Nintendo has reported their first quarter results for fiscal year 2021 (running from April 1, 2020 – June 30, 2020). During that timeframe Nintendo’s net sales came in at 358.1 billion yen, up 108.1% over the prior year’s quarter 1. Operating profit was 144.7 billion yen (+427.7%) and net profit was 106.4 billion yen (+541.3%). Video game sales were up 113.2% year-over-year, mobile was up 32.7%, but playing cards were down 37.3%.
Despite these glowing financial results, Nintendo did not change its forecast for the fiscal year, perhaps playing it conservative in a very uncertain marketplace thanks to Covid-19. Nintendo still plans on selling 19 million Switch systems and 140 million games, which would be a decrease from last fiscal year. However, if the first quarter trend continues, Nintendo should easily beat last year’s numbers and this forecast, but of course many factors remain at play, including financial health of consumers as well as supply chain issues that can crop up if more outbreaks occur. Nintendo will face stiffer competition this holiday season when Sony’s PlayStation 5 and Microsoft’s Xbox Series X are scheduled to hit the market.
For quarter 1 of this fiscal year Nintendo fired on all cylinders with both hardware and software outselling the prior year’s quarter one by a very healthy amount (more than double). 5.68 million Switch systems were sold (+166.6%) and a staggering 50.43 million pieces of software were sold (+123%). A major contributor was the release and continued high demand for Animal Crossing: New Horizons for the Switch, which sold an additional 10.63 million copies, bringing the lifetime sales to 22.4 million! In fact, Nintendo’s internal numbers show that for the first quarter over half the people that purchased a new Switch also picked up Animal Crossing: New Horizons on the same day and played it. Talk about a system seller! 40% of all first party software sold during the quarter was Animal Crossing and about 50% of the total sold were digital. Two more first party games managed to crack the 1 million mark with Xenoblade Chronicles: Definitive Edition selling 1.32 million and Clubhouse Games moving 1.03 million copies.
Digital sales are on the rise for the Switch. This quarter 101 billion yen was made through the eShop versus 30.6 billion a year prior. In fact, 55.6% of all software sold was digital. Downloadable versions of Switch software (the same games sold at retailers) made up 67.7% of overall digital sales and over 50% of Clubhouse Games’ sales come from digital.
As it stands now, the Nintendo Switch has an install base of 61.44 million systems with 406.67 million pieces of software sold. The attach rate of games is higher than that of the 3DS, which has sold more units overall but less software life-to-date with “only” 384.07 million. The NES sold 61.91 million systems over its lifetime and 500.01 million games. The Switch is poised to blast past both of those milestones this fiscal year, and in fact has most likely already done so on the hardware front since this reporting period doesn’t include any of July or August.
As for software, the top spot for Switch games still belongs to Mario Kart 8 Deluxe with 26.74 million sold life-to-date. However, Animal Crossing: New Horizons has been an amazing beast with 22.4 million already sold. It’s quite possible that it will overtake the lead during the next quarter if the sales momentum continues. Other notable evergreen top seller include: Super Smash Bros. Ultimate with 19.99 million sold, Zelda: Breath of the Wild at 18.6 million sold, Pokémon Sword/Shield at 18.22 million, Super Mario Odyssey at 18.06 million, Super Mario Party at 10.94 million, Splatoon 2 at 10.71 million, and New Super Mario Bros. U Deluxe at 7.44 million.
1. Consolidated Operating Results
During the first quarter of this period (April through June 2020), for Nintendo Switch, sales started out strong, with sales of Xenoblade Chronicles Definitive Edition, released in May, reaching 1.32 million units, and Clubhouse Games: 51 Worldwide Classics, released in June, selling 1.03 million units. Titles released in previous fiscal years have also continued to sell well, with Animal Crossing: New Horizons at the top of the list with sales of 10.63 million units (for cumulative sales of 22.40 million units). Sales of this title continue to be strong with no loss of momentum, contributing greatly to the overall growth in software sales. In addition, sales of titles from other software publishers continued to grow steadily, bringing the total number of million-seller titles during this period to nine, including titles from other software publishers. COVID-19 created some difficulties in procuring the parts required for manufacturing Nintendo Switch consoles, but the overall production situation has almost recovered.
As a result of these factors, hardware and software sales both rose on a year-on-year basis, with hardware sales reaching 5.68 million units (166.6% increase on a year-on-year basis), and software sales reaching 50.43 million units (123.0% increase on a year- on-year basis).
Turning to our digital business for dedicated video game platforms, sales increased as a result of the good momentum of downloadable versions of packaged software for Nintendo Switch, and also the popularity of The Isle of Armor, released on June 17 as part of Pokémon Sword Expansion Pass and Pokémon Shield Expansion Pass, the first-ever add-on content for the Pokémon series. Download-only software and Nintendo Switch Online also sold well, with digital sales reaching 101.0 billion yen (229.9% increase on a year-on-year basis).
For the mobile business, many consumers continue to enjoy applications that were released in previous fiscal years, and our mobile, IP related income reached 13.2 billion yen (32.7% increase on a year-on-year basis).
Total sales reached 358.1 billion yen, with overseas sales of 273.0 billion yen accounting for 76.3% of the total. Operating profit came to 144.7 billion yen, ordinary profit was 150.3 billion yen, and net profit attributable to owners of parent totaled 106.4 billion yen for this quarter.
2. Consolidated Financial Forecast
There are no changes to the original financial forecast for this period which was published on May 7, 2020.
For Nintendo Switch, in addition to titles such as Paper Mario: The Origami King (in July) and Pikmin 3 Deluxe (in October), we also plan to distribute The Crown Tundra, the second round of add-on content available with Pokémon Sword Expansion Pass and Pokémon Shield Expansion Pass, this fall. There are also a robust variety of appealing titles from other software publishers scheduled to be released. We will work to keep the platform active with new titles and by reinforcing sales of popular titles that have already been released.
In our mobile business, we will focus on operations that encourage more consumers to continue to enjoy playing the applications that have been previously released.
Nintendo Q1 FY2021 Financial Material
Nintendo Q1 FY2021 Financial Highlights