Japanese video game company Nintendo has released its financial results, revealing a 9.4% decrease in net profit for the past fiscal year, amounting to JPY 432.77 billion (approximately CZK 68 billion). This marks the second consecutive year of declining annual profit for the company, primarily attributed to a decline in sales of its Switch gaming console.

During the previous fiscal year, which concluded on March 31, sales of Switch consoles dropped by 22% to 17.97 million units. Nintendo anticipates a further 17% decline in sales to 15 million units in the current fiscal year, signaling a third consecutive year of decreasing demand. Nevertheless, Nintendo has sold over 125 million Switch consoles worldwide since the initial model’s release more than six years ago, with subsequent improved and modified versions launched over time.

Despite the challenging outlook, Nintendo intends to increase wages and capture investor interest with the potential successor to the Switch console, which could help revive demand. However, publicly available forecasts indicate that the launch of a new console is not currently prioritized.

Nintendo President Shuntaro Furukawa commented on the financial results, acknowledging the difficulty of maintaining the momentum of Switch console and game sales but expressing optimism for improvement. Furukawa believes that releasing a new installment of the popular Zelda gaming series could boost demand for Switch consoles. The upcoming release, The Legend of Zelda: Tears of the Kingdom, has already generated significant interest among gamers during pre-orders, with a price tag of CZK 1,699 for the latest title.

Nintendo faces the challenge of declining demand for video games following the easing of COVID-19 restrictions. The company is seeking to diversify its activities into other areas, including the film industry. The recently successful Super Mario Bros. movie, featuring beloved Nintendo gaming characters, is expected to have a positive impact on Nintendo’s core business. Furukawa believes that fans of the film will also be interested in video games, presenting an opportunity for cross-promotion.

The decline in demand for Nintendo’s Switch consoles can be attributed to the conclusion of the COVID-19 pandemic, which saw a surge in demand for home entertainment products. Consumers have shifted their focus to other activities and may have less time for gaming. Nintendo’s challenge now lies in creating new gaming experiences that can compete with the increasingly diverse forms of home entertainment available to consumers.

Article by Prague Forum