Nintendo Inc. is expecting its net profit to drop by 22.5% ($2.79 billion) by the end of its fiscal year in March because of a weakening demand for the Nintendo Switch console.
According to Nintendo President Shuntaro Fukuwara, this is due to changes in consumer behavior brought about by inflation and the rise of “more entertainment options,” making it harder for the console to be a top choice for consumers.
In Nintendo’s latest forecast, the company is expecting to sell 18 million Switch units for the fiscal year ending in March – a million units less than its previous estimate.
This is a huge contrast to the Switch’s performance at the start of the pandemic, with the company selling 21 million units in a year by the end of March 2021.
The company also reported that its net income for April to December 2022 dropped 5.8% to 346 billion yen from a year earlier. Console sales also continued to fall in the nine months to the end of December by 21.3% to 14.9 million units.
According to the company, this is due to chip shortages that affected console production. However, it also reported that procurement of materials has stabilized late last year, with production returning to normal by October.
Despite its expected drop in sales by the end of March, Nintendo announced raising wages for its employees come April, with base salaries increasing by 10% among other salary increase implementations.
"We expect that various companies will raise wages against the backdrop of high prices," the president explained. "It is essential for us to acquire excellent human resources in order to increase our competitiveness over the long term."