Nintendo on Friday reported a 55% drop in profit as sales of its seven-year-old Switch console have dropped off.
Shares dropped nearly 10% on Friday after the disappointing earnings report.
The Japanese video game company missed LSEG analysts’ expectations in its first quarter, which runs through June like the Bank of Japan’s fiscal year. Nintendo reported revenue of 246.6 billion yen, or $1.68 billion, which fell below estimates of $1.97 billion.
Nintendo reported net profit of $551 million, below expectations of $482 million and down 55.3% since the year before.
The company sold 2.1 million units of its trademark Switch video game consoles, down 46% on the year.
Investors have been hoping Nintendo will soon launch its next big device to take the helm from the Switch, which launched in 2017. The Switch can be plugged in at home with a computer system or used as a standalone handheld device, and it brought excitement back to Nintendo after sales of the DS and Wii systems fell off.
The Switch has sold the second-highest number of units for Nintendo devices, behind the Nintendo DS – which spiked in popularity during the early 2000s.
Nintendo fans have seen varying versions of the Switch over the years, with different display screens and features. But plummeting sales suggest it is time for Nintendo to release its next business savior.
Serkan Toto, founder of game industry consultancy Kantan Games, told Reuters the poor earnings “increase the pressure on Nintendo regarding a Switch 2 reveal.”
He said the next quarter was likely to be a weak one for Nintendo, too.
The company previously said it would announce its next device by March 2025 and expects to sell 13.5 million Switch units in the meantime, which Nintendo reaffirmed on Friday, according to a CNBC report.
Besides its trendsetting video game devices, Nintendo has seen popularity from its game releases – home to iconic characters like Mario and Luigi. The company didn’t release any big video game hits during the first quarter, so it wasn’t able to balance out the Switch sales miss.
Nintendo’s software sales tumbled 41% since last year to 30.64 million units.
The company has focused on selling out intellectual property to boost profits. Nintendo is currently involved in an animated Super Mario Bros. movie.
But sales from the intellectual property department fell 54% since the year before to $100 million.
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