Japanese video game company Nintendo recently released its financial results, showing a 9.4% drop in net profit in the past fiscal year to JPY 432.77 billion (approximately CZK 68 billion). The company has now reported a decline in its annual profit for two consecutive years, primarily due to declining Switch gaming console sales.
During the last fiscal year, which ended on March 31, sales of Switch consoles dropped by 22% to 17.97 million units. Nintendo expects sales to drop by another 17% to 15 million units in the current fiscal year, marking the third consecutive year of decline. Nonetheless, over 125 million Switch consoles have been sold worldwide since the first model was released more than six years ago, with improved and modified models launched over the years.
Despite the negative outlook, Nintendo plans to increase its wages. Investors have become interested in the possible successor to the Switch console, which could help to curb the declining demand. However, published forecasts suggest that launching a new console is not currently on the agenda.
According to Polygon, Nintendo President Shuntaro Furukawa commented on the released financial results, stating that maintaining the pace of Switch console and game sales is challenging but still sees room for improvement. He believes that demand for Switch consoles could be boosted by releasing a new installment of the famous Zelda gaming series, which is coming out this Friday. The Legend of Zelda: Tears of the Kingdom has already generated increased interest among gamers during pre-orders. Prospective buyers will pay CZK 1,699 for this latest title.
Nintendo is grappling with declining demand for video games following the easing of COVID-19 restrictions. The company is attempting to expand its activities into other areas, including the film industry. The movie Super Mario Bros., based on popular Nintendo gaming characters, has been hugely successful in recent weeks. Furukawa believes that the film’s success will also positively impact Nintendo’s core business. “I believe that fans of the film will also be interested in video games,” he added.
The decline in demand for Nintendo’s Switch consoles is likely due to the COVID-19 pandemic’s end, which led to a surge in demand for home entertainment products. Consumers have shifted their attention to other activities and will likely have less gaming time. Nintendo’s challenge now is to create new gaming experiences that can compete with the increasingly diverse forms of home entertainment available to consumers.