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Nintendo's "Animal Crossing: New Horizons" Is Helping People Amid the Coronavirus Pandemic

Digital entertainment is hot right now, with people binge-watching shows and spending more time playing their favorite games as they wait out the COVID-19 outbreak. With schools closed temporarily, there is no video game company benefiting more than Nintendo (OTC: NTDOY).

The Japanese game maker released Animal Crossing: New Horizons on March 20, and the latest installment of the popular Nintendo franchise is breaking sales records in Japan and the U.K. What's more, the game helped the Switch game system have its best sales week in Japan since its launch three years ago.

Image source: Nintendo.

Impressive opening-week sales

In the first three days after release, Animal Crossing: New Horizons sold 1.88 million copies in Japan, according to data released by Famitsu. That surpasses the previous three-day record held by Pokemon Sword and Pokemon Shield, which together sold 1.36 million copies shortly after their joint release. The new Animal Crossing also beat the three-day sales of Super Smash Bros. Ultimate, which sold 1.24 million units in three days. Super Smash Bros. Ultimate is the second best-selling Switch title, having sold more than 17 million units through December 2019.

Keep in mind that the sales figures for Animal Crossing: New Horizons exclude digital sales, so actual sales numbers for the game are probably higher.

Based on those numbers, Animal Crossing: New Horizons is on pace to be one of the best-selling titles on Switch, and probably the best-selling title in the franchise's history. Metacritic rates the game a "must-play" title, giving it a high score of 91, which is a blended average of all the critics' reviews. That makes this version the highest-rated game in the series that originally launched on the Nintendo 64 console in 2001.

The right game at the right time

The latest installment couldn't have come at a better time. People are isolated in their homes, and kids are out of school. Consistent with all of Nintendo's exclusive games, Animal Crossing has been popular for its wholesome, family-friendly gameplay; it puts the player on a virtual desert island with various animals that serve as neighbors and friends. The objective is to cultivate the island by building things, such as a home, bridges, pathways, and a museum, along with other tasks.

Reviewers have been gushing over the New Horizons version for improving the design of the game over previous installments. It's a relaxing gaming experience for players to spend weeks in: building a house, paying bills, going fishing -- normal life stuff. The game delivers the escapism and sense of familiar routine that many people can use right now.

Driving hardware sales

Since the Switch launch in 2017, Nintendo has done a good job stretching out quality releases to keep sales momentum going. Sell-through in North America during the recent holiday quarter showed an increase of 16% year over year. There has been a high attach rate of major releases driving Switch sales, and this seems to be happening with the latest release of Animal Crossing.

The Switch game system, which has sold a total of 52 million units, just had its biggest sales week yet. The console sold 392,000 units in Japan the week ending March 22, marking the highest sales totals yet for Switch in that country. That means sales were even higher than with the superhyped launch three years ago.

Image source: Nintendo.

In addition to the release of Animal Crossing: New Horizons, Switch sales also benefited from the launch of the new Switch Lite Coral. Nintendo also released a special-edition Animal Crossing-themed Switch on March 13.

Worldwide, Switch was the best-selling console for the week ending March 21, selling over 840,000 units, according to VGChartz. By comparison, Sony's (NYSE: SNE) PlayStation 4 and Microsoft's (NASDAQ: MSFT) Xbox One sold fewer than 170,000 units combined.

Animal Crossing: New Horizons should see increasing sales as the year progresses and word of mouth spreads, especially since the game is online-enabled -- that allows players to connect with others during gameplay, which gives the game a network effect working in its favor.

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Teresa Kersten, an employee of LinkedIn, a Microsoft subsidiary, is a member of The Motley Fool's board of directors. John Ballard owns shares of Microsoft and Nintendo. The Motley Fool owns shares of and recommends Microsoft. The Motley Fool recommends Nintendo and recommends the following options: long January 2021 $85 calls on Microsoft and short January 2021 $115 calls on Microsoft. The Motley Fool has a disclosure policy.


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