Software driving growth at Nintendo as Switch falls just short of sales goal

Nintendo has reported an upturn in profits and sales for the fiscal year ended March 31, 2019, despite the Switch just missing out on its revised full-year sales target of 17 million units.

The Japanese console maker saw net sales rise by 13.7 percent year-on-year to 1.2 trillion yen ($10.75 billion), while profits increased by 39 percent to 194 billion yen ($1.74 billion) over the same period. 

Nintendo largely credits that upswing to strong software sales on the Nintendo Switch. The company had 23 million-selling Switch titles across the entire year, with flagship releases like Super Smash Bros. Ultimate (13.81 million units), Pokemon Let's Go (10.63 million units), and Super Mario Party (6.4 million units) leading the charge.

On the hardware front, annual Switch sales totaled 16.95 million units. That's just short of Nintendo's revised sales target of 17 million units, but a far cry from the company's initial goal of 20 million units. Lifetime Switch sales now stand at 34.74 million units, and recent rumors suggest Nintendo will look to give the console a shot in the arm by launching a more affordable model with a focus on portability later this year.

3DS hardware sales, meanwhile, decreased by 60.2 percent year-on-year to 2.55 million units, although it's worth remembering the handheld is eight years old at this point. 3DS software sales suffered a similar fate, falling by 62.9 percent year-over-year to 13.22 million units. 

Glancing at Nintendo's digital business, the company said sales from download versions of retail software and download-only titles on Switch "showed particularly good growth," and that overall digital sales revenue rose by 95.4 percent year-on-year to 118.8 billion yen ($1.1 billion). 

On mobile, Nintendo's IP related income rose by 17 percent year-over-year to 46.0 billion yen ($411.8 million), and the company seemed particularly pleased with the performance of Dragalia Lost.

Looking forward, Nintendo expects the Switch to provide "a foundation for further business growth," and is banking on software to continue driving the system forward. 

It hopes the impending releases of Nintendo Labo Toy-Con 04: VR Kit, Super Mario Maker 2, and Fire Emblem: Three Houses will give the system an immediate boost, before the likes of Pokemon Sword and Shield, Animal Crossing, and The Legend of Zelda: Link's Awakening step up to the plate. 

With that in mind, Nintendo expects the Switch to sell another 18 million units in the fiscal year ending March 31, 2020, helping it achieve a net sales of 1.25 trillion yen ($11.2 billion) and profits of 180 billion yen ($1.6 billion).