Nintendo(OTC: NTDOY) stock lost ground in Wednesday's trading. The Japanese gaming giant's share price closed out the daily session down 3.6%.
The Financial Times published an article today stating that Nintendo and Sony were heading into the crucial holiday sales season without any new offerings that were likely to move the needle in a positive direction. Nintendo's Switch console is now roughly six years old, and the company's holiday game lineup looks relatively weak compared to recent years.
Nintendo looks poised for an underwhelming holiday season
While tastes in gaming and other entertainment mediums are highly subjective, FT is likely right that Nintendo's holiday season looks relatively weak from a commercial perspective. While the company recently released Mario & Luigi: Brothership, the game is part of a less popular spinoff series within the broader franchise. It's unlikely to see sales performance in line with top Mario releases and spinoffs, and it's Nintendo's only major first-party release in the holiday window.
Without flagship software to drive console sales, the Switch will likely see a substantial unit sales decline compared to last year. The system has been an enormous success for Nintendo, but it's now entering the tail end of its product lifecycle.
Is Nintendo in trouble?
With the financial update that Nintendo published in November, the company revealed that it had sold 4.72 million Switch consoles across the first half of its current fiscal year. The performance represented a 31% year-over-year decrease, and the Japanese gaming leader also cut its full-year sales forecast from 1.35 trillion yen to 1.28 trillion yen.
On the other hand, the decline isn't particularly surprising. The video game business tends to be highly cyclical, with performance driven by new hardware and software releases. Nintendo is in the process of readying new console hardware to succeed the Switch, and the shift in resources means that the current-generation console is receiving fewer major games from the company.
It remains to be seen whether Nintendo's next system can match the impressive success of the Switch, but the company has the strongest collection of franchises and characters in the industry -- and it should see financial performance improve when it launches its next console.
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Keith Noonan has no position in any of the stocks mentioned. The Motley Fool recommends Nintendo. The Motley Fool has a disclosure policy.
