Nintendo’s Switch 2 console is defying some of the early skepticism surrounding its sales trajectory. The gaming giant announced Tuesday that it is maintaining its full-year sales forecast for the flagship device, a move that should soothe investor concerns about potential waning momentum.
The company’s outlook remains steadfast at 19 million units for the fiscal year ending March 2026. To date, Nintendo has already shipped 17.37 million units of the Switch 2, with a remarkable 7 million units sold in the crucial December quarter alone. This performance has led Kantan Games CEO Serkan Toto to declare the Switch 2 as Nintendo’s fastest-selling console ever, noting that “the implosion of sales, as predicted by some investors, did not happen in the holiday quarter.”
Nintendo’s third-quarter earnings, which concluded on December 31, saw revenue reach 806.32 billion Japanese yen ($5.2 billion), slightly missing the LSEG estimate of 847.73 billion yen. However, net profit exceeded expectations, coming in at 159.93 billion yen against a forecast of 147.3 billion yen. On a year-on-year basis, revenue surged by 86%, with profit climbing 24%.
Despite these positive sales figures, Nintendo’s stock has faced considerable pressure in recent months. After reaching a record high above 14,000 yen in August, shortly after the Switch 2’s June launch, the shares have since seen a decline of over 30%.
Fueling the holiday sales surge were highly anticipated titles such as “Mario Kart World,” which has sold approximately 14 million units, and “Donkey Kong Bananza,” with 4.25 million units sold since the Switch 2’s debut. These games represent the console’s most popular software offerings to date. Market research firm Circana confirmed the Switch 2’s dominance in the U.S. market, identifying it as the best-selling console in December.
However, lingering concerns persist regarding potential headwinds for Nintendo, particularly concerning memory component costs. The global surge in memory prices presents a significant challenge, as these are critical components for gaming consoles.
While Nintendo President Shuntaro Furukawa indicated that current memory price increases are not significantly impacting financial results for the current fiscal year, he acknowledged that prolonged high costs could affect profitability. Analysts point out that as inventory levels dwindle, Nintendo, along with competitors like Sony and Microsoft, will inevitably face renegotiating contracts at higher prices.
“Suppliers obviously have the upper hand with any new negotiations, so it’s only a matter of time until Nintendo – and Sony and Microsoft – run through their inventory of memory and renegotiate at higher prices,” commented James McWhirter, senior analyst at Omdia. He further noted that “any rise in the cost of console hardware will be passed on to consumers via multiple means: directly, or via a mix of increased software, services, peripherals pricing.”
Beyond component costs, the long-term success of the Switch 2 hinges on Nintendo’s ability to maintain a robust pipeline of new games and effectively encourage upgrades from its predecessor’s substantial user base. Upcoming releases include “Mario Tennis Fever” in February and “Pokémon Pokopia” in March, leveraging two of Nintendo’s most established franchises.
Furthermore, the release of “The Super Mario Galaxy Movie” in April could mirror the success of the 2023 Super Mario film. That cinematic release provided a significant sales impetus for the then six-year-old original Switch, and Nintendo will be hoping for a similar halo effect on the Switch 2.
McWhirter anticipates that “2026 will be make-or-break for Switch 2’s future as Nintendo transitions from selling to die-hard early adopters and toward the mass market.” He added, “Pricing will be a pain point — expect software bundles to return for the holiday season. Nintendo games continue to sell Nintendo hardware, but the company will need to convince players who experienced the best of what Switch 1 has to offer that its Switch 2 sequels are worth the price of entry.”
Original article, Author: Tobias. If you wish to reprint this article, please indicate the source:https://aicnbc.com/16936.html
