When it was first released, Nintendo’s Switch console was so popular that the company struggled to ship enough devices to meet the huge demand.
The Japanese gaming giant now has a different problem.
Nintendo (NTDOF) shares plunged more than 9% in Tokyo on Friday after it slashed its target for annual Switch sales from 20 million to 17 million.
Blockbuster sales of the Switch, a hybrid gaming console that allows users to to play it on the go and at home, have helped drive up Nintendo’s profits and stock price. That was highlighted by the 25% rise in profit the company reported Thursday for the quarter ended in December.
But the cut in the forecast for Switch sales suggests the device may not have the massive appeal that Nintendo was banking on.
There were still signs that the Switch’s popularity could prove resilient. Nintendo increased its outlook for sales of Switch games from 100 million to 110 million.
The company will continuing tapping into its vast trove of well-known franchises, such as Super Mario, to “enhance the appeal” of the Switch, Nintendo President Shuntaro Furukawa said during a presentation on Thursday.
Nintendo said it has sold more than 25 million Switch devices through the last week of December, far better than its disastrous Wii U console but lagging the success of the original Wii, which had sold more than 30 million devices over a comparable time period.
Nintendo is reportedly considering a new version of the $300 Switch to attract more users. The company is working on a smaller, cheaper edition that it may release as early as this year, according to Japanese newspaper Nikkei. Nintendo didn’t immediately respond to a request for comment on the report.
Some analysts remain upbeat about the company’s prospects.
The Switch outsold rival devices from Sony (SNE) and Microsoft (MSFT) last year, Jefferies analyst Atul Goyal wrote in a note to clients. In December alone, more Switch consoles were sold than PlayStation and Xbox devices combined, he said.
“Momentum is very strong” for the Switch, Goyal wrote.