(Bloomberg) -- Nintendo Co. said its next console will be compatible with current Switch games, allaying fears about the company’s ability to ride on the aging machine’s past success.
Backwards compatibility in the next-generation console is a key consideration for players trying to decide on further purchases of content in the waning months of the Switch. Nintendo’s next console will also support the company’s online gaming services, it said during a business strategy briefing.
Further information about the upcoming console will come at a later date, Nintendo said. Its stock rose 4.7% after the announcement Wednesday.
“Compatibility with the current Switch is good news for both investors and users,” Toyo Securities analyst Hideki Yasuda said. “Nintendo talking about its next console’s features and specifications suggests an announcement may be coming soon.”
Flagging momentum for the Switch, launched in 2017, forced the Kyoto-based company to cut its full-year profit and sales forecasts below estimates. The company logged its fifth straight quarter of profit declines earlier this week, hurt by weak sales of hardware and software.
Consumers have eagerly awaited an announcement on a successor to the Switch, which faces sleeker and more powerful updates from rivals Sony Group Corp. and Microsoft Corp.
On Tuesday, Nintendo slashed its operating profit outlook by 10% to ¥360 billion ($2.4 billion) and said it now expects to sell only 12.5 million units of the Switch this fiscal year, versus a previously forecast 13.5 million units. For the September quarter, Nintendo’s operating profit fell a bigger-than-expected 29% to ¥67 billion.
Nintendo’s been expanding into new areas to capitalize on its intellectual property and reduce the ups and downs of an industry hostage to gaming hits. That includes Alarmo, a $99 alarm clock featuring Nintendo’s game characters and music, as well as a Nintendo Music smartphone app for online service subscribers. Its affiliate Pokémon Co., meanwhile, released a smartphone app version of its highly-popular trading card game.
The company’s also putting more resources behind a push into Hollywood. Encouraged by the blockbuster success of The Super Mario Bros. Movie last year, Nintendo’s working on another animated film based on the franchise, as well as a live-action film based on The Legend of Zelda.
--With assistance from Alice French and Debby Wu.
(Updates with analyst commentary and stock reaction)
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