Nintendo Switch Sales Plummet as Switch 2 Looms

Nintendo's hardware sales forecast has been revised downward again, with Switch console and game sales falling "below expectations." For the first nine months of the fiscal year, dedicated game console sales dropped 31.7% year-over-year to 895.5 billion yen (approximately $5.7 billion), reflecting decreased sales of both the Switch and its software. Mobile and IP-related revenue also declined by 33.9% year-over-year to 49.7 billion yen (approximately $320 million), primarily due to unfavorable comparisons with 2023's highly successful The Super Mario Bros. Movie. Consequently, gross profit decreased by 27.3% year-over-year to 565.5 billion yen (approximately $3.6 billion).

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Nintendo has further reduced its financial forecast for the fiscal year ending March 2025, marking the second consecutive downward revision. The company anticipates even lower Switch hardware sales, reducing its projection by 1.5 million units to 11 million, and software sales by 10 million units to 150 million.

While sales declines were anticipated for the eight-year-old Switch, the drop is steeper than Nintendo initially projected. Nevertheless, the Switch has surpassed 150 million units sold, a remarkable achievement. While surpassing the PlayStation 2's 160 million sales to become the best-selling console of all time might be unlikely, the Nintendo DS's 154 million sales are within reach.

Nintendo characterized Switch and software sales in the third quarter (ending December 31, 2024) as "stable considering the platform's eighth year." Overall Switch family sales decreased by 30.6% year-over-year to 9.54 million units, and software sales fell by 24.4% year-over-year to 123.98 million units. However, Nintendo highlighted strong sales of new titles: The Legend of Zelda: Echoes of Wisdom (3.91 million), Super Mario Party Jamboree (6.17 million), Mario Kart 8 Deluxe (5.38 million), and Nintendo Switch Sports (2.63 million) during the quarter. Mario & Luigi: Brothership reached 1.4 million units sold.

Super Mario Party Jamboree stands out as a significant success. In its first 11 weeks (since its October 17, 2024 release), it outperformed previous Mario Party titles on the Switch, namely Super Mario Party and Mario Party Superstars.

Crucially, for Nintendo's upcoming Switch 2 launch, the number of active Switch players is higher than ever, with 129 million annual active users in 2024. This indicates continued engagement despite the console's age.

Nintendo stated that while Switch unit sales declined year-over-year, "even in its eighth year since launch in March 2017, the Nintendo Switch continues to attract consumer interest, and sales in some weeks during the holiday season exceeded same-week sales of the previous year."

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Given Nintendo's financial report, investors will eagerly anticipate the Switch 2's release. Nintendo mentioned upcoming original Switch titles: Xenoblade Chronicles X: Definitive Edition (March 20 release), and Pokémon Legends: Z-A and Metroid Prime 4: Beyond (scheduled for 2025).

The Switch 2 was also mentioned, with Nintendo reiterating its January 16th announcement of a 2025 release and the initial hardware reveal video. A Switch 2 Direct is planned for April 2nd to unveil further details, along with hands-on events in various global cities.