Nintendo breaks expectations with the best quarter since 2008, the technology



Tue 2 February 2021 – 10:31

[TOKYO] Nintendo Co. raised its annual forecasts for the second time after the continued dynamics of the Switch console helped the company achieve the best quarterly earnings since 2008.

The Kyoto-based gaming company reported an operating profit of 229.7 billion yen ($ 2.93 billion), well above the average estimate by Bloomberg analysts at 189.6 billion yen. Nintendo now expects year-round sales of Switch 26.5 million units, which has already surpassed the previous projection of 24 million. The company also boosted its operating profit forecast by 24 percent based on revenue growth driven by the coronavirus outbreak and the hit game Animal Crossing: New Horizons. Shares rose up 2.2 percent in Tokyo on Tuesday.

The portable Switch soon entered its fifth year on the market and sold 11.6 million units during the holidays, which is 7 percent more than in the previous year. Sales remained strong after the holidays, and Nintendo has a sufficient supply of components for the time being, despite shortcomings in the entire industry, said President Shuntaro Furukawa. He added that his company does not plan to announce a new Switch model in the foreseeable future and will leave the door to new hardware open later in the year.

Nintendo has boosted the gadget’s popularity with customized limited editions, a cheaper Switch Lite, and a number of blockbuster titles that support hardware sales. The updated forecast for the rest of the year is considered “too low” by Hideki Yasudou, an analyst at the Ace Research Institute, which expects the company’s full-year results to approach 28 million Switch units.

In 2020, Animal Crossing took advantage of the need for a reassuring lock-in leak to help increase software sales in 43 months to 176.1 million in the nine months ending in December. The company’s digital sales more than doubled over the same period, rising from 28.6% to 40.9% of all software sales.

“The switch has changed from a console to a” tailor-made “lifestyle product for Covid-19 times, with Nintendo surfing the wave,” said Tokyo analyst Serkan Toto.

Nintendo shares outperformed competing Sony Corp and Microsoft Corp consoles in 2020, and the new PlayStation 5 and Xbox Series X faced production and logistics failures that limited their availability. In response to these more expensive and more powerful machines, Nintendo is planning an upgraded version of the switch with the possible addition of 4K output, said Bloomberg News, which will join the new game this year. These plans may still change due to a lack of component supply in the electronics and automotive industries.

Efforts to monetize their characters outside of software and hardware sales were defeated after the company postponed the debut of Super Nintendo World, located in Universal Studios Japan near Osaka, for the second time due to a pandemic.

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