Nintendo raised its Switch 2 sales forecast on Tuesday, bolstering confidence that the record-breaking console will sustain its strong start.
The Kyoto-based company now expects to sell 19 million units of the $450 gadget by March next year, up from the original guidance of 15 million units. It also raised its fiscal-year operating income forecast by 16% to ?370 billion ($2.4 billion) and raised its dividend payout ratio to 60%.
The sustained strength of one of this year¡¯s marquee consumer electronics debuts may bode well for holiday shopping demand across the global economy. Nintendo¡¯s July-September quarter beat the consensus of analyst estimates, with an operating profit of ?88.25 billion and revenue of ?527.2 billion. It had sold 10.36 million Switch 2 consoles by the end of the quarter, according to its website.
¡°Selling over 10 million units in just the first half of the fiscal year was a major surprise that far exceeded market expectations,¡± Toyo Securities analyst Hideki Yasuda said. ¡°Since sales in the second half of the year ¡ª which includes the Christmas shopping season ¡ª almost never fall below those of the first half, there is a strong likelihood that Nintendo will revise upward again.¡±
The Switch 2 is Nintendo¡¯s most expensive piece of hardware to date, and the company¡¯s sole long-term platform for a wealth of in-house gaming franchises. It surpassed sky-high expectations for early sales, setting records for the console segment and powering hardware across Nintendo¡¯s two key markets of Japan and the U.S.
Nintendo President Shuntaro Furukawa has said it won¡¯t be easy to keep up that hot momentum, pointing to the hardware¡¯s elevated price and macroeconomic challenges including U.S.-China trade uncertainty and the Donald Trump administration¡¯s elevated tariffs. Nintendo spent ?64.6 billion on advertising in the most recent quarter, an 80% increase to ensure the Switch 2 was ever-present in the minds of fans and potential new customers.
Investors and analysts like Yasuda expect Switch 2 sales to accelerate in the current quarter as the gift-giving season ramps up. Nintendo is increasing console production to meet demand, which has remained higher than supply in its most important markets. The company has asked its assembly partners to make 25 million units of the Switch 2 by March, people familiar with the matter have said.
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