June 29, 2022

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As Switch hardware sales slow, how long can Nintendo delay ‘Switch 2’?

As Switch hardware sales slow, how long can Nintendo delay 'Switch 2'?
Photo: Nintendo Life / Zion Grassl

nintendo Report For fiscal year 2021/22, it’s down today, and while the Switch continues to sell well and software sales look good, signs that enthusiasm for the five-year-old system is starting to wane. To be clear, the results offer a far from bleak outlook for the console and the company, but the numbers show a 20% year-over-year sales decline and company outlook More drops for next year.

in real numbers, Lifetime switch sales It now stands at 107.65 million units, with more than 23 million of them being last year. That’s a pretty solid number — and sales (meaning the number of units actually sold to consumers at retail stores, as opposed to the number shipped to retail outlets) the console last fiscal year is second only to the year of the console’s launch. Digital sales increased 4.5% during fiscal 2021 as well, with January-March 22 recording the second-highest quarterly digital sales ever — just shy of the previous lucrative holiday season 21. To be sure, it’s not all gloomy and gloomy in Kyoto at the moment.

Although there has been life in the system so far, there are definite signs that the Switch has peaked. Nintendo expects hardware sales to reach 21 million units next year, and while that’s still 3 million more than Sony’s target for the PS5, supply constraints are even worse for the more powerful console — and Sony forecast for fiscal year 2022 is a significant increase from 11.5 million PS5s were sold in the past fiscal year. And let’s remember that the PS5 is still like hen’s teeth in retail stores 18 months after its launch.

Although Nintendo has apparently struggled to produce hardware in sufficient quantities, the truth is that the demand for the hybrid console, while still healthy given its age, he is slowing down. There are over 107 million Switches in the wild, and while that number will continue to grow, the gaming industry is building momentum, and Switches is a very well known amount at this point.

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Switch games
There is no shortage of games to play, that’s for sure (Photo: Nintendo Live)

There’s one thing Nintendo really needs to make investor charts point again: an influx of new, properly upgraded Switch hardware.

A global shortage of chips and rising manufacturing costs are undoubtedly hurting Nintendo’s profits, and a drop in profit margin on Switch OLED is also noted as a contributing factor to the company’s modest 0.6% year-over-year profit increase. Overall rosy aside, though, the negative numbers don’t make a happy investor reading and Switch OLED, while the welcome shot in the arm, was a stopping point.

There’s one thing Nintendo really needs to make investor charts point again: an influx of new, properly upgraded Switch hardware.

The Key long rumors “Pro” Or Key 2 (or whatever you want to call the back of the current model) has been on the headlines of analysts for years at this point. Given the cyclical and gradual nature of the video game hardware cycle and the power deficit between the Switch, Microsoft, and Sony consoles—not to mention the fact that Nintendo has pioneered a mid-cycle, half-step upgrade with its portable systems—a discussion about the potential of new SKUs has been popular since the Switch launched in 2017. .

There wasn’t much need to come up with an updated version the whole time the Switches were flying off the shelves as fast as Nintendo could make, despite what enthusiasts and die-hard analysts may see. In fact, among the Big Three, the massive success of the Switch and its evergreen catalog of software has enabled Nintendo to weather the COVID storm and parts shortage better than it might otherwise. Even though we’re still out of the woods yet, it seems more and more as if anyone wants a transformer to have one eye and you’ll be more than ever on what’s coming in the pipeline.

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In a perfect world, Nintendo would certainly be looking forward to releasing a successor to the Switch in the next year or so. The current model will continue to sell, but as the numbers run out, the new hotness is there to pick up the slack and take profits. Nintendo is facing production issues it can’t control — those that could delay plans for the next console, and issues that could eventually affect the company’s momentum. The switch may be a huge cash cow, but milking it completely dry without the replacement being operational is not a sound business strategy.

OLED Animal Crossing
Slow-burning evergreen games like Animal Crossing have helped switch cruises so well so far (Photo: Nintendo Live)

The suggestions are undoubtedly applicable to the successor, but given all the potential production hurdles, knowing when to pull the trigger to continue is Nintendo’s main problem right now. New console release (backward compatible of course) side by side Zelda: Breath of the Wild 2 It will make significant sense, as the “Spring 2023” release date comes six years after the original release. According to a survey we conducted on the subjectMany Nintendo Life readers will be jumping on the upgraded hardware alongside the new Zelda—and that’s the kind of action you’d expect Nintendo to make.

The suggestions are undoubtedly applicable to the successor, but knowing when to pull the trigger to continue is Nintendo’s main problem right now.

Rumors indicate That Microsoft pushed to “jump in the queue” and get the chip priority in order to make more Xbox, and while Nintendo doesn’t want to buy a pop or two, it can’t compete with Microsoft in terms of absolute purchasing power. With companies forced to stick with components, it won’t be just Nintendo that will have to make the most of the status quo for much longer than it would in normal circumstances. Plans to split its inventory 1/10 She’s another indication that she’s looking to hold on and take advantage of better things while the business is still going strong.

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In fact, we’ve even seen analysts provide more sober estimates of when the Switch successor will appear, with dates like Late 2024 Propose now. By then, the current console will be seven and a half years old – retired in modern gaming terms. There’s no doubt that the system can deliver great games as it is, and that won’t change, but for the industry and hardcore fan base who always have one look at The Next Big Thing™, late 2024 feels like a long wait for the new Nintendo hardware.

In terms of earnings, sure, Nintendo could survive another two years on its current offering, perhaps with a nice Switch Lite OLED roll out. However, the perception that the company is still standing will be hard to shake — if not for players, then surely for investors. The new Zelda will help, but the 2024 holiday seems a long way off.

Bloomberg reports That Nintendo President Shuntaro Furukawa “refused to comment when asked during a briefing about when his company might reveal the next iteration of its iconic console,” and we’re inclined to think that’s a burning question within the walls of Nintendo HQ, too. It’s easy to make an announcement, but mass-producing hardware and meeting consumer demand is a challenge, we certainly don’t envy the people who work in the logistics of launching the next Nintendo console.

Tell us in the survey below when you think Nintendo will release the next console.