Nintendo Forecasts Decline in Hardware Sales, Profit Guidance Below Expectations

Nintendo announced its financial results for the fourth quarter on Friday, with sales falling below expectations and projected an operating profit of 370 billion yen for the fiscal year ending March 2027. Analysts on average expected 480 billion yen, which means that market expectations for profitability in the second year after the launch of Switch 2 are significantly higher than the company's own judgment.

The company announced that the price of Switch 2 will be increased starting September 1st, with the U.S. price rising from $449.99 to $499.99, and the Japanese price from 49,980 yen to 59,980 yen. Over the past six months, a global shortage of electronic components has driven up costs, and Nintendo also projected Switch 2 sales for the fiscal year ending March 2027 to be 16.5 million units, down from 19.86 million units in the previous fiscal year.

Nintendo has previously avoided increasing the price of its flagship console, mainly because it wanted to maintain a broader user base; the price increase now means that the company needs to re-evaluate the balance between profit margins and sales volumes.

After the Switch 2 was launched last June, game sales have not yet picked up significantly. Although Nintendo announced this week the release of a remastered version of Star Fox this summer, the full-year outlook shows that the company does not believe current challenges will disappear anytime soon.

Bloomberg reported that Nintendo's stock is experiencing its worst consecutive performance in a decade, with a drop of about 30% since the beginning of the year, and the upcoming release of Grand Theft Auto VI this fall is more likely to benefit Sony's PlayStation 5.