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[Bloomberg] Nintendo Plans to Boost Switch Output to Meet Resilient Demand

brutaka3

brutaka3

Member
Analyst
I think the title is pretty clear: according to a report by Takashi Mochizuki (the article is pay-walled), Nintendo is planning to actually make more Switch units in the next fiscal year, in comparison the the current one.



Now, the question is: what is the reason for this? I have some theories, some more outrageous than others:

1) They are planning price drops for all the models.

2) Somehow bigger console sellers than Pokémon and Splatoon are releasing this year. Zelda already counts as a system seller, but not bigger than the previous mentioned.

3) The succesor is actually releasing, but still counts as a Switch.

4) Nintendo just lost their minds.

Apparently the reason given by Nintendo is that there's unfulfilled demand caused by the supply issues, but, at least going from the sales we follow weekly, those supply issues weren't as a bad as expected. So ,what do you think?

PD: despite following sales threads in 3 different forums already, it took me until today to make my first thread (sorry if the OP is lacking) :)
 
Goddammit.

At least Nintendo didn't reveal this directly in their shareholders' meeting yet. I can still hang on to a faint glimmer of hope that this production forecast includes Switch 2!
 
IF we're really looking at a Switch 2-launch in late 2024/early 2025, then that makes me question several things. First and foremost, however, I wanna congratulate @Tbone5189 for once again making the rest of us the clowns we thought him to be all this time. Hats off to you.

  • On a more serious note, my first thought is: Western 3rd-party support will be dead for the next past two years. 3rd-party-games releasing for PS5, Xbox Series and PC only will not get Switch-ports unless Nintendo specifically pays for it, which they rarely do. At the same time, even "magical" PS4-ports will dry up, because what's even left? Nobody wants to play Resident Evil 7 and 8 on Switch when these ancient games have released in 4K, VR and Steam Deck/other PC-handhelds before. Witcher 3 was impressive due to the circumstances, but the industry has leapfrogged Nintendo, playing PS4-level games on a handheld is no longer that impressive, especially when other handhelds can run these games at better specs than the Switch can. That's it for Western 3rd-parties.
  • Also zero improvement with Square Enix-, Bandai Namco-, Sega- and Capcom-support. At the end of 2024, PS5 and Xbox Series will have had enough time to fully establish ONCE AGAIN the "you versus everyone else" situation that Nintendo has found itself since the Wii-days. Once again, Switch 2 will be weak system "that holds back" the other systems, so it only gets special versions, old ports or late ports. It's exactly the same situation as the Switch 1 experienced it in face of these big Japanese 3rd-party publishers. SE' only big Switch 2-game will be DQ12 (probably ...) and nothing else. At the end of 2024, they can once again afford to ignore the Switch 2 for these big games just like they're ignoring the Switch 1 now.
  • Which leaves one market, and I find it absolutely fascinating that Nintendo, unlike Sony, appears to be actively seeking out this market: Small- and medium-sized Japanese 3rd-parties. In other words: Nintendo actively goes after the developers that kept the PS Vita alive for years after Sony had long abandoned their own system.

Other than 3rd-party support, it also makes me wonder what Nintendo's plans are 1st-party software-wise. As far as I can see, big, ambitious games (definition: games that I find meaningful; feel free to disagree and mention additional games) will be spread extremely thin. For 2023, it'll be FE:Engage, Zelda, Pikmin. And probably some Pokemon-game. For 2024, it's high time for a new 3D-Mario, Metroid Prime 4 and probably a Xenoblade X-port. But then what can we expect for Switch 2 in 2025? No new Zelda, no new Mario, no new Monolith Soft-game. Now, if the Switch 2 launched in 2023, then I'd say: "Alright, leave the launch-window to 3rd-parties, similar to 3DS back then!". However, in 2025, there's no meaningful 3rd-party support to be expected, see above paragraphs. I'm not sure whether a new Mario Kart will be a sales driver for at least an entire year until we get a look at some impressive singleplayer-adventure titles. It also bears mentioning that Nintendo has no more Wii U-ports left at this point, ports that played an important role during the Switch 1's software schedule.

Now, the conclusion here can not be "Nintendo is doomed"; they're not. But if I consider everything I just wrote about, it almost feels like Nintendo is turtle-ing up inside Japan, focusing solely on what they're already good and strong at, at the cost of losing headspace everywhere else. So sales-wise, I'd expect a situation like going from NDS to 3DS. Which is irritating, because with a 2022/2023-launch, I would have totally bet that the Switch 2 will significantly surpass Switch 1-sales. Phew. Curious to hear what the rest of IB thinks about that news.
 
I've read the contents of the paywalled article and it focuses around what is believed to be Nintendo's current plans for hardware sales projections in the next fiscal year, but they also go on to say that, because we're talking about projections, production quantity could be adjusted down if Nintendo's expectations do not meet with reality.

Frankly, though, if they're overly bullish about Switch hardware sales, it gives me the impression that they're finally ready to perform a price drop.
 
Could it be possible they want to make sure the switch will have good supply in stores and warehouses before switching production to the next console?
 
I honestly doubt that Switch is going to sell better in 2023 than in 2022, but hey, I’ll gladly look at it surprised and pleased.
 
Definitely a impressive mark to beat in the current scenario.
But not impossible.
A 2D Mario to accomplishment the movie.
Tear of Kingdom will be a great success.
Metroid Prime Trilogy/Metroid Prime 4
Pikmin 4
A new Donkey Kong 3D?
With all this on the table, why not?
 
SergioPL said:
A 2D Mario to accomplishment the movie.
Click to expand...

I hope so - as far as I know, there aren't any Mario games scheduled for release this year, unless you count the remaining Mario Kart 8 tracks. There can't have been many years since the launch of the NES which haven't had a single Mario game.
 
Roger Rabbit said:
I hope so - as far as I know, there aren't any Mario games scheduled for release this year, unless you count the remaining Mario Kart 8 tracks. There can't have been many years since the launch of the NES which haven't had a single Mario game.
Click to expand...
Truth!
2022 have only two titles.
1990 is the last time that’s happened.
With Dr. Mario and Super Mario World.
 
They're talking about increasing output. not the amount of sales. They may want to cut switch production quickly when they switch to the new console. Then they sell these extra productions for a certain period of time.
Or maybe price deals/big bundles
Or Tomodachi+2D Mario with movie etc.

since they won't say these, it's not surprising if they say resilient demand and pass.
 
Fatih_656 said:
They're talking about increasing output. not the amount of sales. They may want to cut switch production quickly when they switch to the new console. Then they sell these extra productions for a certain period of time.
Or maybe price deals/big bundles
Or Tomodachi+2D Mario with movie etc.

since they won't say these, it's not surprising if they say resilient demand and pass.
Click to expand...
That seems like a reasonable theory, but won't they have a problem storing any significant excess product?
 
Like I said, Switch sales aren't increasing YoY next fiscal year unless it gets a major price cut, or Nintendo has suddenly become insane at making forecasts.

Aa an aside, if Switch 2 ends up being a late 2024/early 2025 release as some are now entertaining, I think Nintendo will launch a new Switch revision this year (i.e. the fabled docked-only Switch TV 🤫). Maybe Nintendo thinks that revision will sell like crazy, IDK...

Chris1964 said:
At preliminary projections Nintendo had crazy expectations for last fiscal year too, up from FY21-22, but official forecast ended at 21m.
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Can you clarify what this refers to?
 
I 100% believe the demand is there for such a move. All Nintendo needs to do is have one direct crammed to the brim with new game announcements and people won't even remember what a Switch 2 is.

The games aren't cheap to make and if Nintendo makes more announcements that will signal to anyone on the fence that it is still worth the investment and not to hold off for the successor.
 
MysticGon said:
I 100% believe the demand is there for such a move. All Nintendo needs to do is have one direct crammed to the brim with new game announcements and people won't even remember what a Switch 2 is.

The games aren't cheap to make and if Nintendo makes more announcements that will signal to anyone on the fence that it is still worth the investment and not to hold off for the successor.
Click to expand...
Next Direct will be all about Zelda, no other games, and no Direct until June. You're welcome. :>
 
awng782 said:
Can you clarify what this refers to?
Click to expand...
Switch production was estimated to be close to 30m according to several sources close to suppliers, don't reach too much into these articles there can be big errors at production size so soon even with reliable sources.
 
How old would this 'Drake' chip be by late 2024/early 2025?
And they can't change or tweak it for the better in any kind of
way in this time period?
 
Brandonleemoss said:
How old would this 'Drake' chip be by late 2024/early 2025?
And they can't change or tweak it for the better in any kind of
way in this time period?
Click to expand...
Well, based on Linux commits, engineering samples of the taped-out chip (if not the first wave of production tests) have existed since late spring of 2022, IIRC.

EDIT: And no, once you're that far along in a design, tweaks are kinda off the table and you're literally back to the drawing board.
 
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Chris1964 said:
Switch production was estimated to be close to 30m according to several sources close to suppliers, don't reach too much into these articles there can be big errors at production size so soon even with reliable sources.
Click to expand...
I think that 30M production figure corresponded with FY3/2022, where Nintendo initially forecasted 25.5M units shipped, before dropping that to 24M, then to 23M (the final result).

kazuyamishima said:
They went from 23m to 21m to 19m and possibly won’t hit the 19m, but who knows
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There was never a 23M forecast for FY3/2023, it was 21M at first, then downgraded to 19M.
 
awng782 said:
I think that 30M production figure corresponded with FY3/2022, where Nintendo initially forecasted 25.5M units shipped, before dropping that to 24M, then to 23M (the final result).


There was never a 23M forecast for FY3/2023, it was 21M at first, then downgraded to 19M.
Click to expand...
Yes you’re right, got mistaken with the 23m they said in February but that was for FY2021.

I still think there is a possibility they won’t reach their 19m forecast.
 
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As hard as the article is to beleive, IMO Nintendo's strategy is to keep milking Switch SW sales (btw, Nintendo DS was totally burned by piracy at this stage in the life cycle, cutring down profitabilty by a ton). And, to that end, a new boost in HW sales is a "collateral damage".

Agree with the idea that a new top quality 2D Mario game is coming along the film. Sales potential is in the range of 35-45 million units by the end of FY24. Sonic Frontiers is not only a better Sonic game, but came to harvest all the brand awareness created by the films. Not that Mario needs it, but we saw with Pokemon Go that an extra push impacts casual consumers' purchaising decisions even for the biggest brands.

Add +20 million units of Zelda TotK and a big chunk of DQ12 to put Japan on fire. Wouldn't you need a HW option supporting it? People replacing old models, secondary units in family housolds, special editions... Clearly, Nintendo may have a last opportunity to increase Switch sales again, but they need to be more aggresive with HW-SW cross promotions.
 
Pretty curious to see what their H2 software output will be
H1 with Fire Emblem, Kirby and Zelda (plus various third party projects like Octopath or Atelier and probably Marvel midnight and Hogwarts Legacy) seems pretty solid already - I wonder if Pikmin 4 will be H2, but surely won't be the only first party meaningful game coming, if this report is to be believed
 
Aostia82 said:
Pretty curious to see what their H2 software output will be
H1 with Fire Emblem, Kirby and Zelda (plus various third party projects like Octopath or Atelier and probably Marvel midnight and Hogwarts Legacy) seems pretty solid already - I wonder if Pikmin 4 will be H2, but surely won't be the only first party meaningful game coming, if this report is to be believed
Click to expand...
Pikmin 4, Pokemon, XB3 DLC. That's probably it, outside of small stuff.
 
Tokuiten said:
Pikmin 4, Pokemon, XB3 DLC. That's probably it, outside of small stuff.
Click to expand...

Metroid Prime won’t be small, then there is always a bunch of games that are unannounced as well. And then the small stuff granted could be big. We didn’t expect franchises like Luigi mansion, Mario party to blow up like they did and Nintendo even created a new ip that will sell over 15mil lifetime
 
Reading the opening paragraph they expect two things
  1. They'll beat their revised forecast for the current FY and ship around 21m units
  2. They expect to produce even more Switch the next FY
It is difficult to reconcile everything we are hearing about the Switch. Let's wait a few weeks and the first Direct to know what they have coming this year in terms of games.
 
Whether the official forecast ends up higher than this year, equal or slightly lower I think it goes without saying that it can't happen unless Nintendo has major things up their sleeve.
 
If Nintendo comes out aggressively this year and with a price cut they can easily accomplish this especially with components being easier to manufacture.

2022 was relatively quiet and they still likely sold just about everything they shipped.
 
Tokuiten said:
Pikmin 4, Pokemon, XB3 DLC. That's probably it, outside of small stuff.
Click to expand...
Pokemon Scarlet/Violet DLC is the only mainline Pokemon content coming this year, so another new entry is off the table.

Oregano said:
Whether the official forecast ends up higher than this year, equal or slightly lower I think it goes without saying that it can't happen unless Nintendo has major things up their sleeve.
Click to expand...
Right, the rumors of Nintendo not having anymore big Switch games after Zelda can't be true if this Bloomberg report ends up being even remotely correct.
 
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Windom Earle said:
If Nintendo comes out aggressively this year and with a price cut they can easily accomplish this especially with components being easier to manufacture.

2022 was relatively quiet and they still likely sold just about everything they shipped.
Click to expand...
They had a major year in 2022 tbh with record-breaking games like Splatoon 3 and Pokémon S/V coupled with a megaseller called Switch Sports.

It will be difficult to replicate in 2023 beyond Zelda and there's a natural downward pressure on Switch sales given its position in the lifecycle.
 
About to see a rerun of 2009 Wii on Switch this year. A lot of console bundles and stock for the Holiday season with a new big 2D Mario game thats gonna break records.
 
Lelouch0612 said:
They had a major year in 2022 tbh with record-breaking games like Splatoon 3 and Pokémon S/V coupled with a megaseller called Switch Sports.

It will be difficult to replicate in 2023 beyond Zelda and there's a natural downward pressure on Switch sales given its position in the lifecycle.
Click to expand...

It launch awhile ago but even Kirby became much more mainstream (thanks to the 3D transition) which is a potential 7-8mil seller

Edit: Star Allies did 4mil+ which is up apt from the usual 1.5mil-2.5mil main Kirby games we’re doing the past 15 years and KatFL is at 5.27mil as of sept so yeah easily 7mil+ now
 
Starting to see a trend starting with the JP Morgan article about 2025. Now you have Bloomberg saying expect increases in shipments.

Nintendo could be gearing up for a second blitz. There are a few things they can do to keep hype high.

Mario Kart 9 is a big one. Fighter Pass 3 for Smash sans Sakurai. Tomodachi Connection, Nintendogs, dive headlong into their deep bench for modern reimagining of old games.
 
Lelouch0612 said:
They had a major year in 2022 tbh with record-breaking games like Splatoon 3 and Pokémon S/V coupled with a megaseller called Switch Sports.

It will be difficult to replicate in 2023 beyond Zelda and there's a natural downward pressure on Switch sales given its position in the lifecycle.
Click to expand...
We still don't know anything about their 2023 lineup beyond Zelda though, and Zelda is huge. Nor do we know anything about their pricing strategy.

Personally, I'm expecting some sort of Mario title to go along with the movie on top of Zelda and that may just be the beginning.

Furthermore, I believe Nintendo when they have been claiming that chip shortages have been hampering their production over the last couple years and we have to also take into consideration that Covid lead to inflated demand in the first place. The downward curve in the Switch's sales trajectory may very well be somewhat misleading.
 
Interesting news even if i personally don't consider Mochizuki to be a reliable source.

Switch declined from 2021 in pretty much every market according to the data we have right?

If the news is true it could mean a price cut is incoming.
 
Astandahl said:
Interesting news even if i personally don't consider Mochizuki to be a reliable source.

Switch declined from 2021 in pretty much every market according to the data we have right?

If the news is true it could mean a price cut is incoming.
Click to expand...

Mochizuki has been more accurate on going ons in Japan compared to anyone east of the Suez. His only major miss is the Pro.
 
The only game that support this insane decision is Baten Kaitos duology Remastered.

Another one is Dragon Quest IX Remake.
 
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