Nintendo Co. is gearing up for Switch and recording software sales in the coming year, a much stronger performance than investors project, according to the company’s partners and vendors.
Kyoto-based Nintendo plans to see sales of its exclusive Switch gaming console flat or slightly higher in the fiscal year ending March 2022, boosted by the introduction of a version with an OLED screen, according to executives at partners, including component and software vendors. publishers and retailers. Analysts have predicted that console sales will decline next year.
A series of marquee game launches are expected to drive software sales next fiscal year to 250 million units, far more than the record of 205 million units forecast for the current year, according to partners and vendors, speaking of anonymously as the plans are not public. Analysts have also projected that software sales will fall next year.
Some of the suppliers were informed, while other partners established their own forecasts based on orders. A Nintendo spokesperson declined to comment.
Nintendo shares reversed their morning losses and ended up 1.6% higher in Tokyo on Monday.
The coronavirus outbreak was initially a brake and then an accelerator for Nintendo, choking its supply and logistics before unleashing a surge in demand with global lockdowns that prompted people to seek entertainment and escape. The company’s Animal Crossing: New Horizons became the ideal virtual gathering place to ease stress, boost Switch sales, and accelerate the transition from packaged software to digital downloads.
“Nintendo will need to start the next fiscal year without Animal Crossing and the pandemic, but that will be offset by a much stronger line of blockbuster software and new hardware,” said Serkan Toto of games consultancy Kantan Games Inc.
Nintendo plans to release a revised version of the Switch in the second half of this year with a bigger and better screen, as well as improved graphics when the hybrid console is connected to a television, Bloomberg News reported. The company produces some of the highest-grossing games on its platform, contributing significantly to profits and also spurring hardware adoption. Much of this year’s new game lineup remains unannounced.
The Switch and Switch Lite continue to sell well, due in part to the low supply of Sony Corp.’s PlayStation 5 and Microsoft Corp.’s Xbox Series X released in November, according to David Gibson of Astris Advisory Japan. But the lack of visibility around Nintendo’s upcoming list of games has sparked skepticism that the company maintains its recent success.
“With or without an upgraded Switch, Nintendo’s hardware sales would likely decline in the year beginning in April,” according to Matthew Kanterman of Bloomberg Intelligence.
Nintendo’s ability to meet demand for the Switch will be challenged by the same global bottleneck in chip supply that has worried its rivals. Beyond securing silicon from companies like Taiwan Semiconductor Manufacturing Co., the switch maker is also facing a shortage of more generic parts like display driver ICs and Bluetooth modules, people familiar with its operations said. Component suppliers said the shortage would persist until at least June and the situation may not improve for the rest of the year.
Makers of NAND flash memory, the medium in which packaged Switch software is sold, are preparing more drives for the next fiscal year than they supplied in the current one, supply chain people said. Software developers are similarly prioritizing change for their upcoming game releases, as the console will almost certainly pass the threshold of 100 million units sold, ensuring a large audience of potential customers. Nintendo had sold 80 million Switch devices by the end of 2020.
The games announced for this year so far include several Pokémon titles and popular third-party games like Mediatonic’s Fall Guys. Although Nintendo’s release schedule for the second half of the year remains vacant, it delivered a positive surprise last month by announcing Splatoon 3 for 2022, Astris Advisory’s Gibson said, indicating a strong long-term portfolio of games.
“The Switch is in the middle of its life cycle,” Nintendo President Shuntaro Furukawa said in February.