Nintendo, Sony half-year profits soar, leading Japan's recovery

The gaming industry has been one of the clear beneficiaries of the Covid-19 pandemic. PHOTO: AFP

TOKYO - Nintendo's net profit more than tripled for the first half of this fiscal year, the gaming giant said in its earning report on Thursday (Nov 5).

Sony's net profit over the same period has doubled, while a Japanese anime film is shattering domestic box office records.

Toyota, which reports earnings on Friday (Nov 6), also has reasons to be bullish: Its monthly global production for September hit a new high.

The gaming industry has been one of the clear beneficiaries of the Covid-19 pandemic, given citywide shutdowns and stay-at-home orders (or, in Japan, advisories).

The industry will likely remain resilient even as Japan opens for business by removing virtually all Covid-19 curbs, triggering a surge in demand for consumption.

The Japanese economy is expected to grow an annualised 18.4 per cent in the July to September quarter, the Jiji News Agency reported, citing think-tank estimates ahead of the release of gross domestic product data on Nov 16.

This comes after the economy shrank 28.1 per cent in the April to June quarter, in what was the worst post-war contraction.

The government is also bullish, upgrading its monthly consumption outlook last month and noting stronger demand for electronics and higher travel spending.

Japan is now staking its economic recovery on the hardest-hit sectors like aviation and tourism, by promoting domestic travel and consumption via the Go To Travel and Go To Eat campaigns.

But will this be a flash in the pan?

The daily Covid-19 case tally exceeded the 1,000 threshold on Thursday for the first time since Aug 21, with at least 1,045 new cases.

This was led by Tokyo, with 269 new infections. The city's moving seven-day average now stands at 175 cases a day.

Kanagawa, part of the Greater Tokyo region, reported 109 new cases, crossing the 100-case mark for the first time in 50 days.

And more startlingly, Hokkaido recorded 119 infections on Thursday. This was the first time Japan's northernmost prefecture - which saw its first snowfall of the season this week - has ever tallied more than 100 cases in a single day.

The Japanese government recognises the risks that widespread travel might pose, and has proposed measures like extending the New Year holiday by a full week until Jan 11 so that people can stagger the timing of their return to their home towns.

Sony's net profit has doubled. PHOTO: AFP

But it is also not ready to give up the economic windfall that subsidy campaigns like Go To will bring. The campaign, which has been lambasted as being effectively a receptacle for the spread of Covid-19, has been defended if only as a necessary evil.

Prime Minister Yoshihide Suga has, time and again, noted that while millions have leveraged the campaign since its launch in July, only dozens have been infected.

The government is now mulling over an extension of the subsidies - which slash travel costs by up to 50 per cent - until the end of the Golden Week holiday in May.

And as winter illuminations begin to light up across Japan, there is little evidence that an uptick in cases will do anything to dampen the appetite of a population with relatively high disposable income.

Moviegoers are sitting shoulder to shoulder in cinemas nationwide, the industry buoyed by the release of monster hit Demon Slayer: Infinity Train (Kimetsu no Yaiba: Mugen Ressha in Japanese) on Oct 16.

The tale, of an adolescent boy who fights human-eating demons set about 100 years ago, shattered domestic box-office records by raking in 10.7 billion yen (S$139.5 million) in just 10 days.

This easily bested the previous record-holder Spirited Away, the Hayao Miyazaki anime that took 25 days to cross the 10 billion yen benchmark.

Demon Slayer: Infinity Train shattered domestic box office records by raking in 10.7 billion yen (S$139.5 million) in just 10 days. PHOTO: REUTERS

This is a clear financial headwind for Sony, whose anime and music unit Aniplex produced the film.

Ms Naoki Matsuoka, of Sony's finance and investor relations, told an earnings call last month: "We expect anime streaming revenue and the success of the movie to contribute to our business this year."

Merchandising is a multibillion-dollar business in Japan, and other companies are also set to cash in.

These include convenience store Lawson, which has released a wide array of anime-related goods, and Kyushu Railway, which is now operating a steam locomotive similar to the one shown in the film.

Sony will also likely benefit from the release of its new PlayStation 5 game console next Thursday (Nov 12), in time for the holiday season. It expects to sell more than 7.6 million units by the end of the fiscal year in March 2021.

Its competitor, Nintendo, known for the Super Mario series and, more recently, the smash hit Animal Crossing: New Horizons, also reported stellar earnings on Thursday. Its half-year net profit soared 243.6 per cent to 213 billion yen, while the firm will boost output of its Switch game console by 20 per cent.

The recovery of Japan's economy will likely hinge on these resilient sectors - and a hope that public responsibility and social etiquette will be enough to put a lid on the spread of Covid-19 without aggressive government intervention.

Stellar earnings


- First-half net profit surged 243.6 per cent to 213 billion yen (S$2.77 billion).

- Expects to sell 24 million of its Switch games consoles in the financial year ending March 2021, up from the forecasted 19 million.


- First-half net profit soared 103.8 per cent to 692.9 billion yen, led by gaming sales.

- Expects to sell more than 7.6 million units of its new PlayStation 5 game console, to be released next Thursday, by March 2021.

Toyota Motor

- Global output in September up 11.7 per cent from a year earlier to 841,915 vehicles, led by strong demand in China.

- Figure is not just the highest on record for September, but also the first year-on-year increase in nine months.

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