Nintendo reports big gains from Pokémon games in December results

Buoyed by Pokémon game sales, Nintendo beat its financial expectations for the third fiscal quarter ended December 31, but overall sales are still lower than a year ago.

Analysts expected Nintendo to report a quarterly net profit of 34.2 billion yen ($301 million), up from 29.1 billion yen ($256 million) a year earlier, for the three months ending December 31. The actual results were 64.7 billion yen ($569 million).

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Those numbers show that the strategy of Nintendo president Tatsumi Kimishima is working. He believed that smartphone games would boost sales, not cannibalize Nintendo’s core video game business. And, in fact, the popularity of mobile game Pokémon Go boosted the demand for Pokémon Sun and Moon, which debuted on the core 3DS portable system.

Nintendo was expected to generate 177.5 billion yen ($1.56 billion) in revenue during the three-month period, analysts said, down from the 221.5 billion yen ($1.95 billion) it reported in the same period a year ago. Actual revenues were 174.3 billion yen ($1.53 billion) in the December quarter.

Nintendo reported operating income of 26.3 billion yen ($231 million) for the nine months ended December 31, down from 42.8 billion yen a year earlier. Sales were 311.1 billion yen ($2.7 billion), down dramatically from 425 billion yen a year earlier.

Nintendo also had 16.7 billion yen ($146 million) of profit from its share of profits from The Pokémon Company, of which Nintendo owns a part. Quarterly revenues and net income were higher than expected.

But even with the gains from Pokémon games, Nintendo still couldn’t make up for lost sales caused by the failure of the Wii U game console when you look at revenues from the nine-month period.

Still, a one-time event helped boost overall profitability during the nine months. Overall ordinary income was 49.1 billion yen ($432 million). In addition, due to the sale of part of Nintendo’s share in the company that manages the Seattle Mariners Major League Baseball team, Nintendo recorded a gain on sales of investment securities totaling 63.5 billion yen ($559 million) as extraordinary income, meaning that profit attributable to owners of parent was 102.9 billion yen ($905 million).

During the nine months ended December 31, Nintendo said that the popularity of Pokémon Go, the hit mobile game launched in July, generated huge excitement for the 3DS games Pokémon Sun and Pokémon Moon. Those titles sold 14.69 million units.

In addition, Super Mario Maker for Nintendo 3DS surpassed the million-seller mark. The worldwide sales volume for Nintendo 3DS hardware in the nine months was 6.45 million units (10 percent increase on a year-on-year basis) while Nintendo 3DS software sales were 46.78 million copies (20 percent increase on a year-on-year basis).

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On the other hand, for the Wii U console, Nintendo planned to ship 800,000 million units this fiscal year, based on forecasts of comprehensive demand for Nintendo hardware. And so far, Nintendo has sold 760,000 units, down 75 percent from a year earlier. Software sales of Wii U games was 12.48 million copies during the nine months, down 45 percent.

Nintendo plans to replace the Wii U with the Switch, a hybrid home console and portable device that goes on sale worldwide on March 3.

On smartphones, Nintendo released Super Mario Run, a new action game featuring Mario, in 150 countries and regions on December 15. The title elicited a fantastic response, surpassing 40 million downloads in four days after the release.

The Nintendo Entertainment System: NES Classic Edition also launched in Japan and overseas in November to widespread popularity.

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Although the release of some new titles offering Amiibo functionality restored some momentum, Amiibo toy sales were 6.5 million units for figure-type and 6.6 million units for card-type. In addition, there were relatively fewer offerings of downloadable content during this period, so digital sales were also down to a large extent in the same period last year.

Nintendo plans on releasing more titles for the 3DS, including Mario Sports Superstars, and on smartphones, it will release Fire Emblem Heroes on February 2. An Android version of Super Mario Run will debut in March. And Nintendo has now delayed the release of Animal Crossing until the next fiscal year, which starts after March 31.