Nintendo Profit Outlook Doubles Thanks To Booming Switch Sales

Nintendo is riding high on the success of its newest game console releases, the biggest of those being its hybrid Switch system that is suitable for both gaming on the go, and when sitting in front of a big screen TV. The company's gamble on a dual-purpose console is paying off handsomely, prompting Nintendo to adjust its full-year forecast to reflect a much bigger anticipated profit.

The hardware maker nearly doubled its profit forecast for its fiscal year ending March 2018. After going over the numbers to date, Nintendo now expects to report a profit of 120 billion yen (around $1.06 billion), up from its previous forecast of 65 billion yen (~$572.8 million), which it estimated just three months ago. Nintendo also bumped up its revenue forecast from 750 billion yen (~$6.6 billion) to 960 billion yen (~$8.5 billion).

Nintendo Switch Controller

That is quite the turnaround for a company that was flailing in the wind only a year ago. For the three-month period ended June 30, 2016, Nintendo posted an operating loss of 5.13 billion yen (~$45.2 million) after net sales declined 31.3 percent year-over-year. At the time, the Wii U was Nintendo's flagship game console, which saw a 53 percent drop in sales during the quarter compared to a year prior.

Launching the Switch has made all of the difference in the world. Nintendo admitted it underestimated the level of demand for the Switch, which was in short supply for many months following its retail release in March. While there have been conspiracy theories of an artificial shortage, Nintendo expects to tally 14 million Switch console sales during the previous quarter, up from 10 million. To put that number into perspective, Wii U sales still have not topped 14 million units.

Mario Kart 8 Deluxe

"We've boosted Switch production to meet strong demand as it was difficult for customers to buy the console at retail stores," Nintendo President Tatsumi Kimishima stated during an earnings call. He also said that the upcoming holiday season would test the true power of the Switch.

Nintendo also boosted its software sales forecast, which it now believes will total 50 million units, up from its previous forecast of 35 million. The company has strong lineup of current and upcoming titles for the Switch, including games such as The Legend of Zelda: Breath of the Wild, Super Mario Odyssey, Mario Kart 8 Deluxe, and Splatoon 2.