the numbers below, Nintendo is still in a strong position and is making significant profits.

  • Net sales- 624.2 billion yen (about 5.47 billion US dollars)-18.9% decrease from the previous year
  • Operating income 219.9 billion yen (about 1.93 billion dollars)-24.5% decrease from the previous year
  • Net income – 171.8 billion yen (about 1.5 billion US dollars)-down 19.4% from the previous year

Although Nintendo is making significant profits, it is under pressure from some shareholders due to its year-on-year decline. Undoubtedly, the focus will be on relaunching the increase offer in the next fiscal year.

But in the meantime, Nintendo is very financially stable. The question, as always, is how to use that wealth to maintain a solid position in the gaming market.