Everyone that’s seen my latest earnings calendar knows the deal!

Nintendo is up next for this usual series of earnings recap and reaction articles for major gaming companies, this time focused on its annual results for the fiscal period ending March 2022.

While Switch hardware momentum slowed a bit, software is as strong as ever. In fact, stronger than ever.

As part of its report Tuesday, the Kyoto-based video game developer and publisher shared a variety of statistics around its yearly results. Software shipments from a units standpoint rose 2% last year. The firm even reported its highest level of first party software sell-through to consumers for a single platform.

And it’s had a lot of platforms since it entered the games business way back in the 1980s!

Its most recent in the Switch has been a commercial darling since launching in March 2022, spurring growth after the dark days of its failed Wii U console. While it didn’t see as much hardware success as fiscal 2021, it still achieved management’s latest shipment estimate plus had the second highest annual sell-through since it hit market outside of that first year.

Nintendo’s results, which saw dollar sales slow in the single digits and operating profit remain virtually the same, fits the industry theme of reverting to more normalized spending habits. Even if down from highs of last year, this was still its second best annual financial performance in more than a decade.

“Regarding Nintendo Switch, we will continue to convey the appeal of all three hardware models to maintain a high level of sales momentum and expand the install base,” the company wrote in its report. “Other software publishers also plan to release a wide variety of titles, and we will work to strengthen sales through the combination of existing popular titles and a continuous stream of new titles.”

Before moving into the full report, I want to highlight a recent article on Nintendo from friend of the site Kat Bailey at IGN. Entitled “Inside the Growing Discontent Behind Nintendo’s Fun Facade,” this investigative piece digs into the company’s culture and workplace conditions, notably its treatment of contract workers. It’s a rare peek behind the curtain, as relevant as ever considering how well the company is doing. Once you get done here, I highly recommend reading Kat’s fantastic coverage.

It’s time to dig into the nitty gritty.

On the financial side, Nintendo shared that net sales declined 3% to $15 billion. Operating profit lowered ever-so-slightly to almost $5.3 billion. Both of these were the second best amount respectively since fiscal 2010, came in above forecast and fit with the general theme of mean reversion.

These two metrics are displayed over time in the charts above, showing a slight contraction for both from highs a year back.

Splitting out by region, Americas was the leading contributor at 43%. That’s down slightly from 42% last year. Europe’s allocation remained consistent at 25% while Japan moved down from 23% to 21%. The remainder of countries outside these regions made up 10% of 2022’s total.

Nintendo shared insights into product category mix as well. Software sales contributed 52% of dedicated video game platform sales, while hardware made up the remaining 48%. That’s flip-flopped versus last year, when software was 47% and hardware comprised 53%. This shows the balance of Nintendo’s business exposure, plus a lean towards games in a time where console shipments lagged on the supply side.

Similar to my article on Microsoft’s latest financial report, here’s a rundown of how Nintendo stacks up to industry peers when it comes to the latest annual results. Tencent reports later this month, though most recently had an industry best $27 billion from gaming. Microsoft’s Xbox division posted $16.5 billion. Factoring the pending Activision Blizzard deal, it could be upwards of $23 billion to $24 billion depending on cost savings, etc. Unfortunately, both of these companies don’t break out profit from games. On the other hand, Sony also reported results today featuring $24.4 billion in revenue then $3 billion in operating profit. Thus, while Nintendo’s overall sales aren’t as much as these others, it’s currently more profitable than the PlayStation brand.

Digging into the aforementioned softening hardware sales, the Switch sold 4.11 million units during January to March which amounted to an annual total of 23.06 million. While that’s down 20% from the 28.83 million of fiscal 2021, it’s still the second best 12 months on record and exactly in-line with the company’s most recent guidance of 23 million. It’s worth noting this was revised downward twice from an original call of 25.5 million, signaling extended supply challenges.

Lifetime Switch console sales now stand at 107.65 million. An annual dip was expected given both the life cycle timing and global semiconductor shortage, it was just a question of how much. Tending to lean conservative, Nintendo’s initial guidance for the year ending March 2023 is an even lower amount of 21 million. That’s effectively returning to the amount of fiscal 2020, its third full year on sale.

Now that there’s three Switch models, Nintendo shares performance for all of them individually. The standard model is still the most popular of course, contributing 13.56 million to the year’s total. That’s down 33%, mainly due to the introduction of the OLED version which shipped 5.8 million boxes since hitting retail in October 2021. Finally, Switch Lite declined 57% to 3.7 million units in fiscal 2022.

Shifting into the Switch software category, Nintendo sold 235 million Switch games in the year ending March 2022. This is 2% higher than the almost 231 million of a year ago. First party games made up almost 80% of the platform’s annual software sales. Which essentially means 4 out of every 5 titles sold on Switch is published by Nintendo.

This sort of increased performance, happening as hardware sales slip, mainly proves how new and existing console owners keep buying games at a higher rate than even last year’s peaks. Which makes sense for a company known for its quality of output.

This annual growth led to lifetime software sales on the platform hitting 822.18 million. It was at 587.12 million back in March 2021.

Nintendo Switch ended fiscal 2022 with 39 “million-selling” titles during the fiscal year alone. This was at just 29 last quarter! For the year, 26 were published by Nintendo while 13 came from third-parties. Last year, Switch experienced 36 million-sellers: 22 from Nintendo, then 14 from external partners. A clear sign of catalog strength and what I call the “Switch Effect” on new titles in franchises normally considered as niche.

A couple headline releases during the latest quarter helped drive this consistency on the exclusive software side.

January’s Pokémon: Legends Arceus was the highest profile of the bunch, moving 12.64 million copies so far. That’s the third best start for a Pokémon game on Switch behind only 2019’s Pokémon Sword & Shield at 16 million and the nearly 14 million of Pokémon Brilliant Diamond & Shining Pearl last November. Truly an excellent beginning for Legends Arceus, which sold-through 11.4 million of those shipments, considering it’s a single release in a franchise that historically puts out two titles at a time.

Kirby and the Forgotten Land released towards the end of this period, rounding out the company’s first party slate for the fiscal year ending in March. It hit 2.65 million units shipped in those handful of days alone. Not only that, the cute 3D platformer sold-through over 2.1 million copies to buyers. This is undoubtedly the fastest-selling mainline Kirby in history; it will almost certainly pass the franchise’s best-seller of 1992’s Kirby’s Dream Land at 5.13 million last count.

Expanding to earlier catalog launches, Mario Kart 8 Deluxe naturally maintains the top spot on the all-time Switch best-sellers list. Bolstered by new downloadable content, the game originally out in 2013 shipped nearly 2 million in January to March alone! That pushes it above 45 million copies lifetime, 45.33 million to be exact, as one of only a few games ever to hit this milestone.

Animal Crossing: New Horizons moved an additional million copies in the quarter, no biggie, to continue as the second best-selling Switch title with 38.64 million to date. Super Smash Bros. Ultimate stays in third, selling 770K units to fight past 28.17 million in aggregate.

Since launching at that nearly 14 million copies mark in November 2021, Pokémon Brilliant Diamond & Shining Pearl extended to 14.65 million as of March. That makes it the 8th best-selling Switch game and 2nd best-selling Pokémon title on the hybrid platform. Exercise experience Ring Fit Adventure raced past the 14 million milestone to date, legging out an additional half million units and rounding out the Top 10 Switch best-sellers.

Speaking of milestones, Metroid Dread is already the top-selling Metroid game of all time. While it only shipped 160K units during January to March, combining that with the massive start last October puts it at 2.9 million copies or just above the 2.84 million of 2002’s Metroid Prime. Talk about having a ball!

Elsewhere, Mario Party Superstars shipped 1.45 million in the quarter, ending it at 6.88 million. The Legend of Zelda: Skyward Sword HD pushed another milly, now at 4.22 million lifetime. Both of these contributed to that ever-expanding million-seller list for this past fiscal period.

Wrapping up various miscellaneous indicators and tidbits of information, Nintendo indicated digital dollar sales rose 4.5% to $320 million. Downloads accounted for 43% of software sales for the year, same as during 2021. Its digital contribution is lagging the wider industry standard, which has been around 50% or more depending on the publisher or manufacturer, however that’s always been the case for Nintendo. It’s much more reliant on traditional retail sales than others.

In a bit of bad news for analysts, Nintendo still doesn’t report many player engagement statistics. The company has made up this statistics dubbed “Annual Playing Users” which really just means the number of accounts that logged into a Switch during a given year. Last year, this figure reached 87 million. It recently achieved management’s goal of passing 100 million by March 2022, ending at 102 million.

You’ll notice this isn’t the most descriptive of metrics. It’s very much a parallel to the number of Switch hardware units out there. It doesn’t reveal too much. I’d much prefer to know more about monthly active users or revenue per user. Wishful thinking in this context.

Another area with a distinct lack of information was Nintendo Switch Online, the company’s somewhat rudimentary online offering. There’s no update on subscribers, a figure that hit 32 million back in September 2021. All management said was sales of add-on content for Animal Crossing: New Horizon and Mario Kart 8 Deluxe “grew” this past year.

With Nintendo, I’ll take what I can get.

As Nintendo closes the books on another year, it’s clear there’s currently limited downside on financial performance because it keeps fans purchasing software even when hardware is taking a hit from international semiconductor shortages, limited part availability and higher cost to produce consumer technology. This is the sixth fiscal year for Switch after all, as it will end the 2023 period just after celebrating its 7th birthday.

Looking ahead, the company’s forecast is conservative. I think rightfully so, even with a slate of anticipated titles in successful franchises.

In fact, the forward looking guidance is quite familiar. It’s literally the same exact numbers as last year. Nintendo expects revenue to decline 6% to $14.2 billion, while operating profit should dip 16% to $4.45 billion. As displayed by my earlier charts, these will still be healthy numbers in the perspective of the last decade or more.

“If COVID-19 interferes with production or transportation in the future, this might impact the supply of products. Other unpredictable risks to the development and marketing of products and services also continue to exist,” the company’s press release read. “In addition, the production of products might be affected by obstacles to the procurement of parts, such as the increase in global demand for semiconductor components. The consolidated earnings forecast is based on the premise that we will be able to secure the parts needed for the manufacture of products in line with our sales plans.”

Starting with that hardware guidance for the 12 months ending March 2023 of 21 million, I believe it’s a reasonable expectation. It would be down 2 million from the 23 million achieved this year. Right now, based on chipmaker leaders globally and experts saying shortages may last until even 2024, I’m targeting 20 million to 21 million Switch shipments in my models.

The elephant in the room is: What about new hardware? Will there be an update? Could the company produce yet another revision?

Well, Nintendo’s upper management has made a slight yet important tonal shift on that topic. As recently as last quarter, President Shuntaro Furukawa hinted how there’s no successor in sight because the current Switch is mid-way in its life cycle. Today, during a question and answer session after the earnings press release, he declined to even comment on Nintendo’s next hardware.

Personally, as has been the case for a while, I’m not a believer in a Switch Pro or even any upgrade until the successor which I expect to be a “Switch Part 2” with the same fundamental features and various improvements. I believe Nintendo’s strategy will lean on new releases, catalog software and online packs for at least the next two years. Supply conditions alone mean console generations will be longer than ever, so my current forecast is January to March 2024 for the company’s next hardware.

I’m much more upbeat on the software slate and monetary contribution from this business segment going forward, as Switch owners keep proving they want to buy games. Especially given Nintendo’s track record of mostly quality titles, then partnering with others to enhance its platform especially via independent games. From a unit standpoint during the year ending March 2023, it expects software sales to decline 11% to 210 million. I believe it will be higher.

So, what are the flagship upcoming games that will drive this resilience?

First, those with dates. Nintendo Switch Sports kicked off a couple weeks back. Mario Strikers Battle League and Fire Emblem Warriors Three Hopes are scheduled for June, while Xenoblade Chronicles 3 moved up to July. Splatoon 3 is the latest with an actual date attached, launching in September. These all seem locked in, I’d be surprised if they shift.

Pokémon Scarlet & Violet don’t have a date, but rather “Late 2022” as the window. I’ll assume November, and GameFreak will certainly hit that given the franchise’s usual cadence. Bayonetta 3 is much more in flux with a nebulous 2022 window. I’d be surprised if that doesn’t slip to calendar 2023.

In what’s currently the biggest pending Switch game, and the most annoying to write, The Sequel to The Legend of Zelda: Breath of the Wild was recently delayed to Spring 2023. Could that make this fiscal year? I’m betting March 2023.

Then there’s the curious case of Advanced Wars 1+2: Re-Boot Camp, which was supposed to be out by now yet pushed back in light of the ongoing Russian invasion of Ukraine. That and Metroid Prime 4 are listed as “TBA” in Nintendo’s reporting. I expect the former might launch sooner than latter, while the latter won’t be for a while more and thus won’t contribute to the upcoming fiscal period.

There’s also how Shigeru Miyamoto told everyone on Twitter how the Mario movie was also delayed out of holiday season. Was the plan to have a counterpart mainline Mario release to coincide with the film’s marketing? If so, will that also be moved?

I’m wagering there’s definitely a surprise or two that no one knows about, except those working on them. I am betting on that new Mario title, likely 2D, plus a rejuvenated franchise that no one is expecting.

Well, that’s the rundown on Nintendo’s most recent fiscal year. It’s a lot to cover during an eventful time for the company. What stood out the most? Were you surprised by the results or any of its forecasts? What might management be hiding from us as part of its fiscal 2023 lineup? Is this the year it reveals the Switch’s successor?

I’m always available here and social media for discussion. Be well, and stay safe all!

Note: Comparisons are year-over-year unless otherwise mentioned. Exchange rate is based on reported conversion: US $1 to ¥112.34.

Sources: Company Investor Relations Websites, IGN, The NPD Group, Nikkei Asia (Image Credit).

-Dom

While it didn’t announce any blockbuster deals or major investments like certain industry peers, Nintendo did just have a heck of a holiday.

That’s based on its fiscal third quarter announcement shared today out of Japan, where it passed a major milestone for its Switch hybrid console plus achieved its best Q3 results in over a decade.

A couple quick reminders. Nintendo’s filing is for the nine months between April and December 2021. Though I’ll dig into quarterly and trailing annual figures later in this piece. Then there’s the difference between sell-in versus sell-thru metrics. The former is shipment to retailers, while the latter is how many consumers ended up buying. Most of the talk here is shipments, unless specifically noted.

With those ground rules established, the big headline is how Nintendo Switch has officially passed 100 million units sold-in lifetime, now totaling 103.54 million. Fewer than five years after launch, this figure already exceeds the lifetime sales of both Nintendo Wii at 101.63 million and the 102.49 million of the original Sony PlayStation. Which is above all but the most bullish of analyst predictions, including mine. As upbeat as I was on Switch in 2017, I didn’t think it could attain Wii status.

Well, it has. Which means Switch is now Nintendo’s best-selling home console of all time. (Even if it’s also a handheld. Is that cheating?)

Considering this environment, moving 10.67 million Switch in the holiday quarter is an accomplishment and reflects demand for the latest OLED iteration. Still, Nintendo did revise its annual hardware forecast downward a bit. The company now expects 23 million in the year ending March 2022, off from 24 million last quarter which was already lower than original guidance of 25.5 million. Certainly reflects where production is at from an input availability and pricing angle. This guidance implies just over 4 million will ship in this current quarter.

On the first party software side, Nintendo had three major software releases with early success especially in a historical context.

Starting in early October, Metroid Dread has.. rocketed to 2.74 million units in just under three months. This is an incredible mark within the franchise, traditionally more a critical darling than commercial mover. For context, that’s almost equivalent to lifetime sales of the best-selling Metroid game in 2002’s Metroid Prime, at last count hit 2.84 million. It’s already above the original, which debuted on Nintendo Entertainment System in 1986 and accumulated 2.73 million lifetime.

Infamous party game and relationship killer Mario Party Superstars released in late October, reaching 5.34 million copies in its debut quarter. That’s slightly above Super Mario Party, which started at 5.3 million back in 2018. Prior to that, 2012’s mainline Mario Party 9 on Nintendo Wii hit 2.24 million in a couple quarters.

The biggest seller of Nintendo’s holiday period was, predictably, Pokémon Brilliant Diamond & Shining Pearl. The latest remake in the popular monster catching series amassed shipments of 13.97 million since November, immediately becoming the 9th best-selling title on Switch to date. Its launch quarter fell between two other Pokémon titles on Switch: Sword & Shield at 16.06 million in 2019 and the 10 million of 2018’s Let’s Go Pikachu & Eevee.

For a quick financial overview, Nintendo reported single-digit sales and operating income declines since the highs of last year’s same nine-month time frame. Net sales in the last three quarters dipped 6% to $11.89 billion, while operating profit lowered 9% to $4.26 billion. For perspective, that first number is actually the third best Q3 reported in company history from a sales standpoint.

Alongside this, the company upped annual net sales guidance 3% and operating profit by almost 8% for the year ending March 2022. That positivity reflects this stellar holiday quarter plus a more optimistic software forecast, both of which I’ll recap soon.

“Switch is just in the middle of its lifecycle and the momentum going into this year is good,” said Nintendo President Shuntaro Furukawa on the firm’s conference call. “The Switch is ready to break a pattern of our past consoles that saw momentum weakening in their sixth year on the market and grow further.”

I’ve got a lot to cover. Get cozy and read on!

Based on Nintendo’s reporting of the year so far, we can back into quarterly figures. During the three months ending December 2021, revenue reached $6.27 billion or 10% higher than prior year. Quarterly operating profit grew 10% as well, to $2.27 billion. One of the charts above shows these tracked over time. This was the best quarterly sales since $6.3 billion in 2009. Operating profit hasn’t been this high since the $2.66 billion back in 2008. We’re talking exceptional figures during the holiday period, all the more impressive given input scarcity on the hardware side.

The other two charts above show trailing 12-months i.e. the year ending in December going back in time. As of this latest update, Nintendo’s annual revenue closed in on $15.1 billion. That’s down less than a percent. Taking expenses into account, operating profit for the last year declined 3% to $5.33 billion. This is really more indicative of strength earlier during 2020 when Animal Crossing: New Horizons was everywhere rather than recent weakness.

In terms of regional split, Nintendo’s figures showed 43% from The Americas which was up from 41%. Europe accounted for almost 27% and Japan contributed 21%, versus last year when these were 26% and 22% respectively.

On the product category front, Hardware contributed more than half of sales at 53% of the total. Retail software was up next at 29%, while digital software comprised 9% of the pie. Subscriptions and Add-on Content then Mobile and IP Licensing filled in the remainder, at 7% and 2% respectively. Really this shows the continued importance of retail, both hardware and software, for Nintendo in particular as digital remains a much lower portion of its business than certain peers.

Speaking of, now that all of the “big three” have reported this season, it’s time for a final comparison. This time around, we’re also throwing in Tencent in recognition of its massive significance as the world’s largest gaming firm by revenue. As a reminder, Nintendo’s latest annual sales totaled $15 billion. This is very close to Microsoft at $16.28 billion, which was a record for Xbox. (Note this increases drastically when accounting for a $8.8 billion contribution from the pending Activision Blizzard acquisition.) Sony’s PlayStation division generated $26.66 billion and Tencent’s latest number, albeit back from September, was the highest at $27.3 billion. And it will be higher soon. Essentially, Nintendo’s annual sales are still the lowest of these however it’s actually much more profitable than PlayStation at least. Unfortunately, Microsoft doesn’t disclose profit from gaming.

Focusing on Nintendo’s major hardware segment, shipments were down 21% in the nine months ending December to 18.95 million. Within that, 11.79 million were base Switch while 3.17 million were Switch Lite. The new Switch OLED Model racked up 3.99 million sales in its debut quarter. Compare that to base model in 2017 of 2.74 million and Switch Lite’s 2 million in 2019. Technically both the original and Lite launched later in the quarter, so it’s not a perfect alignment. What this does indicate is the impact of newer iterations on ongoing sales, and buyers doubling up with multiple Switches per household.

As shown in one of the gallery slides above, Nintendo also shared statistics around sell-thru to consumers with Nintendo Switch moving past 100 million to date. Which means most of its shipments are going to buyers. This fiscal year is shaping up to be its second best ever, down only from the highs of last year during more restrictive quarantines.

“The outlook for semiconductors and other components has remained uncertain since the start of this fiscal year and distribution delays remain unresolved, so production and logistics continue to be impacted.” said Furukawa. “But even though product shortages in North America have continued, particularly since Black Friday, total global sell-through for April through December reached its second-highest level ever.”

This consistency of hardware purchasing is reflected in Nintendo Switch being the best-selling console of 2021 in the United States, United Kingdom and Japan according to local industry tracking firms. That’s during a battle with the initial year of a new console lineup for its competitors in Xbox and PlayStation, which are certainly feeling the sting of supply plus have higher price points on average.

Flipping over to Switch software, which made up that 38% of Nintendo’s dollar sales, the company said units shipped in the nine months ending December grew 2% since last year to 179.29 million. 85.41 million of that happened in the holiday quarter alone. Lifetime, software for Switch is at 766.41 million. Comments from the earnings call imply around half of software sales right now are catalog titles from prior periods.

From a shipment standpoint, there’s currently 29 “million-selling” software titles on Switch during this current fiscal year. That’s the number of titles shipping more than a million copies in this time frame. 22 of those are Nintendo first party, while 7 are from third party publishers. This time last year had the same number overall at 29, with 20 of them from Nintendo and the rest by external teams.

At the top end, Mario Kart 8 Deluxe is still the best-selling Switch title ever by a wide margin and driving those catalog stats. It actually just had its best holiday, shipping 4.61 million units towards a staggering lifetime figure of 43.35 million. This is a game that originally launched on Wii U almost eight years ago! With this sort of momentum, and still being bundled with Switch, unfortunately I don’t see a new Mario Kart until the next full-blown Nintendo console.

Animal Crossing: New Horizons maintains second place for Switch best-sellers at 37.62 million. That’s literally more than every prior Animal Crossing game has done combined. Nintendo said this includes 10 million units in Japan alone, beating out the 6.81 million units of the classic Super Mario Bros. to take the crown as the country’s top-selling video game to date.

Rounding out the Top 3 is The Legend of Zelda: Breath of the Wild selling 4.37 million this past holiday to pass 28.5 million. Another mover and shaker included Ring Fit Adventure stepping firmly into the Top 10 on Switch at 13.53 million units, flexing its muscle by shipping 1.32 million in the quarter.

Luigi’s Mansion 3 has now surpassed the 11 million threshold, settling at 11.04 million. Both September’s WarioWare: Get it Together! and Big Brain Academy: Brain vs Brain, a remake released in December, passed the million mark at 1.24 million and 1.28 million respectively. Finally, June’s Game Builder Garage snuck onto the million sellers list at 1.01 million to date.

As for copies getting to consumers, Nintendo said October to December 2021 was the single best quarter for first party global sell-thru since 2017’s Switch launch. Putting it plainly, both new titles like Pokémon and evergreen experiences like Mario Kart and Animal Crossing tag-teamed Switch’s best software holiday in its five years on market. Sounds like a happy holiday for the publisher and its employees, indeed.

Before I go, I’ll clean up some additional flavor text and chat about the near-term future in the context of Nintendo’s latest filing.

Within software, Nintendo said digital sales were effectively flat year-over-year at roughly $230 million during the first nine months of this fiscal year. Digital accounted for just over 40% of software sales for its dedicated platforms. For the holiday quarter, digital actually rose 31% to $100 million. This was attributed to an increase in downloadable versions of its titles, naturally!

One area Nintendo doesn’t share a lot is engagement statistics, skewing more towards the traditional unit sales metric. That said, it’s intriguing to see the figure of 98 million “annual playing users” for Switch in the calendar year 2021. That’s up from 80 million in 2020. Executives said the goal is to expand past 100 million users in the upcoming fiscal year.

This represents the number of users who play Switch software at least once during the calendar year, using data from Nintendo accounts. It’s certainly trending alongside the hardware trajectory, though it does show that the people buying them are at least turning them on. I’d like to know how many hours they are playing, and even further what the average revenue is per user. (Wishful thinking.)

There was minimal mention of its Nintendo Switch Online service, which at last count had 32 million paying subscribers. While it didn’t reveal a new user base figure, executives did say the following alluding to some sort of digital record:

“Sales grew steadily for Nintendo Switch Online, which launched a new paid membership service last October, add-on content like Animal Crossing: New Horizons Happy Home Paradise and download-only titles, with digital sales for the same period reaching a record quarterly high.”

Peeking ahead into this January to March 2022 quarter, the final period of Nintendo’s fiscal year, the company is upbeat on its dollar sales, profitability and software momentum as it increased guidance for all of these.

The most aggressive forecast raise was a 10% upward revision for Switch software unit sales. In stark contrast to its lower hardware forecast, Nintendo thinks Switch unit sales will end at 220 million for the year, up from 200 million.

Part of that is Pokémon Legends Arceus, which launched in late January to solid critical acclaim. And, even more importantly for the bottom line, early commercial success. Even if that’s based on somewhat vague language from executives on the conference call. I mean, it’s a brand new Pokémon game with a fresh take on the formula. It’s going to do extremely well. The only wildcard is how it’s a single title as opposed to the dual release model used often by the franchise.

Rounding out the fiscal year for first party will be Kirby and the Forgotten Land in late March. While it won’t be the commercial juggernaut of Nintendo’s more popular brands, I could see it following Animal Crossing: New Horizons as a breakout seller in its respective series. Just not nearly to the magnitude of New Horizons, of course.

Nintendo’s only area of bearish guidance was Switch hardware, down that 4% to 23 million units. My prior estimate was 25 million, which I’m formally reducing to 23.5 million after monitoring the impact of both part availability and input cost. I really do see the firm beating on all counts here, especially operating profit above $5 billion which I believe would be its second best annual figure outside of last year’s high.

When asked about industry consolidation and potential acquisitions, Nintendo gave the answer one would expect given that it’s not nearly as aggressive as competitors. “Our brand was built upon products crafted with dedication by our employees,” said Furukawa. “And having a large number of people who don’t possess Nintendo DNA in our group would not be a plus.”

Intriguingly, management’s reply to a query around the Metaverse left open the possibility for Nintendo to be more forward-thinking than usual. According to a report collated by VGC, executives have interest and see potential however wonder what kind of “joy” Nintendo can provide.

Well, I’d say Nintendo’s solid holiday quarter results are indicative of where it’s at within the broader industry in how there’s uncertainty around hardware that’s being offset by growth in software and legacy titles. Generating its best fiscal Q3 in a number of years while facing headwinds from supply proves the resilience of its formula combining memorable experiences and high-quality IP.

What Nintendo lacks in online capability and ongoing service it makes up for with games that never go out of style and appeal to a huge audience of all ages. Throw in content here and there for Animal Crossing. Toss Mario Kart in every bundle. Launch collections of Mario Party and WarioWare mini-games. Remix the same Pokémon that people have always loved. Sprinkle in the fastest-selling Metroid of all time.

This, along with innovative hardware that supports multiple ways to play especially on the go and prompts people to purchase more than one version, is a recipe for Nintendo’s incredible success during the Switch generation. Which, apparently, is far from over.

What stood out for you in Nintendo’s latest report? Anything I might have missed? Any questions on the numbers? Give me a shout here or social media.

Until next time, thanks very much for reading and be safe all!

Note: Comparisons are year-over-year unless otherwise mentioned. Exchange rate is based on reported conversion: US $1 to ¥111.06.

Sources: Company Investor Relations Website, Famitsu, GSD, The NPD Group, Video Game Chronicle.

-Dom