Nintendo reports strong Switch sales on stay-at-home demand

TOKYO • Nintendo Co Ltd beat sales forecasts for its Switch console in the last fiscal year, reflecting surging demand for games and other entertainment as people spend more time at home amid the Covid-19 pandemic.

Nintendo sold 21 million units of the Switch in the year ended in March, higher than its own estimate of 19.5 million and Morningstar Research’s expectation of roughly 20 million units. The Kyoto-based game maker’s operating profit tripled to ¥89.5 billion (RM3.6 billion) from the same period a year earlier.

Still, Nintendo gave a cautious outlook for the current year, largely because of uncertainty over the pandemic’s impact on production and services. The company said it expects to sell 19 million Switch consoles and 140 million copies of Switch games in the current fiscal year,

with 15% lower operating profit. “Fiscal year 2020 software sales, if normal conditions, should be at least 180 million to 200 million. The 140 million figure could be a sign from Nintendo that there would be release delays of major titles,” said Hideki Yasuda, an analyst at Ace Research Institute.

The company warned that Switch production may suffer if the pandemic is prolonged, however, it said the effects of the outbreak on its results in the last fiscal year were limited. Some services and software releases may have to be delayed if the virus persists, the company said.

Nintendo is benefitting from the rocketing popularity of its “Animal Crossing: New Horizons” game, which has helped propel a 40% rally in Nintendo’s shares since their low in March, adding more than US$16 billion (RM69 billion) to the Japanese company’s market value.

The game is the Switch’s fastest-selling hit, reaching 13.4 million sales in the first six weeks after its March 20 launch. Arriving at a time when people were looking for ways to connect with friends while staying at home, the marquee title has proven a haven from the outbreak.

Animal Crossing’s popularity has made the Switch hard to find almost everywhere in the world. The company asked suppliers to boost Switch production to about 22 million units for the current fiscal year, Bloomberg News reported in April. Still, a lack of components across the manufacturing sector could weigh on plans, while demand may subside once Covid-19 fears recede. — Bloomberg