TOKYO — Nintendo is forecasting a 29% drop in net profit for the year ending March 2022 as the pandemic-fueled gaming boom eases, with its popular Switch gaming console expected to face a slowdown in sales.
The Kyoto-based gaming company announced on Thursday that it anticipates annual net profit to decline to 340 billion yen ($3.1 billion) compared with 2021, which saw unprecedented demand for gaming early on in the COVID-19 pandemic and helped Nintendo log a record net profit of 480 billion yen.
Nintendo does not expect to score record profits for a second straight year as hardware and software sales decline.
Annual revenue is expected to fall 9% to 1.6 trillion yen this fiscal year and operating profit to slide 22% to 500 billion yen.
Nintendo is aiming to sell 25.5 million units of its Switch hardware, including its handheld Switch Lite device, which is 11.5% less than a year earlier.
Blockbuster sales from its global hit title Animal Crossing: New Horizons, which has sold over 32 million copies since its release in March 2020, also set the bar high for this year. For the current fiscal year, Nintendo expects total software sales to decline 18% to 190 million copies.
Many analysts had predicted Nintendo would announce lower profits for fiscal 2021, but still expected rosier figures.
According to data from Quick FactSet, the analysts’ consensus for annual net profit was 414 billion yen and 575 billion yen for operating profit.
Hideki Yasuda, a senior analyst at Ace Research Institute, said Nintendo’s guidance seemed conservative since Nintendo plans to release major software titles, including the latest game from the Pokemon series.
“Current demand for the Switch console is still strong and I believe there is potential to sell more this year,” he said.
Meanwhile, Nintendo reported record profits for the year up to March. Net profit jumped 86% to 480 billion yen, the highest ever for the company, while revenue rose 34% to 1.76 trillion yen. Operating profit climbed 82% to 641 billion yen.
The company did well out of people stuck at home during the pandemic, selling over 28 million units of its Switch hardware, a 37% jump year on year. Total sales for the Switch console, released in 2017, have reached over 84 million units.
A subscription gaming service, Nintendo Switch Online, also gained popularity and had accumulated 26 million members by September. Revenue from digital downloads also helped boost profit margins. Digital sales increased 69% to 344 billion yen and accounted for over 40% of Nintendo’s overall software sales for the fiscal year.
