Nintendo on Thursday announced its highest annual profit in history. The virus lock-in led to a surge in sales of its sensational Switch console, but the Japanese gaming giant warned that a pandemic year will be difficult to repeat.
Although a new wave of infections has shattered the hope of recovery in many industries, as people seek indoor entertainment, successive rounds of restrictions have brought good luck to video game companies.
The company said that the out-of-control of Nintendo Switch and the popular family game “Animal Crossing” (Animal Crossing) drove sales soaring, and the game became an instant hit.
In the fiscal year ending in March, net profit increased by 85.7% year-on-year to 480.4 billion yen (US$4.4 billion, or approximately Rs 32,447 crore), exceeding the company’s 400 billion yen forecast.
It broke the previous profit record set in 2008-09, when it generated considerable revenue driven by Wii and DS consoles.
Nintendo said that sales increased by 34.4% to 1.76 trillion yen, and 28.8 million Switch devices were sold, which is the highest number since the launch of game consoles that can be handheld or used with a TV four years ago.
However, the Kyoto-based company predicts that the current 2021-22 fiscal year’s prospects will be more severe, with a net profit of 340 billion yen and sales of 1.6 trillion yen.
Nintendo said in a statement: “Regarding the risks associated with COVID-19… If production and transportation are blocked, the supply of the product may be affected.”
It said: “In addition, the production of products may be affected by parts procurement barriers, including the increase in global demand for semiconductor components.”
The surge in demand for electronic equipment during the pandemic, coupled with the fires in Japanese factories and the drought in Taiwan, has caused the world to face a shortage of chips.
Yasuo Imanaka, chief analyst at Rakuten Securities, told AFP: “The global semiconductor shortage may severely hit the game industry this year, because other important industries such as automobiles are engaged in fierce chip wars.”
Tricky fifth year
According to data from market research company NPD group, Switch is the best-selling game console in the United States in 2020. This year, sales of video games, game consoles and accessories hit a record high.
Nintendo predicts that global Switch sales this fiscal year will be 25.5 million units.
Hideki Yasuda, an analyst at the Ace Research Institute in Tokyo, told AFP: “Nintendo’s sales are strong and it has taken full advantage of locked-in demand.”
He added: “I don’t think the outlook is so pessimistic, because Nintendo won new game users during the pandemic.”
The lower profit target comes from Switch entering a crucial fifth year. In the past, sales of Nintendo’s new game consoles tended to peak in the third year after their release, and then gradually declined.
“Animal Crossing: New Horizons” is the latest title of the “Animal Crossing” series. It was released in March 2020, when the COVID-19 pandemic was leading to strict lockdowns in many countries.
In the game, players can guide their digital characters on an uninhabited island and gradually change the landscape through houses, gardens, and eventually a thriving neighbourhood of cute cartoon animals.
Its leisurely pace has attracted the resonance of game players all over the world, many of whom are eager to truly escape from the heavy exercise restrictions.
Nintendo’s first real theme park in history, the Super Mario theme area at Universal Studios Japan, opened in March after the pandemic was delayed for several months, but was forced to close due to new virus restrictions a month later.
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