Nintendo sees Switch sales peaking this business year

TOKYO (Reuters) - Japan’s Nintendo Co Ltd on Thursday forecast Switch console sales to reach 25.5 million units in the financial year that started April 1, signalling expectations of the hit device peaking.

Nintendo sold 28.8 million Switch consoles in the year ended March 31. That compared with the 26.5 million that the games maker forecast in February.

The Kyoto-based firm reported operating profit rose 82% to 640.6 billion yen ($5.9 billion) in the year ended March.

With Nintendo a major beneficiary of the COVID-19 pandemic-induced gaming boom, market participants are now focused on whether the Switch can maintain momentum in its fifth year of life amid speculation over new games and a hardware refresh.

Nintendo’s share price has gained 90% since March 2020 as gamers flock to titles such as “Animal Crossing” and “Ring Fit Adventure”. Still, the stock has fallen 10% from highs reached in February as investors take heed of the Switch’s cycular peak.

Each generation of games console typically lasts about seven years before being superseded by the next, with peak sales usually hit around year five.

Support for Switch sales - in contrast to a thin pipeline at the same time a year ago - will come from upcoming titles including “Mario Golf: Super Rush” set for release in June and a remake of “The Legend of Zelda: Skyward Sword” due in July.

Nintendo is highly dependent on its console business, unlike rivals such as Sony Group Corp and Microsoft Corp which have diversified business lines. Its expansion into the booming mobile gaming market has largely stalled.

Sony’s share price fell last week after the group forecast PlayStation 5 sales of over 14.8 million units this business year, but said a chip shortage is likely to prevent it from drastically boosting production.