(Feb 6): Nintendo Co raised its forecast for Switch console sales and profit for the year after reporting better-than-expected earnings for the holiday quarter.

The Kyoto-based company now expects to sell 15.5 million Switch units in the fiscal year ending March, up from 15 million, and it also raised its revenue, operating profit and net income guidance.

The December quarter’s operating profit of ¥184.5 billion (US$1.2 billion or RM5.92 billion) edged out the average of analyst estimates, though it fell shy of the company’s performance in the same period a year earlier.

Sales were down a smaller-than-expected 6%, Nintendo said on Tuesday.

Customised editions of the Switch featuring Super Mario and Animal Crossing themes helped lift sales in the Japanese market above expectations, according to the company.

Nintendo shares hit an all-time high this year, after the Japanese company’s successful expansion into cinema with The Super Mario Bros Movie and the award-winning debut of The Legend of Zelda: Tears of the Kingdom sustained sales in 2023.

Expectations for a next-generation Switch also play into the lofty valuation, as investors look past the next few quarters for a major boost to come in the holiday period.

The existing Switch will be Nintendo’s “main business” heading into 2024, president Shuntaro Furukawa said on a conference call after the earnings report.

The company’s plan for the next fiscal year will be shared at its next earnings briefing, he added.

Those hopes firmed up with an Omdia forecast in January pointing to a new eight-inch Switch device coming in 2024.

Now seven years old, the original hybrid-handheld console has outlived most rivals, thanks to a succession of hit releases from Nintendo’s creative studios.

Last year, however, it fell behind Sony Group Corp’s surging PlayStation 5, which became the bestselling console in the US, according to Circana.

Microsoft Corp’s Xbox division also gained a big hit in January with Palworld, a game drawing inspiration from Nintendo’s Pokémon franchise, which has attracted millions of players to the Xbox Game Pass subscription service.

Nintendo remained tight-lipped about any Switch successor plan, with Furukawa declining to comment beyond saying that the company is always researching new hardware and software.

Nintendo would benefit from a hardware upgrade in contending with Sony’s expanding PS5 user base and Microsoft’s cloud-gaming push.

The absence of marquee titles on its software release schedule this year is seen as another sign that the company is potentially holding releases back until it has the new platform in place.

“Nintendo is keeping their blockbusters in the oven for now, as they must make sure to have a killer line-up for when the Switch successor launches,” industry analyst Serkan Toto said ahead of the earnings report.