Nintendo hikes annual profit forecast despite gaming boom slowdown

Nintendo upgraded its full-year net profit forecast on Thursday despite a weaker performance in the first half as the coronavirus lockdown-fueled global gaming boom slowed.

The Japanese gaming giant now projects net profit at 350 billion yen ($3.1 billion) for the year to March 2022, up from an earlier estimate of 340 billion yen.

It also hiked its software sales forecast for this fiscal year ahead of releases including three titles in the popular Pokemon franchise.

The Kyoto-based firm's more optimistic outlook follows the October release of an upgraded model of its Switch console.

However, Nintendo lowered its annual target for Switch sales as Japanese media reported that production would be hit by the global chip shortage.

For the six months to September, Nintendo's net profit dropped 19.4 percent to 171.8 billion yen -- still well up from 62 billion yen in April-September 2019.

The extraordinary demand experienced by gaming hardware makers during pandemic lockdowns is slowing as life returns to normal in many countries.

Nintendo had posted its highest ever annual profit in 2020-21, boosted by the runaway popularity of the Switch console and the family-friendly game "Animal Crossing".

It lowered its annual Switch sales target to 24 million units for the current fiscal year from the 25.5 million forecast earlier.

The Nikkei business daily this week reported that annual Switch production was expected to fall by some 20 percent from its target for the current fiscal year due to the chip crunch.

Agence France-Presse

'Animal Crossing' and cooped-up gamers fire up Nintendo profits

Nintendo's popular Switch console and blockbuster games including "Animal Crossing" fuelled a strong rise in profits and sales, which were also helped by players being stuck at home because of the coronavirus pandemic.

The Japanese gaming giant said Thursday it had notched up annual net profits of 258.6 billion yen ($2.4 billion) in the fiscal year to March, a gain of 33 percent from the year before.

Sales climbed nine percent to 1.3 trillion yen and the firm was quick to point out the success of "Animal Crossing: New Horizons", which it said had enjoyed the strongest-ever debut for a Nintendo Switch title.

"Nintendo Switch performed very well without losing momentum," the Kyoto-based firm said in a statement.

The conglomerate is one of a "handful" of major companies seeing significant business opportunities from the coronavirus outbreak, said Hideki Yasuda, an analyst at Ace Research Institute in Tokyo.

"Demand for video games has shot up among people staying home following the outbreak," Yasuda told AFP.

Nintendo shares, which closed up 3.24 percent on Thursday before its earnings announcement, have surged some 27 percent since early March.

However, the firm also pointed to risks arising from the pandemic, including production and procurement of parts, and delays in Research and Development.

For the current fiscal year, the firm predicted reduced sales and profits, as the Switch enters a "crucial" fourth year -- past consoles began declining in popularity after three years.

Nintendo sees net profit at 200 billion yen for the fiscal year to March 2021, down 23 percent from the previous year, with annual sales forecast at 1.2 trillion yen, down 8.3 percent.

STAYING HOME WORLDWIDE

Yasuda said the popularity of the latest "Animal Crossing" title should continue to drive profits for the current fiscal year.

The leisurely game has struck a chord with players around the world, many of them enjoying a virtual release from the restrictions on movement and social activity imposed to contain coronavirus.

"'Animal Crossing' does not involve lots of violent actions," noted Yasuo Imanaka, chief analyst at Rakuten Securities.

The ability to invite online friends to play and shop together in this virtual world has appealed to those cooped up due to coronavirus, Imanaka told AFP.

"This perfectly fits the feeling of people staying home worldwide," said Imanaka, adding that the game's calm vibe was especially appealing to women and children.

Among other Nintendo titles, "Pokemon Sword" and "Pokemon Shield" have also become multi-million-unit sellers, following big hits "Super Mario Maker 2", "The Legend of Zelda: Link's Awakening", and "Fire Emblem: Three Houses".

Launched in March 2017, the Switch has become a huge global seller, helped by innovative, family-friendly titles that have wowed critics and gamers alike.

Sales of both its regular Switch platform and the Switch Lite -- a smaller, cheaper version -- reached 21 million units for the fiscal year, well above its annual target upgraded three months ago.

Rival Sony is scheduled to report its annual results next week as it prepares to launch its next-generation PlayStation 5 console later this year.

Analyst Imanaka said games such as "Animal Crossing" would not fizzle out immediately as coronavirus restriction are gradually lifted.

"I am expecting those people who have started playing video games or online games will continue playing them in this quarter at least," Imanaka told AFP.

Agence France-Presse

Digital video game spending hits record high under virus lockdown

SAN FRANCISCO - Spending on digital video games hit a record high $10 billion in March as people stuck at home under coronavirus lockdowns turned to gaming, market tracker SuperData reported on Thursday.

Money spent on major console games leapt to $1.5 billion in March from $883 million in February, while spending on games played on high-performance personal computers climbed 56 percent to $567 million in the same comparison.

Console and PC games tend to be popular in Europe and North America where restrictions on going out were ramped up in March due to the pandemic.

"Individuals are turning to games as a reliable entertainment option during the COVID-19 crisis and are using online multiplayer to keep in touch with others," SuperData said in a blog post.

Overall revenue from digital video games for the month was up 11 percent year-on-year, according to the industry tracker.

Nintendo sold 5 million copies of its family friendly "Animal Crossing: New Horizons" in March, setting a sales record for the most units of a digital console game sold in a single month, SuperData said.

The closing of real-world stores due to the pandemic was cited as a factor in gamers purchasing more titles as digital downloads.

Spending rose 15 percent on mobile games, a lot of them played on smartphones, reaching $5.7 billion in March, SuperData reported.

Among other leading titles, "Pokemon Go" saw revenue for the mobile game grow 18 percent in March after maker Niantic modified features to make it easier to play without needing to be out and about, according to SuperData.

New-generation Xbox and PlayStation consoles along with games tailored for the hardware are expected to launch by the end of this year.

Microsoft has unveiled a name and look for its new gaming console, the Xbox Series X.

Meanwhile, Sony is readying a powerful PlayStation 5 for market.


Consoles face a potential threat from the advent of cloud gaming, however.

Google early this month made its Stadia online video game service free to provide an escape for those hunkered down at home because of the coronavirus pandemic.

Launched late last year, Stadia is crafted to let people access console-quality games as easily as they do email on an array of internet-linked devices.

"Keeping social distance is vital, but staying home for long periods can be difficult and feel isolating," Stadia vide president Phil Harrison said in an online post.

"Video games can be a valuable way to socialize with friends and family when you're stuck at home."

Google is offering free access to Stadia for two months. 

Agence France-Presse