‘Animal Crossing’ boosts Nintendo profits as demand for games soars

The success of the Nintendo Switch during the coronavirus pandemic propelled the Japanese video company to a banner year.

Nintendo said on Thursday that it made 352 billion yen ($3.3 billion) in operating profit for the fiscal year ended in March — a 41% surge from a year ago, and the highest in nine years. Profit in the three months to March more than tripled compared with the previous quarter.

Sales were driven this spring in large part by the breakout success of “Animal Crossing: New Horizons,” a game set on an island utopia. The company sold more than 13 million units of the game in its first six weeks of release.

“Animal Crossing” and the hardware it runs on, the Nintendo Switch game console, have been in high demand as people worldwide remain stuck indoors because of efforts to contain the spread of the coronavirus. The Switch, which was first released in 2017, has sold out on several websites.

The Kyoto-based company also ran into supply issues with the Switch this spring because of factory shutdowns in China. Those closures triggered component shortages and slowed output at factories in Vietnam, where Nintendo manufacturers the console. That problem prompted the firm to briefly suspend Switch shipments to Japan in April.

Still, Nintendo said hardware sales of the Switch and the portable version, the Switch Lite, surpassed 21 million units during the last fiscal year. That marked a 24% increase year-on-year and was well above forecasts. The games “Pokémon Sword” and “Pokémon Shield,” which released late last year, were also bright spots, selling more than 17 million units.

“It is incredible for hardware going into its fourth year to sell so well,” said Hideki Yasuda, an analyst at Ace Research Institute. “It’s an uncertain world already, and no one wants war and horror games in their living room. Animal Crossing keeps the parents happy too.”

While delays to production and shipping are gradually easing, Nintendo on Thursday warned of continued risks if the Covid-19 crisis is prolonged or gets worse.

Nintendo also cautioned that work-from-home conditions for its employees may prompt delays in the release of new software titles.

The company — well known for its conservative forecasts — said it expected operating profit to decline to 300 billion yen ($2.8 billion) this fiscal year.