Key Takeaways
1. Nintendo’s FY25 financial results showed declines in both hardware and software sales, despite growth from new game launches.
2. The anticipated Switch 2 is expected to boost sales and profit for FY26, with a target of 15 million units sold.
3. Pricing for the Switch 2 could be adjusted based on potential new tariffs, which might affect demand.
4. Pre-orders for the Switch 2 in Japan have reached 2.2 million, indicating strong initial interest.
5. FY25 saw a significant decline in hardware (31.2%) and software sales (22.2%), influenced by strong sales in the previous year.
This is the time of year when companies share their financial results, and Nintendo, like EA, has revealed its yearly data. The overall performance for FY25 wasn’t very strong for Nintendo, with declines in both hardware and software sales. However, the business from the games launched during the fiscal year showed consistent growth. The anticipated Switch 2 is projected to bring notable increases for the upcoming fiscal year, but the company is keeping a close eye on the tariff situation. While the console’s pricing remains stable for the moment, it could be subject to change later.
Pricing Adjustments Ahead
As stated in a report by Reuters, Nintendo’s President Shuntaro Furukawa mentioned during the earnings call that the pricing for Switch 2 could be modified if new tariffs are introduced. This could potentially decrease demand for the console. For now, the goal is to rapidly enhance the console’s popularity around the world. Nintendo aims to sell 15 million units of the Switch 2, hoping for a 13% increase in operating profit for FY26. The pre-order lottery in Japan has already collected 2.2 million orders, suggesting that 15 million units might be a more cautious target.
Pre-Order Strategy
In the US and Canada, Nintendo chose to delay pre-orders to evaluate the effects of tariffs, but the company maintained the original pricing for the consoles; however, accessory prices have risen. It appears that Nintendo is carefully watching the situation. Although they are eager to get the Switch 2 into the hands of many consumers, the console’s price is still influenced by the potential severity of the tariffs imposed.
Sales Trends
The FY25 report indicates that hardware sales declined by 31.2% compared to the previous year, while software sales fell by 22.2% year-on-year. A contributing factor to this decline was the strong sales from the previous fiscal year, driven by titles like The Legend of Zelda: Tears of the Kingdom, released in May 2023, and Super Mario Bros. Wonder, which came out in October 2023. Considering that the original Switch is now entering its ninth year, these sales figures can be seen as relatively steady.
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