Nintendo Co. announced that it sold more than 3.5 million units of its new Switch 2 gaming console within the first four days of its release, surpassing the company’s sales projections.
Launch Details
The Japanese gaming company officially launched the Switch 2 on June 5, following years of anticipation from fans eager for an upgrade to the eight-year-old predecessor. Enthusiastic fans lined up outside stores worldwide for the console’s release.
Impact on Revenue
The strong sales provide a much-needed boost to Nintendo’s sagging revenue. The company is counting on the Switch 2 to drive growth and has projected sales of 15 million units during the fiscal year ending in March next year. This figure represents a decline of about one-third compared to five years ago, prior to pandemic-related lockdowns and supply chain disruptions.
Nintendo expressed its satisfaction with the sales results, stating, “We’re thrilled with these results.”
Preorder Success
Fans’ enthusiasm was evident as preorders sold out quickly, leading to chaotic scenes at stores worldwide on launch day.
Financial Forecast
Analysts forecast that Nintendo will generate more than $10 billion in hardware and software sales this fiscal year, a decrease from $13 billion last year but an increase from $7 billion in the fiscal year ending March 2020, when demand was heavily impacted by COVID-19 lockdowns.
Operating Profit Expectations
- Analysts expect operating profit to be around ¥1 trillion ($8.6 billion) this fiscal year, following a significant drop last year due to higher shipping costs and lower component prices amid global inflationary pressures.
- While Nintendo has not disclosed specific profit expectations per unit sale for the Switch consoles or games like Zelda: Tears Of The Kingdom, estimates suggest:
- Goldman Sachs analysts estimate an average operating profit margin above 20% per unit.
- Credit Suisse analysts suggest it could be above 30%.
Comparison with Competitors
In comparison, Sony Group Corp., which sells PlayStation consoles, reported an average operating margin per unit sale above 40% in recent quarters, according to Bloomberg Intelligence estimates.
Stock Market Reaction
Nintendo shares rose as much as 4% in Tokyo trading before paring gains, ultimately closing up less than 1%.
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