Nintendo has announced that its Pokémon Scarlet and Pokémon Violet games for the Nintendo Switch have broken all-time sales records. Pokémon is one of Nintendo’s longest running and most popular franchises.
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Nintendo on Tuesday cut its sales forecast for the Nintendo Switch console and games and lowered its profit forecast for the current fiscal year.
The Japanese gaming giant said it now expects to sell 18 million Switch units in the fiscal year ending in March 2023, down from a previous forecast of 19 million. Nintendo said it now also expects software sales of 205 million units, down from a previous forecast of 210 million units.
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Nintendo cut its net profit forecast to 370 billion Japanese yen ($2.8 billion) from 400 billion yen previously.
The company said the reason for the reduction in expected hardware sales is that the Switch “did not perform as expected” during the holiday season.
Electronics manufacturers are facing tougher macroeconomic conditions.
“Nintendo was unable to completely prevent itself from becoming a victim of the current economic environment and probably disappointed itself with the quarter,” Serkan Tota, CEO of Tokyo-based games consultancy Kantan Games, told CNBC.
Another problem that Nintendo struggles with is that its Switch console is almost six years old. Sony’s PlayStation 5 competitor is just over two years old. Nintendo released a version of the Switch with an upgraded display in October 2021. Investors are now wondering when the company might release new hardware to revive sales.
“There is definitely new hardware in the works, the big question marks are when it will be released and whether it will be an upgraded Switch, an even more beefed-up ‘Switch 2’ or a completely new platform,” Toto said.
Nintendo sold about 8.23 million Switch consoles in the December holiday quarter, down about 22% year-over-year.
While Nintendo struggles, its competitor Sony this month raised its PS5 sales target by one million units to 19 million for the year to March.
There were some bright spots in Nintendo’s earnings report. Digital sales of Nintendo games rose 10.2% year-on-year to ¥122.1 billion in the December quarter, marking record quarterly sales for the period, the company said.
Nintendo added that its new games Pokemon Scarlet and Pokemon Violet, which were released on Nov. 18, sold 18.2 million units in the seven weeks since release, marking the “fastest launch of any title for a Nintendo video game platform.”
The Japanese gaming giant is also preparing for the May release of Legend of Zelda: Tears of the Kingdom, one of its most popular franchises, which analysts believe could help the company.
“Not only the next Zelda, but the next Switch update can’t come soon enough,” Toto said.