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Media & Entertainment

Nintendo lifts profit outlook again on strong year-end sales

Pandemic-fueled demand remains high for Switch and Animal Crossing

Nintendo's expectations for record earnings for the fiscal year ending March are supported by the popular Switch gaming console and titles such as Animal Crossing. (Photo by Ken Kobayashi)

TOKYO -- Nintendo raised its earnings forecast for the year ending March for the second time in three months and now expects a record net profit of 400 billion yen ($3.8 billion), the company said on Monday.

Supported by strong sales of its popular Switch gaming console and hit software titles like Animal Crossing: New Horizons, Nintendo now estimates its full-year net profit will rise 55% compared with a year ago.

The game maker previously raised its annual forecast in November. At that time it said it expected its net profit to surpass the record set in 2009, jumping 16% on the year to 300 billion yen.

The latest upward revision reflects strong demand for the Switch console since the coronavirus outbreak, as lockdowns and a rising number of infections keep people at home and drive demand for games and other types of home entertainment such as online streaming. The year-end holiday shopping season also helped boost sales.

Nintendo's record net profit target is expected to be underpinned by a 22% surge in revenue to 1.6 trillion yen. The company forecasts operating profit will rise 59% to 560 billion yen.

The gaming giant also posted its highest-ever net profit for the April to December period on Monday.

The company's net profit rose 92% to 376 billion yen compared with the same period a year earlier, topping the previous record of 258 billion yen for the nine months through December 2007. Its revenue jumped 37% to 1.4 trillion yen, while its operating profit also surged 98% to a record 521 billion yen.

Nintendo sold more than 16 million Switch consoles during the nine-month period. Combined with its handheld Switch Lite, the company sold over 24 million machines, a 36% increase versus the same period a year earlier.

The year-end holiday season in particular gave the game maker a lift. In the three months through December, Nintendo sold over 11 million hardware units, up 68% on the previous quarter and a 7% jump compared with the same period a year earlier.

That helped Nintendo log an operating profit of 229 billion yen for the quarter ended December alone, a rise of nearly 60% compared with the first and second quarters, respectively.

The gaming giant now expects to sell 26.5 million Switch consoles for the year through March. Previously the company had a target of 24 million units, but raised its outlook to reflect the strong demand.

Some 66 million Switch machines have been sold worldwide since its release in March 2017 -- 79 million when combined with Switch Lite. That is more than the company's iconic Family Computer, also known as the Nintendo Entertainment System. The Switch is now the company's second-best-selling gaming console after the Wii, 101 million of which have been sold.

Nintendo's software is also popular with gamers. Animal Crossing sold over 19 million copies globally in the nine months through December. Total sales have reached 31 million copies since the title's release last March.

To date, the company has nearly 30 games that have sold more than 1 million copies this fiscal year. One more recent release, Super Mario 3D All-Stars, which came out last September, has sold 8 million copies.

Total software sales at the company topped 176 million copies in the April to December period, jumping 43% on the year.

"Demand for home entertainment is growing as a result of more people staying at home," said Shuntaro Furukawa, president of the Kyoto-based company, in an online earnings call on Monday. Furukawa said that holiday season sales remained robust, and that Nintendo will continue working to create innovate games to support future sales of the Switch console.

He added that the company has sufficient supplies to maintain production of game machines despite a global chip crunch that has affected the auto sector and other industries.

On a down note, Nintendo has had difficulties opening its new theme park attraction, Super Nintendo World, at Universal Studios Japan, due to the country's state of emergency. The Mario-themed area was slated to open Feb. 4, but the date was pushed back as infections continue to rise across Japan.

The Osaka theme park plans to wait until the COVID-19 emergency ends, but has yet to say when the area will open.

The gaming giant wants to expand its licensing of popular characters like Mario beyond video games to enhance its brand value and strengthen its intellectual property strategy. Along with Super Nintendo World, the company is working on an animated film featuring Mario, as well as opening shops that offer exclusive Nintendo merchandise.

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