Nintendo's sales can't keep up with last year's lockdown boom

COVID-19 and ‘Animal Crossing’ makes business-as-usual look worse by comparison.

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TIANJIN, CHINA - 2021/07/20: A cartoon figurine of Super Mario Bros. stands in front of a Nintendo Switch store in a shopping market.  By the end of June 2021, Nintendo's total global sales of Switch (including Switch and Switch Lite) have reached 87.43 million units, surpassing PS3 and becoming the seventh best selling host in Nintendo's history. (Photo by Zhang Peng/LightRocket via Getty Images)
Zhang Peng via Getty Images

If there’s one downside to an unexpected and massive spike in success, it’s that when things go back to normal, it can look worse by comparison. This is the “problem” that Nintendo is currently dealing with as it publishes its most recent quarterly report, reflecting the fact that the world has changed once again. In the three months to June 30th, the company posted an operating profit of 119 billion yen, which works out to roughly $1.1 billion. That is, however, a 17.3 percent drop compared to the 144 billion yen ($1.3 billion) posted this time last year, when people were mandated to spend much more time indoors.

The other difference compared to last year is a lack of a brand-name Nintendo title to draw in users like it had in 2020. Animal Crossing: New Horizons was (according to some analysts) the third-biggest selling game of the year, which also drove sales of new Switch consoles to buyers looking to get in on the action. In fact, New Horizons is still a big selling title, with 1.26 million units sold in this quarter, a year after it was originally launched. And Nintendo’s software sales in total were only 10.2 percent smaller than the trade it did across the same period last year.

Rather amusingly, Nintendo broke out a graph in its financial report showing that, if you remove the Animal Crossing spike, its software sales have constantly increased since at least 2018. The fact that investors are still apparently nervous about Nintendo’s future — to the point where Bloomberg is reporting that the company will issue stock buybacks to cover the gap in fallen sales — shows the disconnect between Wall Street and the world the rest of us are living in. But the company hasn’t altered its sales forecast or plans for the rest of the year, such is its confidence about its business.

Nintendo’s financial health is going to look a lot rosier in the back half of 2021 anyway, with a number of big titles out, and soon to be released. The HD remake of Zelda: Skyward Sword isn’t covered in this report, and WarioWare: Get It Together drops in September. October sees the launch of Metroid Dread and Mario Party Superstars, while November sees the launch of Pokémon Brilliant Diamond and Shining Pearl. Plus, you know, there’s the OLED Switch and Zelda Game and Watch coming to boost hardware sales.

Not to mention that next year is likely to feature a third Splatoon game, a sequel to Zelda: Breath of the Wild and a new entry in the Mario+Rabbids series. And what investors are forgetting, it seems, is that if we’re all asked to start traveling to work again, it’s more likely that we’ll be tempted to bring along those Switch consoles some folks panic-bought at the start of last year. Which will require a steady stream of new games to keep their fingers entertained while sat on the bus or subway.

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