Nintendo's 1H earnings: The Switch Effect

[Deeke]

I'm combing through Nintendo's Q2'17 financials and have found some really interesting tidbits. I thought the community would be interested in seeing The Switch Effect(tm) in action, and how it's affecting Nintendo as a whole.

By no means is this a complete analysis. It's just a bunch of little tidbits thrown together, and a list of things that popped out to me as I'm checking the results:

• Nintendo Switch install base increased to 7.6 million units worldwide

• On the heels of boosted production contracts and monthly shipments, Switch sales forecast lifted from 10m units to 14m, a 40% volume increase

• 64% of Nintendo Switch's total 7.6m unit install base (or 4.89m) was sold during 1H'17 (April 1 - Sept 30, 2017)

• In 1H'17 Nintendo earned 22.8 billion yen ($205.29 million) from digital download sales, up 55% year-over-year, making its best-ever six-month period for digital download sales

• Q2 saw the biggest jump for this period

• Nintendo Switch platform (hardware, software, accessories, downloads, etc) made up ~67% of Nintendo's total sales revenue in 1H'17

• Switch platform sales revenue: 245.774 billion yen (~$2.212 billion)
• Total sales revenue: 374.041 billion yen (~$3,367 billion)

As a result of strong overall sales in 1H'17 and currency conversion, Nintendo has significantly adjusted its forecast for the fiscal year ending March 2018 (see below)

EDIT: Picture fixing!​

 

[Skittzo]

It should be noted that Nintendo's overall profit (in that profit per share column of the second image) might wind up being down YOY but that would solely be due to the sale of the Mariners last year, which is reflected in the "Profit attributable to owners of parent" column I believe. Combined with a much bigger advertising budget.

I really think it's high time Nintendo started to release digital-only sales numbers, since that first chart seems to indicate their digital sales in general are going to be way, way higher on the Switch than on their previous platforms. And the fact that the majority of Switch games in general are digital-only, so the software number they just gave us which excluded those titles is probably leaving out a massively significant amount of software.

 

[Elfteiroh]

Interesting (yet not that surprising).
I like that Operating profit was 5,000 higher than Ordinary before, but after the correction, Ordinary is now the one 5,000 higher. I wonder why? :O

 

[404LinkNotFound]

It should be noted that Nintendo's overall profit (in that profit per share column of the second image) might wind up being down YOY but that would solely be due to the sale of the Mariners last year, which is reflected in the "Profit attributable to owners of parent" column I believe. Combined with a much bigger advertising budget.

I really think it's high time Nintendo started to release digital-only sales numbers, since that first chart seems to indicate their digital sales in general are going to be way, way higher on the Switch than on their previous platforms. And the fact that the majority of Switch games in general are digital-only, so the software number they just gave us which excluded those titles is probably leaving out a massively significant amount of software.

Click to shrink...

Isnt the First year of a console always usually where they only "break even" due to hardware manufacturing costs and advertising anyways? . i could be wrong but i beleive it was the same with the PS4 in the first year

 

[Skittzo]

Isnt the First year of a console always usually where they only "break even" due to hardware manufacturing costs and advertising anyways? . i could be wrong but i beleive it was the same with the PS4 in the first year

Click to shrink...

Nintendo typically doesn't take a loss on hardware though, so it should still be making a hefty profit from their Switch sales. Advertising and increased production might have taken a chunk of that though. But I think the Mariners sale will actually represent a fairly big chunk of that difference from last year.

 

[Puroresu_kid]

Digital sales revenue very interesting. Really shows that Nintendo are now utilizing there's storefront and publishers will see that they can really push content to switch gamers who are embracing digital purchasing.

Would like to see the individual breakdown for Switch accessories and especially pro controller sales.

Again I think the hardcore were wrong when they said the pro controller was too expensive and would put people off.

 

[404LinkNotFound]

Nintendo typically doesn't take a loss on hardware though, so it should still be making a hefty profit from their Switch sales. Advertising and increased production might have taken a chunk of that though. But I think the Mariners sale will actually represent a fairly big chunk of that difference from last year.

Click to shrink...

That is true ,i mean they did do a Super Bowl AD .They are truly pulling all the Stops to make sure this thing sells