Nintendo announced on Tuesday that it had cut the outlook for its Switch console and game sales as well as reducing the profit outlook for this fiscal year.
Nintendo said it expects to sell 18 million Switch units for the fiscal year that will end in March 2023, a drop from the previous forecast of 19 million. For software units, Nintendo expects sales of 205 million, a drop from its previous prediction of 210 million units.
The company also lowered its net profit outlook to 370 billion Japanese yen ($2.8 billion) from the previous estimate of 400 billion Japanese yen.
The reason to lower the expectations of the hardware sales is that the switch did not perform as expected during the holiday season.
The electronics manufacturers were facing a difficult macroeconomic environment, and another problem was that the age of the Switch console was nearly six years old, while its console rival Sony’s PlayStation 5 was just over two years old. The last upgrade for Nintendo was in October 2021 with only a display, so for now, the investors wanted to know when the company would release new hardware to recover sales.
In December, during the holiday quarter, the company sold about 8.23 million switch consoles, dropping around 22% year over year.
As Nintendo struggled, its rival Sony increased its sales target for the PS5 this month by one million units, bringing the total for the year to March 2023 to 19 million.
Still, Nintendo planned to raise wages by 10%, although the stronger yen forced it to lower its full-year profit forecast.
The wage ramped up came amid the Prime Minister Fumio Kishida’s call for Japanese companies to pay for employees more, according to the inflation taking place in an economy that has had years of deflation and stagnant wages, and Japan prepared for negotiation with the labour at the annual spring round.
