Nintendo reported a 52% year-on-year rise in gross profit in its second-quarter earnings — while sales of its latest console, the Switch 2, were falling. Hardware sales were down 34.4% on the year.
Both numbers are real and they are not in conflict. Much of the profit growth came from outside the console business, helped by income related to the Super Mario Galaxy Movie. The hardware decline is largely explained by timing: a great many people bought the machine when it launched last year, so the comparison is against a launch quarter.
Roughly 24 million Switch 2 consoles have been sold since the June 2025 launch, which is a strong start by any measure.
The problem that arrives at Christmas
Nintendo now has to keep giving people a reason to upgrade — which is harder than it sounds, because the original Switch has an enormous library and works perfectly well.
Into that it is sending a remake of The Legend of Zelda: Ocarina of Time, a game first released in 1998. It will land in the same holiday season as Grand Theft Auto VI, which the industry expects to be the biggest game launch there has ever been.
"The stakes are high for Nintendo, and they have to come out of this holiday season very strong," said Joost van Dreunen, a professor at New York University's Stern School of Business who has written a book on the games industry.
Two companies that barely overlap
Saturday Night Live made the point better than any analyst, in a sketch on 3 October. Link, in his green tunic, described a morning in Hyrule buying magic beans and playing his ocarina. Jason from GTA VI, sitting beside him with a bandaged bloody arm, talked about stealing cars and spending a million dollars in a strip club.
Underneath the joke is the actual strategy. Nintendo is the only company willing to put a release directly against GTA VI, and it can do that because it is not competing for the same evening or the same player.
That is the four-decade bet: bring the same characters back in new forms across console generations, and more recently across films, concerts and theme parks. The characters, not the hardware, are the asset that survives each cycle.
Why the console business is uncomfortable right now
Two pressures sit on everyone in the industry. Memory prices have been climbing sharply, which raises the cost of every console built. And competition increasingly comes from games that are free and not on Nintendo hardware at all — Roblox being the obvious example.
Nintendo's answer is exclusives. Since Mario Kart World at launch it has released a steady run of them: Donkey Kong Bonanza, Fire Emblem: Fortune's Weave, Pokémon Pokopia.
Gaming still accounts for most of the company's business, so the films and parks cushion a bad quarter rather than replace a good one. That is what makes this Christmas a real test rather than a comfortable one: a 28-year-old game, remade, against the largest launch the industry has ever planned for.
