Nintendo (NTDOY) forecasts 9.5% drop in FY 2024 sales
Nintendo warned investors of a continued sales slowdown when the company issued its FY 2024 guidance.
The Nintendo Switch train is losing steam heading into its seventh year since launch. Nintendo issued a downbeat FY 2024 forecast with the Big N expecting sales to drop 9.5% from the previous year.
Source: Nintendo Investor Relations
Here's an excerpt from the Nintendo FY 2023 earnings release:
For hardware, by continuing to convey the appeal of Nintendo Switch, we try to not only put one system in every home, but several in every home, or even one for every person. Another objective is to continually release new offerings so more consumers keep playing Nintendo Switch even longer and we can maximize hardware sales. Looking ahead at software, in addition to The Legend of Zelda: Tears of the Kingdom in May, and Pikmin 4 in July, add-on content for Pokémon Scarlet and Pokémon Violet in the form of The Hidden Treasure of Area Zero is on the way. The first part of this add-on content, The Teal Mask, is planned to be released in the fall of 2023, and the second part, The Indigo Disk, is planned for release in the winter of 2023. Other software publishers also plan to release a wide variety of titles, and we will work to invigorate the platform by supplementing existing titles with a continuous stream of new titles and add-on content. The Super Mario Bros. Movie was released in theaters in April as part of our efforts to expand the number of people who have access to Nintendo IP. Through initiatives like this, we will work to continually grow our dedicated video game platform business, which is our core business. Our financial forecast for the next fiscal year is sales of 1,450.0 billion yen, operating profit of 450.0 billion yen, ordinary profit of 480.0 billion yen, and profit attributable to owners of parent of 340.0 billion yen. The unit sales forecasts for key products on which these calculations are based can be found on page 14 in the "4. Others" section, under the heading "(4) Consolidated sales units, number of new titles, and sales units forecast." Assumed exchange rates for the major currencies are 130 yen per U.S. dollar, and 135 yen per euro.
It certainly appears that Nintendo is planning for a leaner year of hardware and software sales. The company forecasts 15 million Switch console units will be sold in FY24 which would still be more than the 13.5 million in lifetime Wii U console unit sales. Nintendo has come a long way in the six years since the Switch launched, and it appears that the company is coasting into the next generation of hardware for the time being.
The Super Mario Bros. Movie revenue was not disclosed in this report because the movie came out in April 2023 which is the company's fiscal Q1 2024. The line item to keep an eye on next quarter will be Mobile, IP related income, etc. That is where the revenue from the Mario movie will show up, but investors will remain in the dark for another quarter. Many analysts, traders, investors, and fans want to know just what kind of partnership has been formed between Nintendo and Illumination and how it will affect the bottom line.
Source: Nintendo Investor Relations
For now, Nintendo's forecast seems pretty light in the back half of this year. Sure, Advance Wars 1+2: Re-Boot Camp, Pikmin 4 and Tears of the Kingdom are great first party titles, but the second half of 2023's notable releases are some Pokemon DLCs and Waves 5 and 6 of the Mario Kart Booster Course Pack. This could all change with some unannounced releases, but the Switch's console cycle could ultimately be bookended by two Zelda titles.
Nintendo's cautious guidance may spook some investors, but the Switch console cycle wasn't going to last forever, and the company is positioned well with new IP-related efforts like Super Nintendo World and the Mario Movie. The Big N is known for sandbagging forecasts, but today's FY 2024 guidance appears to be an honest admission that the Switch's best days are behind it.
This article is only meant for educational purposes, and should not be taken as investment advice. Please consider your own investment time horizon, risk tolerance, and consult with a financial advisor before acting on this information.
Full Disclosure:
At the time of this article, Shacknews primary shareholder Asif A. Khan, his family members, or his company Virtue LLC had the following positions:
Long Nintendo via NTDOY shares
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replyAsif Khan posted a new article, Nintendo (NTDOY) forecasts 9.5% drop in FY 2024 sales
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Note to Nintendo: Sales will increase significantly with a new console. Games are good, 7 year old hardware is bad (despite OLED)
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Late in a console cycle is generally the best time to buy hardware. Console catalogs are mature by then, the difference here ofc is that the Switch has never had a price drop while in the past you could get a huge catalog alongside a cheaper Xbox/Playstation/Nintendo.
There is a good Mario bundle though, non-OLED unfortunately
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I don't see how it won't. They've sold so many Switches and have ported so many games. It would be pretty disastrous for them to have to start over.
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This. 114 million obsolete devices would not make happy customers.
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Fair points. But just like the PS5 is PS4 compatible because of hardware design decisions, the next-gen Nintendo device (in my opinion) raelly must support Switch games just as easily. Especially given the efforts to create Switch remasters. Hell, even the Wii supported GC games natively.
And people still do buy and use their DS devices!!-
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Yarp. I loaded up on some physical games before that happened. As a Zelda fanboy, I own all of the Zelda themed 2DS and 3DS systems (except the one that doesn't fold.. that looks like ass).
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DS games worked on 3DS and Wii games worked on Wii U.
Hell, Gamecube games worked on Wii, GBA games worked on DS, there were adapters for GB/GBA games to work on Gamecube, etc.
Even when making big system changes they've been pretty good about backwards compatibility. Dropping PowerPC and optical storage was a massive break from the past, but I reckon going forward that staying on ARM and solid state storage will maintain compatibility just like how breaking from PPC and going to x86 did the same for Xbox and Playstation.
At worst there may be a new pin layout for future cartridges like there was for 3DS games, but that didn't prevent old DS carts from working on the 3DS. I assume the same will happen with whatever follows up the Switch, an updated pin layout for new carts but the slot still works with Switch games.-
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Breaking compatibility in the past was done by obvious necessity. Reselling old games was a bonus but it never led the cart.
As it stands they went above and beyond to maintain compatibility. In the Wii U's case they had a separate Wii SoC inside the Wii U SoC, same with GBA compatibility on the DS. With a Tegra based system they wouldn't need to do that, it would all just work like things do on iPhones or PS/Xbox after 2013. -
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After which they dumped PPC and optical media.
Is the worry that Nintendo goes from ARM and solid state to x86 and optical discs? I can’t imagine what would break compatibility for any of the console makers now that everyone has settled on mature platforms with indefinitely long futures.
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Yeah I'd just be done with Nintendo.
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I think they've got a handle on things
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I love Nintendo, don't get me wrong. It just burns me that they always want to turn a profit on every piece of hardware they sell (for the longest time possible) and that each device they deliver is underpowered compared to the competition to achieve those financial objectives.
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Nintendo has already made mistakes in the past (I C U Wii U) and survived. While they've continuously reiterate and revamp their handheld devices (GBA, GBA SP, 2DS, 2DS XL, 3DS, 3DS XL), they've never tried to release two tiers of a home console.
We all know new hardware is coming - it's just a matter of time, but I doubt it would kill them to explore having a Pro model and see if there's a market for it.-
That was literally the plan in 2021 but the supply chain crisis killed that.
There are hardware and software references out there, reliable Nvidia leakers that nailed Ampere and Lovelace specs and prices talked about it way back in March 2021, but there was no way Nvidia could supply as many chips as Nintendo needed (they couldn't even make enough of their own GPUs at the time) so they punted.
At this point its very possible that this chip never sees the light of day and they end up using something else, we'll see.-
Its worth noting that Nintendo's total order from Nvidia for 2021 was 30 million units. Nvidia was only able to supply enough for 24 million, and this was just for the normal 16nm Tegra X1 that they'd been making since 2019. Supplying enough Ampere based Tegras for what became the SWOLED wasn't going to happen.
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The start of a new Mario Cinematic Universe. Nintendo could mine their IP for movies the same way Disney has been.
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In Disney’s case they own the content creation stack. Nintendo is partnering with illumination—I have no idea how the economics works out in these scenarios.
Does Nintendo get 50% of profits? Did they pay illumination a flat fee to develop the movie for them? Did illumination pay Nintendo a flat fee to use their IP?
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Every year, "they're DOA without 4k etc"
Every year, "Nintendo sells record amounts" -
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yeah i often ponder about the technical versus the artistic aspects of videogames, and how infrequently they're successfully combined. nintendo famously runs hugely successful platforms on potatoes, fromsoft has basically never put out a game with consistent frametimes and yet has some of the most beautiful and atmospheric games ever made.
are those ideals incompatible at such a level they can't even coexist in the same organization? or is it just that if you do one well enough, you can largely ignore the other? there's some pop-psych left/right brain shit going on there.-
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There's no doubt they have had great art style, it's probably the most important thing. But the first time I really remember is WC3, when you zoomed in you saw just how low poly the models were and not good looking. You can just always tell they have to cut corners somewhere to get the performance they do.
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Can't think of any that weren't appealing artistically and ran well. Diablo II was a little low-res for its time but had great atmosphere and art direction. War 3, WoW, D3, S2, all pretty (not technical powerhouses) and ran well. Overwatch too.
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Probably a minority. A friend told me "nah my Xbox Series S is 4k"
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I'm just a guy making educated guesses based on past actions that made money. Nintendo likes spring releases because they can launch small and then tune production output based on customer reception. This helps them avoid the problem with holiday releases where they are forced to produce a ton of units for the holiday quarter but if the product is a bust (like the Wii U) then they're sitting on excess inventory.
Looking at the PS3 and PS4 Slim releases, both came out in September three years after the originals did. If that continues to hold then September 2023 seems safe, but who knows, it might be during the holiday quarter instead. The timing is right either way, a 2023 die shrink would really cut down on cooling and power requirements.
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Very nice! Thanks for the 411 buddy https://www.youtube.com/watch?v=z-BkrwO_Dck :)
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