said its operating profit nearly doubled in the fiscal first quarter as strong game-software sales more than offset a falloff for its main Switch game console.
During the April-June quarter, Nintendo sold 1.88 million of the handheld-hybrid consoles, down from 1.97 million a year earlier—right after its March 2017 release—when component shortages made it hard to keep up with demand.
Still, the Kyoto-based company reported an operating profit of ¥30.5 billion ($274 million) on ¥168 billion ($1.51 billion) of revenue, up 88% from the year-earlier ¥16.2 billion profit on ¥154 billion of revenue.
The results suggest Nintendo is on track to make the Switch platform sustainable by selling games for it. The company said it sold 17.96 million Switch games during the first quarter, more than twice the 8.14 million of a year earlier, when its popular “The Legend of Zelda: Breath of the Wild” game did well.
The Switch is attracting customers who tend to buy many games, both packaged products and digital downloads, and play them for long periods, said Goldman Sachs analyst
Nintendo’s strategy is to make the Switch a popular place to play online multiplayer fighting games, including “Fortnite” by North Carolina-based Epic Games.
In addition to software sales, Nintendo plans to launch a subscription-based online gaming program, similar to services from
for the PlayStation and
for the Xbox console.
Strong software sales, both physical and digital, are likely to keep pushing Nintendo’s operating profit higher, Mr. Sugiyama said in a recently issued report to clients.
Despite the strength in software, a lack of major game releases during the latest quarter was to blame for subdued Switch sales, analysts said. By contrast, Sony Corp. sold 3.2 million PlayStation 4 consoles during the quarter thanks to the release of hit titles including “God of War.”
Nintendo reiterated its goal of selling 20 million Switch consoles this fiscal year. Analysts are divided over whether that is achievable, but Nintendo is unlikely to change the plan at least until the release of new games planned for later this fiscal year. Major titles include “Pokémon” and “Super Smash Bros.,” and Nintendo said there will be more.
Nintendo’s April-June net profit was ¥30.6 billion, up from ¥21.3 billion a year earlier. Investors pay less attention to the net, as the company’s large foreign-currency holdings cause it to fluctuate.
Write to Takashi Mochizuki at firstname.lastname@example.org