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Nintendo Smash Forecasts With 428% Surge In Profits

Nintendo has annihilated analyst earnings with profits surging over 428% as retailers such as JB Hi Fi and EB Games benefit from demand for gaming consoles.

Driving it was a surge in demand for the Nintendo full strength and Lite versions of the Nintendo Switch hybrid gaming console and the Animal Crossing from New Horizons game, which is only available on the Switch platform.

The primary difference between the two consoles is the full-strength version is able to be hooked up to a television.

Nintendo reported it sold over 3 million Switch units and 2.6 million Switch Lite units, an increase of 167% for the Switch family.

Nintendo said that profits surged 428% in the quarter, hitting 144.7 billion yen, or about $1.37 billion, more than double the 71 billion-yen analysts had expected.

The coronavirus pandemic forced people to stay at home and many, with nothing but time on their hands, took to playing video games.

While most gaming platforms saw gains, there was nothing like the demand for the Switch, which quickly sold out early on in the crisis, leading Nintendo to apologize for the shortages and promise to get more on the market, but not before consumers jumped all over the Switch Lite, which also became scarce.

Demand for both devices was driven by outsized popularity of the Animal Crossing game, which sold 10.6 million copies in the quarter, bringing the total units sold to 22.4 million. It made sales of other titles that would normally be considered big successes, like Mario Kart 8 Deluxe, which sold nearly 2 million units in the quarter, pale in comparison.

Nintendo said of all the Switch units that were played for the first time in the quarter, more than half played Animal Crossing on the first day.

The one drawback is the blowout quarter sets a very high hurdle to get over next year.

Demand for gaming products is seeing investors flood into gaming Companies.

Epic Games Inc., the video game company behind Fortnite said that their business is now valued at $17.3 billion after they completed new round of funding. The deal makes Epic the fifth-most-valuable technology start-up in the U.S.

Bloomberg reported in April that Epic, which also owns a widely used set of game development tools called the Unreal Engine, was seeking investments at a value of more than $15 billion. By June, as the effects of the coronavirus pandemic boosted demand for video games, the valuation had reached about $17 billion.

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