Nintendo on Tuesday said it expects sales of its aging Switch console to keep falling, cutting its forecast for sales for the year ending in March and prompting speculation about the release of an updated “special edition” release.
The weak forecast was nevertheless accompanied by an announcement that it plans to raise salaries by 10% for current and incoming employees in Japan this year. Many large companies in Japan have hiked wages in recent months because of a very tight labor market, Bloomberg reported.
The Kyoto, Japan-based gaming company said it now expects sales for its fiscal year to fall 3% to $12.1 billion, while operating income for the year is projected to decline 4% to $3.6 billion. Its forecast calls for sales of about 18 million consoles, down from its prior target of 19 million.
For the fiscal third quarter, the company said it missed its console sales targets despite the popularity of “Pokémon Scarlet” and “Pokémon Violet, which became the fastest-selling Nintendo games in the company’s history after their November release. That success followed the release of “Splatoon 3,” which set a record for fastest domestic sales in Japan.
“The outcome was weak, and that’s a surprise. The year-end holiday season suggested sales of hardware weren’t that strong despite amplified supply, which also weakened sales of software,” Toyo Securities analyst Hideki Yasuda told Bloomberg. “It’s now clear that the Switch’s momentum is downward.”
The company may be able to drum up new sales with special editions of the console, Yasuda said.
“If Nintendo prepares at least two special editions, it can still sell more than 20 million units in the next fiscal year,” Yasuda said. “Without that, sales would be 18 million or fewer, which, to be honest, is still strong for hardware of that age.”
Nintendo President Shuntaro Furukawa did not directly respond to questions about whether Nintendo will release a new device, but said he believed there was still strong demand for the Switch out there.
And Furukawa announced the salary increases despite cutting the sales forecast, saying the burden on employees is increasing and the move will help strengthen the company’s “hiring power.”
Salaries in Japan are rising at their fastest pace since the late 1990s, Bloomberg reported, making more difficult the nation’s efforts to combat the worst inflation it’s seen since 1981. Economists are watching the Bank of Japan for signs it could tighten its monetary policy in response.