“Passed Its Peak”: Nintendo Warns Of Demand Plunge Of Switch Consoles

Since its launch in 2017, Nintendo’s Switch console has had an impressive run, with a surge in sales during the virus pandemic. However, sales plummeted in the full fiscal year, from April 2022 to Mar. 31.

This article was originally published by ZeroHedge.

The absence of any plans for a next-generation Switch or a new console release in the near term could be a worrisome sign for the game manufacturer based in Kyoto, Japan.

Nintendo expects to sell 15 million Switch devices this fiscal year, missing the average analyst estimate of 15.7 million, which takes into consideration a slowdown in hardware sales over the past several months. In addition, the company forecasts an operating income of ¥450 billion ($3.3 billion) for this fiscal year, which is close to the ¥455.3 billion average estimate.

During the last fiscal year ending in late March, Nintendo sold 18 million Switches and reported an operating profit of ¥93.8 billion for the quarter, which is a 22% decrease compared to the previous year. In addition, the company’s quarterly net sales have declined by 18% to ¥306.5 billion.

There are concerns Nintendo’s sales may have peaked due to the Switch’s age, and the buying panic during the virus pandemic may have led to a blowoff top in demand.

“Sustaining the Switch’s sales momentum will be difficult in its seventh year.

“Our goal of selling 15 million unit this fiscal year is a bit of stretch. But we will do our best to bolster demand going into the holiday season so that we can achieve the goal,” President Shuntaro Furukawa said on a call after the results.

Switch sales peaked during the pandemic and have yet to recover.

Throughout Switch’s existence, Nintendo has attempted to revitalize the console with a ‘lite’ version and upgraded screen. Yet none of this stoked demand.

“The Nintendo Switch had a fantastic run but definitely passed its peak,” Serkan Toto, CEO of Tokyo-based games consultancy Kantan Games, told CNBC.

Nintendo must maintain its ability to rake in revenue from its 114 million annual paying users. However, it said software sales totaled 213.96 million units for the year ended Mar. 31, down 9% YoY.

Analysts don’t foresee Nintendo boosting sales in the near term:

“We expect Nintendo will not release the next-generation hardware over the next 12 months.

“Nintendo’s valuation is very likely to shrink until the launch of the new hardware,” UBS Securities analyst Kenji Fukuyama wrote to clients after the earnings release. 

The game maker’s shares closed flat on Tuesday and have yet to pierce the December 2007 high as Switch’s momentum wanes.

The Switch is past its peak.