Nintendo returns to profit on the Switch
TOKYO, Japan – Nintendo said on Wednesday, July 26, it swung back to profit in the 3 months to June as the Switch console made more inroads into the global game market.
The Kyoto-based company struggled in the April-June quarter last year when it faced a stronger yen and lackluster sales, particularly of its Wii U game consoles.
Nintendo launched the Switch game console in March with a price tag of $300 and had sold 2.7 million units by the end of the month. The gadget is seen as a new pillar for the company's earnings.
During the April-June period, the company carried out successive launches of headline game titles for Switch, such as Mario Kart 8 Deluxe and ARMS.
Nintendo said sales of Switch hardware in April-June totalled 1.97 million units while software reached 8.14 million during the quarter.
The company said quarterly net profit reached 21.26 billion yen ($190 million), flipping from a net loss of 24.53 billion yen in the same period last year.
Nintendo plans to ship 10 million consoles in the fiscal year to March 2018.
Capable at home and on the go, Switch blends Nintendo's console and handheld device business with its fledgling mobile gaming strategy, which got a big brand win after Pokemon Go's success in the summer of 2016.
"Nintendo Switch got off to a flying start and demand has been stronger than anticipated," Hideki Yasuda, an analyst at Ace Research Institute in Tokyo, told AFP before the earnings announcement.
Nintendo was positioning itself for the year-end holiday shopping season with Switch for a further boost to its bottom line, he added.
"Sales are expected to remain strong for now as Nintendo is set to release big game titles later this year," he said.
"A weak yen is also contributing to its earnings. Switch is so far, so good," Yasuda said.
But the analyst added that the market needs more time to fully assess the console's long-term success.
Nintendo's operating profit came to 16.21 billion yen, a jump from an operating loss of 5.1 billion yen.
Sales, meanwhile, reached 154.07 billion yen, more than doubling from the same period last year.
The company maintained its full-year projections, seeing net profit at 45 billion yen, operating profit at 65 billion yen and sales of 750 billion yen.
Nintendo shares rose 1.33 percent on Wednesday to end at 35,770 before the release of the earnings.
The company's shares have soared more than 50 percent since Switch's debut.
In smart phone games, its Super Mario Run and others remained popular, racking up sales of 9.0 billion yen, more than quadrupling from a year earlier.
Smart phone game app Pokemon Go sparked a worldwide craze last year that has captured customers beyond Nintendo's traditional fan base.
The mobile app, developed by an outsider, significantly spiced up its brand and spilled over to boost the popularity of the overall Pokemon franchise. – Rappler.com