Switch Sales Dip Amidst Anticipation of Switch 2

Nintendo's hardware sales forecast has been revised downward again, as Switch console and game sales fell short of projections.

For the first nine months of the fiscal year, Nintendo's dedicated video game console business saw a 31.7% year-over-year drop in revenue, reaching 895.5 billion yen (approximately $5.7 billion). This significant decline stems from reduced sales of both the Nintendo Switch and its software.

Mobile and IP-related income also experienced a downturn, decreasing by 33.9% year-over-year to 49.7 billion yen (approximately $320 million). This is primarily attributed to the challenging comparison with the exceptionally successful 2023 release of The Super Mario Bros. Movie.

Consequently, gross profit decreased by 27.3% year-over-year to 565.5 billion yen (approximately $3.6 billion).

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Nintendo has further lowered its financial forecast for the fiscal year ending March 2025, marking the second consecutive downward revision. The company anticipates even lower Nintendo Switch hardware sales than previously projected, reducing its forecast by 1.5 million units to 11 million, and software sales by 10 million units to 150 million.

While sales declines were expected for the eight-year-old Switch, the drop is steeper than Nintendo initially anticipated. Nevertheless, the Switch has surpassed 150 million units sold, a remarkable achievement. While surpassing the PlayStation 2's 160 million sales to become the best-selling console of all time may be unlikely, the Nintendo DS's 154 million sales figure is within reach.

Nintendo characterized Switch and software sales in its third quarter (ending December 31, 2024) as "stable, considering the platform's eighth year on the market."

Overall sales for the entire Nintendo Switch family of systems decreased by 30.6% year-over-year to 9.54 million units. Software sales declined by 24.4% year-over-year to 123.98 million units. However, Nintendo highlighted strong sales of new titles: The Legend of Zelda: Echoes of Wisdom (3.91 million), Super Mario Party Jamboree (6.17 million), Mario Kart 8 Deluxe (5.38 million), and Nintendo Switch Sports (2.63 million) during the three-month period. Mario & Luigi: Brothership reached 1.4 million units sold.

Super Mario Party Jamboree stands out as a significant success. Within the first 11 weeks after its October 17, 2024 release, it outperformed previous Mario Party titles on the Switch, namely Super Mario Party and Mario Party Superstars.

Crucially, for Nintendo's upcoming Switch 2 launch, the number of active Switch players is at an all-time high, with 129 million annual active users in 2024. This indicates continued engagement despite the console's age.

Nintendo stated, "Nintendo Switch unit sales declined year-on-year, but even in its eighth year since launch in March 2017, the Nintendo Switch continues to attract consumers, and sales in some weeks during the holiday season exceeded those of the previous year."

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In light of Nintendo's financial report, investors eagerly await the Switch 2's release. Nintendo mentioned upcoming titles for the original Switch: Xenoblade Chronicles X: Definitive Edition (March 20 release), and Pokémon Legends: Z-A and Metroid Prime 4: Beyond, both slated for 2025.

The Switch 2 was also mentioned, though without new information. Nintendo reiterated its January 16th announcement of the Switch 2's 2025 release and its accompanying video showcasing the hardware.

A Switch 2 Direct is planned for April 2nd, promising further details. Hands-on events will also be held globally.