(Tokyo) Video game giant Nintendo on Thursday announced lower results in the first half of its 2021/22 fiscal year, as demand from the pandemic falters, but nevertheless slightly raised some of its annual targets.
The group, which made a record net profit in 2020/21 when lockdowns over COVID-19 boosted demand for home entertainment, saw its net profit drop 19.4% to 171.8 billion yen ( approximately 1.9 billion Canadian dollars) over the period April-September.
The March 2020 release of his game Animal Crossing: New Horizons, which has become a real social phenomenon when home-based lifestyles are taking hold in the world, in particular has caused an exceptional rush for Nintendo consoles and games, which is almost impossible to reproduce.
“Young adults who played Animal Crossing last year are now moving towards bars and children return to school ”after periods of confinement, said Amir Anvarzadeh in a note from Asymmetric Advisors.
“The engagement (of players, Editor’s note) has remained the best for games with an online mode, explained Matthew Kanterman, analyst at Bloomberg Intelligence, ahead of the results.
»But this is not necessarily Nintendo’s strong point. Except Animal Crossing, they don’t have a lot of games like that, they rather have Zelda and Mario “.
Switch sales target lower
Over its past half year, the Kyoto company has seen its half-year turnover decline by 18.9% over one year to 624.3 billion yen (4.7 billion euros), mainly because of a 34% drop in sales of its Switch console, those of its games having fallen more modestly.
Its operating profit over the period fell 24.5% over one year to 220 billion yen (1.7 billion euros).
The Japanese group, however, very slightly raised Thursday the modest annual forecasts it had formulated in May, citing among other things the potential of the new version of the Switch with an Oled screen, released in early October, and games like Metroid Dread Where Pokémon Brilliant Diamond and Pokémon Shining Pearl.
” The Switch Oled is a great console, but it’s not a huge improvement, Kanterman says. This is not going to be enough to fuel demand. Without a big Nintendo game release, sales are likely to drop significantly ”in 2021/22, he warns.
Nintendo is well aware of this. The company also lowered its annual Switch sales target on Thursday to 24 million units, against a previous forecast of 25.5 million units. In its 2020/21 fiscal year, 28.8 million Switches had been sold worldwide, a record.
“Less big games”
The shortage of semiconductors and other components, which also affects production of competitor Sony’s PlayStation 5, is also weighing on Switch production: “We have lowered our shipping forecast for the second half of the year. […] because of the effects of the global semiconductor shortage, ”Nintendo said in a statement.
According to information from the Nikkei daily published on Tuesday, the group lowered its Switch production target for the year by 20% to 24 million units.
Regarding game sales, “Nintendo’s release schedule is lighter” than that of some of its competitors such as Sony, further notes Mr. Kanterman, estimating that there are “fewer big games coming out” currently on the side. of the Kyoto firm.
Nintendo now expects for 2021/22 an annual net profit of 350 billion yen (2.6 billion euros) against 340 billion yen previously, which would remain a severe decline over one year (-27.1%).
And he now expects an operating profit of 520 billion yen (3.9 billion euros), against 500 billion yen previously, still a decline of 18.8% over one year.
Its revenue target remained unchanged at 1.6 trillion yen (12.1 billion euros), which would represent a drop of 9% over one year.