Zelda and Super Mario Bros Movie push Nintendo to blowout results

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Nintendo has broken its record for first-quarter profits as The Super Mario Bros Movie dominated the global box office and the company’s latest Legend of Zelda game sold 18.5mn copies since its launch in May.

Operating profit in the April to June quarter hit ¥185.4bn — a jump of 82 per cent from the same period a year earlier and a testament to the demand for new games from the now huge base of Switch console owners.

Sales of The Legend of Zelda: Tears of the Kingdom — ranked by critics as among the best games of all time — also helped shift 3.9mn units of the Switch during the April to June period. 

That pace, said analysts, was highly unusual given that the Switch was now seven years old and that rumours were already swirling around when the company will launch a successor.

The Switch, which has undergone several upgrades and redesigns during its lifetime, has sold a total of nearly 130mn units worldwide, based chiefly on a relentless flow of hit games that have included Mario Kart, Super Mario Galaxy and the previous iteration of Zelda.

The first quarter also marked the culmination of a four-year project by Nintendo to better leverage the might of its intellectual property. Mario, Luigi, Link and other Nintendo characters are described by analysts as the most valuable entertainment IP properties in the world that are not owned by Disney. 

Despite that value, though, Kyoto-based Nintendo has historically avoided extensive use of its IP outside the games themselves. That strategy began to change in 2018 when Shuntaro Furukawa became chief executive. As well as lending its IP to Mario-based theme parks in Japan and beyond, The Super Mario Bros Movie was released in April, and has since taken more than $1.3bn worldwide at the box office. 

Nintendo said on Thursday that sales related to IP had tripled from a year earlier to ¥31.8bn in the first quarter, driven by the success of the film. 

While the film’s success was an important milestone, said Jefferies analyst Atul Goyal, investors should not be distracted by it. 

“The story here is that console gaming for Nintendo is still the main thing,” said Goyal. “The movies and theme parks are great, but peripheral. What we saw with the sales of Zelda is something else — from an investor’s point of view, you shouldn’t take your eye off the core gaming side.”