 Hey everyone, welcome back to Nintendo Prime. And early this morning here, Nintendo dropped all of their latest financial data for quarter one of their current fiscal year, running from April through June 30th. And my Lord guys, we spent a lot of time lately talking about that next generation system, but we should spend a lot more time talking about the current generation system because Nintendo Switch just had its best first quarter of all time. And yes, it's largely thanks to, well, that Zelda game. But you know what? Don't believe me, let's hop right into it. So this is their financial results explanatory material. We're not gonna go through the raw data. We're gonna go through their explanatory material because it does a better job explaining what we're actually trying to understand. And so you see the first quarter of the fiscal year ending March of 2024. Scrolling on down here says the consolidated financial results and outlook. Here we get our first little bit of data here looking over the consolidated results. And there's a few things to note here. Obviously the net sales, the operating profit, the ordinary profit, the net profit, net profit ratio. What you wanna notice over here is the comparison to quarter one of fiscal year 23. When you look over here, everything, plus 50%, plus 82, plus seven, plus 52, plus 52, and plus 0.5 of a percent. This is just literally a net massive gain across the board for Nintendo year over year. And it points it over here by saying year on your net sales for the first quarter of the fiscal increased by 50% to 40, 461.3 billion yen, et cetera, et cetera, et cetera. But let's just put it this way, Nintendo's dominating. Okay, this is just the raw numbers at the end of the day. Well, let's get into why they're dominating. So first off, we have the consolidated sales data here split up into a pie chart. What I like about this pie chart is there's a portion of sales outside of Japan is 80%. And this really breaks it down for you. If you ever were wondering, where does Nintendo sell the most stuff? Well, Japan makes up 20% of their sales, but the Americas, this is North and South America, make up 44.6%. Europe makes up 22.9%, and the rest of the world makes up 12.5%. That's the biggest thing to get here. You can also see that Nintendo's been making a smidge of profit on playing cards, et cetera. I think this might just be, I don't know, maybe Legos or something, but anyways, they are making a smidge of profit and obviously a massive increase. So there is that dedicated video game platform, mobile IP related income, et cetera, et cetera, et cetera. All right, what's interesting here is in the mobile IP and related business, overall sales rose 190.1% year-in-year, a 31.8 billion yen bolstered by an increase in income from royalties and income from the visual content related to the Super Mario Bros movie. So you're seeing the first impact of the Mario Bros movie right here. Now here we get to our gross profit, again, up 52.3%. So that's really, really good. As we get down in here, we see some information on this. Although the proportion of harbor sales declined and the proportion of first-party software sales increased, our gross profit margin relating the same level year-in-year. This was due in part to the lower proportion of digital sales and Nintendo Switch OLED model, which has a lower profit margin. And the other models of the Switch family system accounting for a greater percentage of harbor sales. So what they're saying is even though all the numbers look positive in many sense, they're, you're still seeing some negatives in here. And that's because digital sales are down and really like percentage-wise and the OLED sales are up, but OLED doesn't make as much profit as there are other platforms. So that's making up that discrepancy. As we go down in here and selling in administrative expenses, this is just how much it costs to run the company. And it's pretty, pretty standard here. You are seeing an increase here in the research and development expenses is something I always like to point out because this is the kind of money Nintendo's investing in future video games and also investing in future hardware. So it's always, you know, when you start to see these increases, and again, we've seen a lot of them recently. It tends to indicate Nintendo has something cooking. We know what they have cooking. We know there's a device coming, but I just wanted to point that out. The rest of those numbers don't matter too much to us, whether we do have a look at their ordinary profit and their net profit. This is obviously the most important part. Their net profit, well, up the profit ratio is only up half a percentage point. So yeah, they're making a lot more money, but the ratio changes because of different factors that only Nintendo could really fully explain. But now we got to go down into some of the more interesting stuff here. So we have our consolidated financial forecast showing their operating profit and their net profit and showing a little bit of a decrease. And again, they talked about this decrease actually just being because of, you know, the Switch OLED and obviously the digital sale difference. But we'll get into this in a moment because I want to point out that despite this, Nintendo's having a first score. So I said they were having an amazing first quarter, one of the best ones ever. That doesn't mean that that's how the numbers are always going to play out because when it comes to pure profitability, there are other ways to make more profit while selling less. Now, the first quarter of the fiscal year, both sales and profits were notably large for a first quarter, mainly due to the concurrent releases of the Super Mario Bros. movie and Zelda, Tears of the Kingdom. Yeah, basically they dominated. Those two things carried Nintendo. So getting to our business highlights and now the fun begins. We have the sale status of Nintendo Switch, which is sell in. Now notably, sell in does not mean sold to consumer. That is what sell through means and we're gonna see that number later, but you're gonna see a big number jumping out right now. 18.51 million units of Tears of the Kingdom have been sold in through June 30th. Again, the difference is for Nintendo's purposes, sell in is a sale. Sell through is what a lot of us view as sales. So sell in is this is what they have sold to retailers and then sell through is what we have actually purchased. Now, why does this matter and why does Nintendo care more about sell in? Because sell in means Nintendo's already made their money on 18.51 million. So that just means there's, as we're gonna find out later, it's actually more like 15 million that have actually sold through. That's because there's a few million sitting on store shelves worldwide at the end of June. Those are probably gone by now, but the point is that sell in is what Nintendo cares the most about and that's 18.51 million, which is just earth shattering. You can also see the same thing here with hardware, 3.91 million, which is ahead of last year. And you can see the massive increase here with the Switch OLED model compared to a year ago at 86%. And that's probably due to the Zelda special edition OLED if I had to really just stick a number on why the hell is the OLED increasing that much? Well, there was a special edition Zelda one. You see those Zelda sales, that's insane. The only other million unit seller during the fiscal quarter was actually Mario Kart 8 Deluxe of 1.67 million units. We're actually gonna give a look at the full top 10 software sales update here in a little bit. So they had two million sellers in that time period. And then you can see the quarterly trends here. Obviously you always see this peak in Q3. Q3 is always the biggest because that is the holiday season. But yeah, this is really, really good. And you can see this increase in overall Switch sales in comparison to quarter one of fiscal year 2023. So it says unit sales for the entire Switch family of systems rolls by 13.9% year on year. The new title Legend of Zelda cheers the kingdom to 18.5 million units of the quarter, which not only significantly increased software unit sales but also drove hardware sales, thanks in part to the theatrical release of the Mario Bros movie and promotions tied to that movie. Sales of Mario Kart 8 Deluxe and other Mario related titles also posted solid sales. Now here we're seeing Nintendo hardware sell through and annual playing users. So there's a couple, like the show couple of bar graphs some big things to note are this number here. This is the annual playing users. So what this means is people who have logged into their Switch at least one time in the last year and played a game is that 116 million, that is damn. All you could really say is damn. 116 million active users is an insane number. If you think about it, there's only 130 million Switches sold. Yeah, that's a lot, that's a lot. Anyways, you guys obviously the global sell through and the increase in the OLED sales here. Obviously holiday period and then, you know, hey, it is what it is. So so far we have been talking about sell in or unit sales by Nintendo Group, its business partners. Now let's turn the discussion to sell through, which is the number of units purchased by consumers and to the number of costs of open software on Nintendo Switch. The graph on the left, which we showed up here, that's this graph right here, shows global hardware sell through from April through June. Global hardware sell through in the first quarter increase compared to the same quarter last fiscal year, helped by sales of the Nintendo Switch OLED model, including the Nintendo Switch OLED model Legend of Zellatures, the Kingdom Edition, which launched at the end of April. On a region by region basis, sale in decline in Europe and the Americas compared to the same period last fiscal year, but sell through increase for all regions, including Europe and the Americas. So basically they shipped more units last year, but they sold through more units this year. Again, this is where you play with the numbers. Technically that means they made more money last year than this year. But yeah, you just, again, numbers are fun, aren't they? And the way you could twist them to be negative or positive. Anyways, the graph on the right shows the trend in the number of annual player playing users for Nintendo Switch. Number of annual playing users from July 2022 to June 2023 was the highest ever, exceeding 116 million. And this is a big key number for Nintendo because that's how many active users they have. That's, you wonder why the software continues to sell. That is insane. Scrolling down, Nintendo's first-party software sell through, this is where they show you the 15.7 million units in eight weeks. And again, Nintendo has made their money in 18.51, but this is how many consumers technically bought it. I'm sure the rest have been sold by now, but it's just good to know. And so now let's move on to a discussion of how to sell through a first-party software. Global sell through a first-party software, this quarter reached the highest level for a first quarter since the launch of Nintendo Switch. The Legend of Zelda series of Kingdom, which released on May 12th, has made a major contribution. We're about to drop a really neat stat here. All right, in which we see widespread adoption in Nintendo Switch hardware and continued playing in game for many consumers. Sell through of this one title, so just tears of the kingdom, constitutes approximately half of the first-party software sold this fiscal year. Consumers who played the previous century Breath of the Wild have been the primary driver, but as the weeks have passed, we have seen that a growing percentage of purchases are being made by consumers who have not yet played that title. That's right, a growing number of people are buying tears of the kingdom, who never played Breath of the Wild, that's insane. And obviously half of all first-party software sold was Zelda, I can believe it. All right, scrolling on down here, we're seeing the digital sales, and this is where you're seeing a decrease that Nintendo mentioned earlier, that the percentage of digital sales is down. Only 47.3% of all software sales were digital. When you compare to fiscal year of what is it? 2023, you can see here 53%. So we see a roughly 6% decline year over year. So for those of you that love physical, that's probably a good sign. Also, Zelda was probably the big driver. I got a feeling a lot of Zelda physical sold compared to digital. So that was probably the big difference here. And it just shows examples of digital copies of games, Mario Kart, et cetera, Fire Emblem Engage, all of that. Let's get to what they say down here. Digital sales during the first quarter increased by 35.9% year on year to 119 billion yen and accounted for 47.3% of total software sales for our dedicated video game platform. Now growth they're talking about overall profit because well, a smaller percentage was sold, a larger amount of total games was sold. See, Bouncing Act, this is what they teach you when you take a statistics class. Very easy to manipulate statistics to say negative or positive things. Anyway, several factors contributed to the increase in digital sales and depreciation of the yen and foreign exchange markets increased the sale amounts when converted to yen. In addition, the downloadable versions of packaged software for Nintendo Switch like the Legend of Zelda 2 and the Kingdom sold well and sales related to Nintendo Switch Online increased. On the other hand, the sales of packaged version of Tears of the Kingdom were also strong, resulting in a lower overall digital sales ratio compared to the same period last fiscal year. So there you go, they're basically saying, hey, we sold more physically of Tears of the Kingdom than we did digitally. That's basically the big contributing factor on why it's down by 6% in terms of the digital to physical sales split. And then they go over to these example of announced products for 2023. Obviously we already have Pikmin 4, but a nice reminder we got, what is this Detective Pikachu 2 or whatever coming out here on October 6th. Then we have Mario Bros. Wonder October 20th, November 3rd. We have the Warrior Wear Move It and we can't forget about November 17th with the Super Mario RPG. We still have the wave six of the DLC to come and then they have part one and part two plan for releasing them, which is the Scarlet and Violet DLC. So the Nintendo products are already announced for release in 2023. We don't need to go back over all of this list because this is just exactly what we talked about. Now when we come down here, we get some information on the Mario movie. So it says the Super Mario Bros. movie box office went to 168.1 million viewers at the box office, which is insane. That put the revenue at $1.349 billion, the highest ever for an original film based on a video game and the second highest for an animated film. Viewed by people of all ages, not only in Japan, North America, Europe and Australia, but also in South America and Asia. And they expanded outside the dedicated video game platform business to create new opportunities to encounter Nintendo, IP, re-invigorating their overall business. So that is just really, really awesome. And this is just kind of recapping everything we just said. So it said the heightened consumer interest in Mario is having a positive effect on a wide range of fields, including growing sales of Mario related titles and sales of smart device apps and merchandise. And by expanding the IP outside of areas, dedicated video game platform, we create new opportunities for consumers to encounter Nintendo, IP. And this does invigorate the overall business. And they're gonna continue to basically do that, moving forward. So they're gonna be having more and more movies, essentially. Now we get to the million seller first party titles here. We already went over this earlier. It's Legend of Zelda and Mario Kart 8 Deluxe for the quarter. There's one big thing I still wanna show you in this particular file. And that is this thing, right? Is this the one? Nope. Nope. It is. Hold on. Here it is. I don't know how well you guys can see this. So this just tells you all the games that are already announced, right? So we went through over most of them. We gotta add like Luigi's Mansion and Metroid Prime 4. Also, we gotta add this title. I know the text is really small for you guys. So I'm just gonna read it here. It says, Princess Peach will star as the main character in a brand new game temporary title. That's right. At the moment, the official title of that Peach game is Princess Peach will star as the main character in a brand new game. I've never seen Nintendo list the game like that. Yeah, we get lots of temporary titles. But that's the temporary title for the Peach game. Princess Peach will star as the main character in a brand new game. I don't know. I find it funny. Maybe it's really not that funny, but it is to me. Now I wanted to get into this and of note, Nintendo Switch itself is at 129 and a half million units. But what I really wanted to get down to is into the top 10 selling software in the sales update. So MyCard 8 Deluxe is now at 55.46 million units. Animal Crossing New Horizons is at 42.79 million units. Super Smash Bros. is now at 31.77 million. The Legend of Zelda Breath of the Wild has now officially crossed 30 million on just the Nintendo Switch at 30.65 million. Mario Odyssey is in there at 26.44 million. Pokemon Sword and Shield is sitting pretty at 25.92 million. Pokemon Scarlet and Pokemon Violet are at 22.6 million. And by the way, very, very close. The next financial update should have this officially as the third best selling Pokemon game of all time. And only really time is gonna tell if it could pass Pokemon Sword and Shield. Super Mario Party is at 19.39 million. There's Tears of the Kingdom chimein' in at 18.51. And then we have New Super Mario Bros. Udeluxe at 16.17. By the way, people are wondering what the other Mario Party game is. It did cross 10 million in total sales. So Mario Party Superstars, obviously that's about half the sales of Super Mario Party, but that does make it the second best selling game in the franchise while Super Mario Party is the best selling Mario Party game of all time. So what have we learned from all this? A whole lot of sales data. Nintendo is doing really, really well. Of course, that's what happens when you drop a big kahuna game like Zelda. Now some people, analysts have gone out there and said that Nintendo needs to change their projections and make them go higher. And Nintendo did have a note in the one file I didn't show you where they said they are not changing their projections. And I think I understand why. They knew Zelda was gonna do numbers. They knew it was gonna do astronomical numbers. They probably had these numbers already projected into their sales data. So I don't know that Nintendo is surprised that they had this amazing first quarter. I think they just know nothing else this fiscal year is coming out. That is as important as this game. I know Mario Wonder could do some good sales but I don't know that that's gonna push units. So I do feel that they just knew this Zelda period was gonna be special and they're not changing their projections on sales because they just know nothing's gonna do with Zelda just that they don't have another game that massive coming out between now and the end of the fiscal year. So they're just keeping their projections where they are because the Switch is performing as expected. But 18.51 million. Can you believe it, man? It is going to, I don't wanna say it. But by the end of this fiscal year, Cheers to the Kingdom has a chance to become the best-selling Zelda game of all time. I just want you to let that sink into your noggin for a moment. All right, guys, that's all I got for you. Thank you so much for being here. If you enjoyed all this crazy data and the numbers and all that, I'd appreciate if you drop a like and subscribe to the channel and I'll catch you in the next video.