Nintendo Marks Down Switch Sales Projections as Console Sales Slow Down

The Nintendo company is reportedly dampening its fiscal-year sales forecast for the Switch console by 10% to 19 million after the company's earnings report on Tuesday, Nov. 8.

Nintendo Tone Downs Switch Sales Predictions

This means that the company is now expecting to sell 2 million fewer consoles this year.

This seems to be the same tune as of May, when Nintendo announced a 20% decline from the 2021 figure of 28.83 million consoles shipped, with Nintendo citing shortages of semiconductors and other components.

According to Bloomberg, this time around, Nintendo's operating profit in the quarter that ended September was $809 million, up from 100.2 billion yen in the same period a year ago. The median estimate was for a profit of 117.6 billion yen.

Kyoto-based video game company Nintendo recorded a 34% upswing in revenue for the first two quarters of the fiscal year thanks to the vigorous sales of flagship console games like "Splatoon 3."

Following VGC, Splatoon 3 sold a staggering 7.9 million units during the said three-month period. These are interesting numbers, given that the game is considered the fastest Switch launch in history for Nintendo. Mario Kart 8 Deluxe came in second with 3.07 million, Nintendo Switch Sports third with 6.15 million, and Kirby and the Forgotten Land fourth with 2.61 million. The last title is hailed as the best-selling Kirby title to date.

The company reportedly increased its full-year operating profit projections from 500 billion yen to 600 billion yen, citing the weaker yen as a major factor.

Nintendo Is Front-loading Production

As stated by the company, fewer Nintendo Switch consoles were sold in the quarter compared to the same period in 2021. The continued chip shortage is the primary reason for the reported low sales figures.

In October, the United States enacted new regulations restricting the sale of computer chips used in supercomputers and artificial intelligence to Russia and China. Since then, China has warned that such violations could jeopardize supply chains and the global economy. Could Nintendo be more impacted as tensions rise?

Nintendo President Shuntaro Furukawa, on the other hand, stated that chip supply had begun to recover in recent months, aiding Switch production. The industry is approaching the critical end-of-year demand season.

Nintendo is now focusing on increasing production as soon as possible in order to meet a potential surge in demand during the holiday season. After all, Nintendo stated that production output has been improving since September.

Nintendo benefited greatly from this year's drastic drop in the value of the yen. The currency is trading at its lowest level in more than 30 years against the US dollar, according to reports.

Nintendo generates 80% of its sales outside of Japan, while its software production costs are mostly pegged in the domestic currency. According to Reuters, the company expects its net profit to be 400 billion yen ($2.73 billion) for the fiscal year ending March 2023, up from the previous forecast of 340 billion yen.

Despite this adjustment, analysts say the updated forecast still falls short of the consensus profit forecast of 463 billion yen.