April 25, 2019
By Sam Nussey
OSAKA (Reuters) – Japan’s Nintendo Co Ltd cautioned it will take time for the launch of its Switch console in China and dampened speculation about introducing a low-cost version of the device.
Nintendo’s partner Tencent Holdings won approval last week to sell the hybrid home-portable device in China. But though Nintendo Chief Executive Shuntaro Furukawa praised Tencent and the partnership on Thursday, he said Switch sales in China wouldn’t begin soon.
The news of the partnership and hopes that it will extend to mobile gaming helped lift Nintendo’s stock price to six-month highs last week. Mobile and PC gaming in China, the world’s largest video games market, dwarfs the market for consoles, whose growth has been pegged back by local regulations.
Nintendo’s push into mobile is yet to deliver a major hit, although analysts point to Mario Kart Tour, developed with DeNA and due for release this summer, as a possible contender.
The Kyoto-based gaming company, which has a reputation for making conservative forecasts, said it would sell 18 million Switch console units globally this financial year, up 6.2 percent from last year.
It expects operating profit to rise 4.1 percent to 260 billion yen ($2.3 billion) this year, well below an average analyst estimate of 342 billion yen, according to Refinitiv data.
Media reports that Nintendo is preparing a low-cost version of the Switch have helped push its shares higher in recent weeks.
Furukawa said at a news conference that while the company is always developing new hardware internally it has nothing to announce and had no plans to reveal new hardware at the E3 trade show in June.
Nintendo sold 16.95 million Switch hardware units in the year just ended, slightly undershooting its revised forecast of 17 million units. Nintendo had initially forecast sales of 20 million units before Furukawa took up the role in June.
The Switch games pipeline continues to create fan excitement, with two full Pokemon titles due later this year.
Nintendo expects to sell 125 million copies of Switch games in the current fiscal year, versus 118.55 million in the year ended in March.
The industry is facing a shake-up with established console gaming companies like Nintendo and Sony Corp exposed to competition from new entrants like Alphabet Inc’s Google offering browser-based games streaming services.
Furukawa said he welcomed new technology bringing games to users.
Nintendo’s shares closed up 1.3 percent ahead of the earnings announcement. Its share price has risen 32 percent year-to-date, pushing its market capitalization above 5 trillion yen.
(Reporting by Sam Nussey; Editing by Muralikumar Anantharaman)