Nintendo shares jump 5% after new game Splatoon 3 hits Japan sales record

Nintendo shares rose 5% on Tuesday after the Japanese gaming giant said its new title surpassed a domestic sales record.

The company said sales of Splatoon 3 in Japan surpassed 3.45 million units — a domestic record for any Nintendo Switch software within the first three days of sales.

Launched on Sept. 9, the action-shooting game was one of the highly anticipated titles in Nintendo’s line-up this year.

The title’s success eased fears about an industry slowdown after a pandemic-fueled boom that saw people spend more time at home playing games. Investors are also concerned about the impact of a potential recession on the video game market. Gaming giants Nintendo, Microsoft and Sony all saw disappointing results in the second quarter.

But Serkan Toto, CEO of consultancy Kantan Games, called Splatoon 3 a “cult hit” in Japan and said the recent slowdown in the gaming market was due to a lack of major titles.

“I’m not a big subscriber of the theory that the recession really puts a dent into the video game industry. I think it was really a drought of blockbusters,” Toto told CNBC’s “Street Signs Asia.”

“I think it’s really the case that people are drawn to these kind of blockbuster games no matter if there is a  recession on the horizon or not,” he added.

The gaming industry still faces a number of headwinds including supply chain issues.

But the success of games like Splatoon helps keep the momentum going for Nintendo’s flagship Switch console, which is now more than five years old, particularly as the holiday season approaches.

Nintendo is also gearing up to release new games in its popular Pokemon franchise in November. Later Tuesday, the company will hold its Nintendo Direct event where it will reveal details of future games.