Nintendo Takes Big Profit Hit After Failing to Switch It Up
Nintendo revealed on Tuesday that it had suffered a 69% drop in its profits year-over-year for the most recent financial quarter.
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Did King Bowser throw his hammer at profit margins?
Japanese video game giant Nintendo revealed on Tuesday that it had suffered a 69% drop in its profits year-over-year for the most recent financial quarter. It also announced it’s cutting its expectations for full-year profit by 10%, and the rapid loss of momentum suggests that its console, the Nintendo Switch, is running out of steam with consumers.
Last Life
Nintendo has given the world some truly iconic consoles: the GameCube, the Wii (and its accompanying soundtrack), and most recently the Nintendo Switch, which is one of the best-selling consoles of all time. Even as it produced these game-changers, Nintendo managed to sidestep the “console wars” between Sony and Microsoft. Nintendo has successfully marketed itself as a family brand that sits apart from the Xbox and PlayStation.
Now it sits apart for the wrong reasons. While Xbox and PlayStation managed to drum up fresh demand for their consoles by releasing powerful new versions, the Nintendo Switch remains fundamentally unchanged since its launch in 2017, and its goodwill surplus is finally running out:
- In its earnings, Nintendo said sales of the Switch were down 31% year-over-year for the quarter ending in September.
- Nintendo President Shuntaro Furukawa tried to put a positive spin on the numbers, Reuters reported, saying: “For a platform that is in its 8th year in the market, both hardware and software enjoy stable demand and brisk sales.”
Rhys Elliott, games industry analyst at MIDiA Research, told The Daily Upside the flagging results were no big surprise. “[Nintendo] is an extremely hit-driven company. The whole Switch platform revolves around Nintendo IP and is driven by first-party revenues,” Elliott said, adding the company has had a slow year content-wise.
Holiday Blues: Nintendo isn’t expected to announce a second iteration for the Switch until March 2025, so its stock is likely to have a pretty rough ride through the end of 2024 — unless everyone decides to get their kid a Switch for Christmas.