Nintendo made a net profit of $ 1 billion in the first quarter, it said Thursday, with gamers stuck at home during the coronavirus pandemic that fueled extraordinary demand for the industry.
The global health crisis has had devastating economic consequences in a wide range of industries, but the gaming sector has been a rare beneficiary of the blockades that kept people inside the world.
Nintendo said it raised 106.5 billion yen during the three months to June, an increase of more than six times from the 16.6 billion yen the previous year.
Sales more than doubled to 358 billion yen, as demand for its popular Switch console showed no signs of disappearing, even as the device entered the crucial fourth year since its launch.
“Sales for the entire Nintendo Switch family increased 166.6 percent on-year to 5.68 million units,” the firm said, referring to both the original Switch and the stripped-down Switch Lite.
Earlier, Bloomberg News reported that the company is raising its target for Switch production to around 25 million units this fiscal year from the 22 million set in April, to meet strong demand.
The results far exceed analyst expectations and are backed by the runaway success of the Switch and Nintendo’s hit game “Animal Crossing”.
The leisurely game has struck a chord with players around the world, many of them enjoying a virtual release from the restrictions on movement and social activity imposed to contain the coronavirus.
Nintendo is one of the “big” major companies seeing significant business opportunities due to the coronavirus outbreak, analysts said.
Shares of the Kyoto-based company have risen more than 35 percent since early March and closed 0.18 percent on Thursday before its earnings announcement.
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“Demand for video games has remained strong among people who stay home after the pandemic,” Hideki Yasuda, an analyst at the Ace Research Institute in Tokyo, told AFP before the results.
“The closure boom is expected to continue for now,” he added.
Despite the highly successful figures, the company declined to update its full-year forecast, leaving intact its projection of $ 200 billion in net earnings for the fiscal year through March, 23 percent less than the previous year.
Yasuda said the popularity of the latest “Animal Crossing” title should continue to generate profits for the current fiscal year.
But he cautioned that despite this, “It is still too early to judge Nintendo’s performance as its earnings largely depend on the results of the year-end Christmas season.”
The explosive growth in Switch sales seems to counter a trend that has caused many consoles to lose popularity about three years after their launch.
Since hitting stores in March 2017, the device has become a huge global seller, aided by innovative and familiar titles that have captivated critics and gamers alike.
Nintendo did not completely escape the effects of the pandemic and acknowledged that the virus “has created some difficulties in acquiring the necessary parts for the manufacture of Nintendo Switch consoles.”
He said the situation had “almost recovered”, but warned that a future surge in the virus could affect manufacturing.
Rival Sony said Tuesday that its net profit rose 53.3 percent in the first quarter, in part due to strong demand for game downloads.
But the PlayStation giant warned that annual earnings will likely see double-digit falls as the pandemic continues to cloud the forecast.