On Monday, the Japanese gambling industry reported 229.7 billion yen ($ 2.2 billion) in operating profit for the quarter ended December. Sales of the Switch console reached a record high of 11.6 million units during the most important holiday season.
The runaway success of the Switch forced the company to increase it sales and earnings forecasts for the second time since November. The company now expects a 24% increase in profit than it predicted just three months ago, by 560 billion yen ($ 5.3 billion) for the year ended March.
The results show that even in many months after the pandemic, people are still turning to the Switch in large numbers. Nintendo had earlier predicted that it would sell 19 million units of the console for the year ending in March. The company now expects to sell 26.5 million after several upward changes to the forecast.
Nintendo has been a big winner of the pandemic economy, as more and more people are uploading their games and devices to entertain themselves at home. Last year, the company’s profit increased, sometimes by margins higher than 400%.
One major success for the company was the continued popularity of “Animal Crossing: New Horizons.” The game, which is located on a relaxing virtual island utopia and allows users to catch, catch bugs and play with friends on the beach, runs on the Switch and becomes a bestseller.
Nintendo sold 19.4 million copies of the game in the last nine months of 2020, bringing total sales to approximately 31.2 million units.
But the company is also opposed to concerns about how long it can keep its hot streak going, especially as the world begins to look past the pandemic.
At present, analysts remain cautiously optimistic.
Atul Goyal, a stock analyst at Jefferies, on Monday recommended that investors ‘buy but stay awake’.
“We expected this beat,” he wrote in a research note responding to the earnings.
But to continue its successful performance, the company “needs a strong game pipeline and a hardware upgrade,” he added.
The company plans to release several new titles for the Switch this year, including ‘Super Mario 3D World’ and ‘Bowser’s Fury’.
But “the title series can not be denied [the upcoming fiscal year] seems deficient, “said Takao Suzuki, an analyst at Daiwa Securities in Japan.” And investors are closely monitoring the impact on earnings of a possible change in consumer behavior after the development and distribution of Covid-19 vaccines. “
Nintendo must also work to build its brand ‘in business areas other than games’, such as mobile applications or theme parks, he told CNN Business.
The company has not teased new hardware, though some analysts suggest it may change later this year.
The Switch was first released in 2017, while the smaller, cheaper Switch Lite model appeared in 2019. Since then, other competitors, such as Microsoft (MSFT) and Sony (SNE), launched new consoles, namely the Xbox Series X and PlayStation 5.
For the time being, Nintendo is missing an ‘earnings growth story’, Goyal wrote. “We would like to see Nintendo start building [broader] strategy, but it remains a dream. ‘
.Source
Related
