The Decline of Nintendo Financials After Zelda: A Detailed Analysis
Nintendo reported a downturn in both net sales and operating profit over the first quarter of the current fiscal year.
The company saw net sales decrease by 46.5 percent year-on-year to 246.6 billion yen ($1.68 billion), while operating profit decreased by 70.6 percent to 54.5 billion yen ($371.6 million). Profit attributable to owners of parent fell by 55.3 percent to 80.9 billion yen ($551.6 million).
There are some predictable—but nonetheless interesting—reasons for that downturn. For starters, the Nintendo Switch is more than eight years old and that means hardware sales are dwindling.
As it stands, the Switch family has sold 143.42 million units worldwide. It's an eye-watering metric that means it's hardly surprising to hear quarterly hardware sales declined by 46.3 percent year-on-year to 2.1 million units. Despite that downturn, Nintendo claimed sales are relatively stable compared to the last quarter.
'Special factors' like Zelda and the Mario Bros film last year contributed to steeper slide
It also said the first quarter of the previous fiscal year delivered 'extremely high' software and hardware sales due to the launch of The Legend of Zelda: Tears of the Kingdom and marketing ripples caused by The Super Mario Bros. Movie. Those, it explained, were 'special factors' that have resulted in a hefty year-on-year decline.
'There were no such special factors in the first quarter of this fiscal year, and with Nintendo Switch now in its eighth year since launch, unit sales of both hardware and software decreased significantly year-on-year,' added the company.
As Nintendo highlighted, software sales declined by 41.3 percent year-over-year to 30.64 million units—impacted by the lack of a major release like Tears of the Kingdom, which has now sold 20.8 million units worldwide.
It added that newer releases such as Paper Mario: The Thousand-Year Door (1.76 million units), Princess Peach: Showtime! (1.3 million units), and Luigi's Mansion 2 HD (1.19 million units) made a 'good start.'
Glancing briefly at other metrics, the number of annual playing Nintendo Switch users topped 128 million from July 2023 to June 2024. Digital sales decreased by 32.6 percent year-on-year to 80.7 billion yen during the first quarter, but still accounted for 58.9 percent of total software sales.
Nintendo neglected to mention the Switch's long-rumored successor, but has already confirmed it will reveal the console before the end of the current fiscal year on March 31, 2025.
The company has stood by its existing fiscal forecast and still expects Switch hardware sales to hit 13.5 million units before the fiscal year is out.