With Japan's fiscal year off to a good start, Nintendo has unveiled a balance sheet covering the period from April to December 2024, providing an early look at the full year. And unsurprisingly, the Japanese company is well and truly in a transitional phase. But far from being alarmist, the market sees this slowdown as a parenthesis before the start of a new cycle driven by the next generation of consoles.
Investors look ahead to 2025
In calendar 2024, the Switch, all versions combined, sold 11.5 million units, down 32% on 2023. A similar trend can be seen in game sales, which reached 159.7 million units, down 22%. This slowdown is directly reflected in Nintendo's accounts: its operating profit between April and December 2024 stands at 247.6 billion yen ($1.59 billion), compared with 464 billion over the same period in 2023, a drop of 46.7%.
In view of these figures, Nintendo has revised its annual profit forecasts downwards, adjusting them by 22.2% for the fiscal year ending at the end of March. As far as games are concerned, only 12 titles exceeded one million copies sold in 2024, compared with 17 in 2023. Nevertheless, Nintendo's share price continues to climb, recording a 2.2% increase, flirting with its all-time highs. Better still, the group's valuation has reached 33 times earnings, well above its usual ratio of around 15 over the last five years.
A new cycle to come
Nintendo has no reason to panic: the Switch is nearing the end of its life cycle, but its successor is already ready. In April 2016, the announcement of this hybrid console between living room and portable had marked a turning point, offering an intelligent response to the failures of the Wii U. The gamble paid off: with over 150 million units sold, the Switch is now the third best-selling console of all time. And after eight years of loyal service, it's time to pass the baton to the Switch 2.
The first glimpses of this new generation are all recent, and its next media event is scheduled for April 2, when Nintendo may finally unveil the release date. In the meantime, the end of the fiscal year will be marked by the release of revisited titles from the Wii U catalog. The release of the Switch 2 could well be accompanied by blockbusters like Pokémon Legends ZA (the world's most lucrative IP) and Metroid Prime 4 Beyond, two highly anticipated games scheduled for 2025. Rumors also point to a new Mario Kart opus, not least because the license was featured in the first Switch 2 trailer. It has to be said that Mario Kart 8 Deluxe remains the Switch's biggest success, with 67.35 million copies sold, making it the second best-selling game in Nintendo's history.
Diversification in small steps
Nintendo remains a cyclical stock, its results evolving in step with console generations. But the Japanese firm is seeking to smooth out its revenues by capitalizing on its iconic licenses well beyond video games. Films, theme parks... The group is gradually expanding its ecosystem, with a cautious but effective approach.
The success of the Super Mario Bros. movie has reinforced Nintendo's commitment to this strategy. A second installment is already in the pipeline for 2026, while a feature film based on The Legend of Zelda is in development. On the theme park front, popularity is high, particularly among foreign tourists visiting Japan's Nintendo World. Expansion continues with the opening of a new zone last December, and above all, the inauguration of a second Nintendo World park on May 22, 2025 in Orlando, within the Universal Epic Universe complex. As our editor Odile Dubois explained, this diversification is taking place "slowly but surely", an approach that is appealing to investors.
Competition tougher than ever
While the excitement surrounding the Switch 2 is real, expectations must be tempered. The console's price remains unknown, and was a key argument for the success of the first version in 2017. What's more, the market has evolved, and Nintendo no longer enjoys the same boulevard as it did back then.
In March 2017, the Switch introduced an unprecedented hybrid format, which enabled it to establish itself without any real competition. Sony, cooled by the failure of the PS Vita, had abandoned the idea of a portable console, leaving Nintendo free rein in this segment. As for home consoles, the Switch was positioned in a price range well below that of the PlayStation and Xbox, becoming a complementary machine for many households.
But in 2025, the situation has changed. The Switch's success has inspired other players, starting with Valve. The PC gaming giant launched the Steam Deck, a portable console capable of running PC games, with the entire Steam catalog at its disposal. This breakthrough paved the way for a new market where machines such as the Asus ROG Ally and Lenovo Legion Go now stand side by side. With this fiercer competition, the Switch 2 will have to convince beyond the simple appeal of the Nintendo ecosystem.