Nintendo cut its net profit forecast after sales for its Switch console fell in the first three quarters
Nintendo cut its net profit forecast after sales for its Switch console fell in the first three quarters AFP

Japanese video game giant Nintendo on Tuesday cut its annual net profit forecast after hardware and software sales for its Switch console fell in the first three quarters.

The Switch, which is both a handheld and TV-compatible device, hit shelves in 2017 and became a must-have gadget among all age groups during pandemic lockdowns.

Nintendo announced in January that it will release the console's hotly anticipated successor -- the Switch 2 -- in 2025, but stopped short of revealing details such as pricing.

On Tuesday, Nintendo revised its full-year net profit forecast to 270 billion yen ($1.7 billion) from 300 billion yen.

"Nintendo Switch hardware and software sales through the third quarter were below expectations," the company said in its explanation of the profit warning.

"The sales trend" in the April-December period and "prospects for the remainder of the fiscal year, as well as a reevaluation of the assumed exchange rate" were also behind the decision.

Over the nine months, net profit dropped 42 percent to 237 billion yen and sales tumbled 31 percent to 956 billion yen.

The company also lowered its Switch hardware sales forecast to 11 million units from 12.5 million units.

"Sales of both hardware and software declined compared to the same period of last fiscal year, when sales were substantially driven by 'The Legend of Zelda: Tears of the Kingdom'... and 'Super Mario Bros. Wonder'," Nintendo said.

"Going forward, we will continue to release new offerings so even more consumers keep playing Nintendo Switch," it added.

Nintendo has promised to reveal more details about the Switch 2 in early April after it released a brief but slick video preview in January.

In the two-minute video, the new console looks bigger but is broadly similar in design to the original hybrid Switch.

Serkan Toto from Tokyo consultancy Kantan Games told AFP ahead of the earnings release that "Nintendo was way too optimistic about Switch 1 sales when they released their hardware sales forecast for the current fiscal year."

Toto said that while "the initial reaction by gamers was mixed" to the "drip feed" Switch 2 announcement, the popularity of the new console would be key.

"Switch 2 absolutely must be a success, as Nintendo has developed into a single-platform company, he said.

"For decades, Nintendo actually ran two distinct businesses, namely TV versus handheld gaming," but now "Nintendo has no Plan B in case a console fails".