Nintendo Confirms Legend of Zelda Live Action Movie. Why It’s a Game Changer.

On Tuesday,
Nintendo
(ticker: NTDOY) reported solid profit growth for the first half of its fiscal year and gave a better-than-expected outlook thanks to robust game sales from its latest Mario and Zelda releases. Nintendo raised its fiscal 2024 net profit guidance to 420 billion yen from 340 billion yen. It also increased its forecast for software units to 185 million from 180 million.

But the positive financial results were only part of the story. Later in the day, Nintendo announced that it’s developing a live-action movie based on its hit videogame franchise, The Legend of Zelda. The film will be co-financed by Nintendo and
Sony
Pictures Entertainment, with
Sony
(SONY) handling the movie’s distribution.

“By getting deeply involved in the movie production to put smiles on everyone’s faces through entertainment, Nintendo will continue its efforts to produce unique entertainment and deliver it to as many people as possible,” the company said a news release.

There’s already enormous enthusiasm for the project. Nintendo’s first social media post about the Zelda movie, written by its famed game creator Shigeru Miyamoto, has already been viewed over 24 million times.

The main response from fans was joy and relief. For years, gamers had lamented how Nintendo wasn’t fully using its roster of beloved videogame characters, including Mario, Luigi, Donkey Kong, Peach, Zelda, and Kirby. Now, it’s clear the company is finally ready to embrace the characters beyond just the videogame console.

There are reasons to be optimistic. April’s release of The Super Mario Bros. Movie had positive effects across Nintendo’s business. It generated over $1.3 billion at the box office, making it the second most successful animated film in history. Some 170 million people saw the film in the theater, with countless more still watching at home.

One widely shared video on social media shows a crowd of first-graders passionately singing one of the movie’s main songs. The film has helped a new generation develop a love for Nintendo’s characters that’s likely to last a lifetime, the kind of loyalty Walt
Disney
(DIS) is known for.

According to Nintendo, the film has led to increased sales of Mario games too. Five older Mario titles sold more than one million units in the six months that ended in September, with aggregate sales up more than 30% versus the prior year. The company also said its latest Super Mario Bros. Wonder game, released in October, sold 4.3 million units in its first two weeks, making it the fastest-selling Super Mario-related title ever.

The coming Zelda film will likely be another blockbuster and represents a confirmation that Nintendo is ready to branch out.

“Big box office success of Super Mario Bros. Movie appears to have boosted Nintendo’s confidence to expand its offering,” Jefferies analyst Atul Goyal said in a note to clients. “This is a significant event that could have a major impact on the future of both Nintendo and Sony Pictures.”

Barron’s recommended Nintendo stock in May, noting the untapped potential from the company’s valuable intellectual property, along with the eventual launch of a successor to the Switch console. That new console should drive another wave of strong financial results. New films, should be a tailwind to sales that wasn’t there for the Wii, Switch, and prior Nintendo consoles.

Meanwhile, this week Nintendo reiterated its plans to expand its theme park initiatives. It opened Super Nintendo World at Universal Studios Hollywood earlier this year, with two more theme parks already planned for Orlando and Singapore.

Nintendo’s recent success shows the enduring power of its franchises. Following earnings and the Zelda movie announcement, the company’s stock surged 6% overnight in Japan, to a new high for the year.

The good news for investors is Nintendo’s latest ascent is likely just beginning.

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Write to Tae Kim at tae.kim@barrons.com or follow him on X at @firstadopter.