Animal Crossing drives Nintendo Q1 profits up 500% to $1bn

Nintendo is off to an incredible start for the first quarter of its financial year, thanks to the success of Animal Crossing: New Horizons.

For the three months ended June 30, the platform holder reported net sales had more than doubled year-on-year to ¥358.1 billion ($3.4 billion).

Net profit rose to ¥106.4 billion ($1 billion), up by a massive 541.3% when compared to the same period last year.

Unsurprisingly, the biggest driver was Animal Crossing: New Horizons. The game shipped 10.6 million copies worldwide during the quarter, bringing its lifetime shipment to 22.4 million.

The estimated sell-through for Animal Crossing -- i.e. units purchased by consumers -- stands at over 20 million as of the end of June.

This puts the game on course to double the 12 million units sold by 3DS outing Animal Crossing: New Leaf, the previous best-selling entry in the series.

While the ratio differs by region, Nintendo also reports around 50% of all Animal Crossing copies sold in Japan, the US and Europe were digital.

In terms of physical copies, Animal Crossing has been a key system-seller. Of all the Switch consoles sold or played for the first time during this quarter, more than half were used to play Animal Crossing on the first day.

Ring Fit Adventure has also continued to perform well, boosted no doubt by the number of people wanting to exercise at home during lockdown.

The game's lifetime sales stand at more than four million units as of the end of July. It shipped 1.2 million units during the last quarter.

Nintendo says demand for this title has been "so much higher than our forecasts that the global supply has been unable to keep up since release." As such, product shortages caused a drop in sell-through, with March to May impacted most.

The only other new releases, Xenoblade Chronicles Definitive Edition and Clubhouse Games: 51 Worldwide Classics, shipped 1.32 million and 1.03 million respectively.

Mario Kart 8 Deluxe shipped another 1.9 million units, bringing its lifetime total to 26.7 million.

So far this financial year, nine Switch games have shipped more than one million units. Seven are first-party titles, including all the titles mentioned above plus Zelda: Breath of the Wild and Super Smash Bros Ultimate -- both of which shipped just under 1.2 million units.

Digital sales for the three months ended June 30 more than tripled to ¥101 billion ($955.8 million), accounting for 55.6% of all software sales.

66.7% of all digital sales were for titles that are also available as boxed games. Clubhouse Games, for example, saw digital account for 50% of its total sales.

Nintendo said subscriptions to Nintendo Switch Online "have been steady" but did not share specific figures.

Looking at hardware shipments for the Switch itself, the console has shifted 61.4 million units since launching in 2017. Of this, 8.8 million units are Switch Lite.

This means the device is about to surpass the lifetime total of the NES, which reached 61.9 million units.

5.6 million Switch units were shifted during the last quarter, almost triple the 2.1 million units shipped during the same quarter last year.

Nintendo expects to shift a total of 19 million switch units by the end of the financial year in March 2021.

Total software sales into retail stand at 406 million, with over 50 million units sold this quarter -- an increase of 123% year-on-year.

Mobile and IP-related revenue grew by 32.7% year-on-year. Nintendo cited record sales and playtime for Animal Crossing: Pocket Camp, boosted by promotions with New Horizons, while Mario Kart Tour showed steady growth.

Lego Super Mario sales have not been included in these results, as it did not launch until July 10 in Japan and August 1 in other markets.

Despite this strong quarter, Nintendo's forecast for the financial year remains unchanged since it was announced on May 7.

The company expects net sales to reach ¥1.2 trillion ($11.4 billion), down 8.3% compared to last financial year. Net profit is expected to be ¥200 billion ($1.9 billion), down 22.7%.

Part of this is the uncertainty around COVID-19, although the report states that while production and sales may decrease for certain periods of time, "we anticipate that production and sales will be able to meet demand for the full year and that we will be able to release software titles now in development as planned."

The platform holder notes that it has encountered difficulties securing the components required to manufacture Switch consoles but adds "the situation has almost recovered." It is noted that if COVID-19 spikes again, this may affect manufacturing.

Nintendo also acknowledges there are still Switch shortages in some regions, but is working hard to rectify this as soon as possible.