Nintendo’s report for the 2021/22 fiscal year dropped today, and while Switch continues to do well and software sales appear healthy, signs that enthusiasm for the five-year-old system is starting to wane. ebb are also apparent. To be clear, the results present a far from bleak outlook for the console and the company, but the numbers show a 20% year-over-year sales decline and the company expects further declines for the console. coming year.
In actual numbers, Switch lifetime sales now stand at 107.65 million units, including just over 23 million last year. That’s a very solid number – and the sale (meaning the number of units actually sold to consumers at retail, as opposed to the number of units shipped to retail outlets) of the console over the last financial year is the second after the year of launch of the console. Digital sales were also up 4.5% from fiscal 2021, with the January-March 22 period recording the second-highest quarter of digital sales ever, just ahead of the previous lucrative Holiday 21 season. It’s certainly not all pessimistic in Kyoto right now.
Although there is still life in the system, there are clear signs that Switch has reached its peak. Nintendo expects hardware sales of 21 million units in the coming year, and while that’s still 3 million more than Sony is aiming for the PS5, supply constraints are worse for the console. the most powerful – and Sony’s forecast for fiscal year 2022 is significantly up from PS5’s 11.5 million. it was sold in the last fiscal year. And let’s remember that PS5s are still like goose teeth at retail 18 months after launch.
Although Nintendo has apparently struggled to produce hardware in sufficient quantities, the fact is that demand for the hybrid console, while still healthy given its age, is slow-down. There are over 107 million Switches in the wild, and while that number continues to grow, the gaming industry is on a roll, and Switch is a pretty well-known quantity at this point.
There’s one thing Nintendo really needs to get those investor charts pointing up again: an influx of new, properly upgraded Switch hardware.
Global chip shortages and rising manufacturing costs are undoubtedly hurting Nintendo’s profits, and the reduced profit margin on Switch OLED is also seen as a contributing factor to the modest 0.6% increase in profit. company gross year-on-year. Regardless of the overall roserie, however, the negative numbers don’t make investors happy reading and Switch OLED, while a welcome shot in the arm, was a stopgap.
There’s one thing Nintendo really needs to get those investor charts pointing up again: an influx of new, properly upgraded Switch hardware.
The long-talked-about Switch ‘Pro’ or Switch 2 (or whatever you want to call the successor to the current model) has been on analysts’ lips for years at this point. Given the cyclical and continuous nature of the video game hardware cycle and the power gap between Switch and consoles from Microsoft and Sony – not to mention the fact that Nintendo pioneered the console upgrade in mid cycle and half-step with its wearable systems – debate about potential new SKUs have been common since the Switch launched in 2017.
There was no need to release an updated version all the time. Switches were flying off the shelves as fast as Nintendo could make them, despite what die-hard enthusiasts and analysts might say. In fact, of the Big Three, the huge success of Switch and its evergreen catalog of software has allowed Nintendo to weather the COVID storm and parts shortages better than it ever could have. While we’re not out of the woods yet, it increasingly looks like anyone who wants a Switch has an eye on what’s next in the pipeline than ever before.
In an ideal world, Nintendo would surely be looking to launch a Switch successor within the next year. The current pattern would continue to sell, but as the numbers go down, the new trend is here to pick up the slack and generate profits. However, Nintendo is dealing with production issues it can’t control – ones that may well delay plans for the next console, and ones that could ultimately affect the company’s momentum. Switch might be a huge cash cow, but milking it completely without a ready-made replacement isn’t good business strategy.
Motions are undoubtedly in place for the successor, but given all the potential hurdles in production, knowing when to pull the trigger on the follow-up is now Nintendo’s biggest problem. Launching a new console (backwards compatible, of course) alongside Zelda: Breath of the Wild 2 would make perfect sense, with the “Spring 2023” launch date coming six years after the original. According to a poll we did on the subject, many Nintendo Life readers would jump on upgraded hardware alongside the new Zelda – that’s the kind of move you expect from Nintendo.
The motions are undoubtedly in place for the successor, but knowing when to pull the trigger on follow-up is Nintendo’s biggest problem now
Rumors suggest that Microsoft paid to “jump the queue” and get chip priority in order to make more Xboxes, and while Nintendo doesn’t want a bob or two, it can’t compete with Microsoft in terms of purchasing power. With companies having to line up for components, it won’t be just Nintendo that will have to make the most of the status quo for longer than it would under normal circumstances. His 10/1 stock split plans are another indicator that he is looking to pull back and make the most of things while business is still strong.
Indeed, we’ve even seen analysts lately come up with much more sober estimates of when a Switch successor might appear, with dates like “late 2024” now suggested. By then, the current console would be seven and a half years old – a retiree in modern gaming terms. There’s no doubt that the system is capable of delivering great games as is, and that won’t change, but for an industry and die-hard fan base that still has its eye on The Next Big Thing™, the end of 2024 seems like an endless wait for new Nintendo hardware.
In terms of profits, of course, Nintendo could afford to continue for two years on its current offering, perhaps with a Switch Lite OLED added in for good measure. However, the perception that the company is standing still would be hard to shake – if not for players, then certainly for investors. A new Zelda will help, but Holiday 2024 seems a long way off.
Bloomberg reports that Nintendo President Shuntaro Furukawa “declined comment when asked during a press conference when his company might unveil the next iteration of its flagship console,” and we’d be inclined to believe that it’s a pressing issue within the walls of Nintendo. HQ too. It’s easy to make an announcement, but producing hardware at scale and meeting consumer demand is a challenge we certainly don’t envy to the folks handling the logistics of Nintendo’s next console launch.
Let us know in the poll below when you think Nintendo will launch its next console.
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