When Nintendo launched Switch some years back, it seemed the Japanese game had found a worthy successor to the Wii. The company cut its forecast for annual Switch shipments for the fiscal year from 20 million units to 17 million, an indication that the hybrid console might be struggling to acquire new users.
The company did smash some estimates. Wall Street predicted $1.34 billion in profits, but the company surpassed it, earning $1.5 billion. The company has now cut sales target as it seeks for new ways to expand its appeal beyond the status quo.
Nintendo’s shares fell as much as 7% in Tokyo, following the slashed sales target, as speculations continue to swivel round about the appeal of the Switch.
When it first launched, the gaming giant couldn’t ship enough units to meet the insane demand and there were signs Switch popularity could help the Japanese game maker go head-on with Playstation and Microsoft. Regarding functionality, the Switch isn’t more powerful than the Wii U that was released before it, but it has been more successful. The Switch has a greater appeal with its ability to function as a handheld and a home console.
As at January 2017, PlayStation 4 had sold 20.2 million units globally within a 16 months period. Switch sold 19.67m units within a 15 months period. It’s not just the hardware that has been selling, for the first time, Nintendo is focusing on its software units as well. The best selling Super Mario Odyssey sold 11.17m units. Mario Kart 8 Deluxe, pulled in 10 million units over the same period.
The Switch has grown into a core driver of Nintendo’s profits and share price, as revealed in its earnings report. The company sold nine million units in the three months ending in December 2018, but the appeal is gradually wearing off.
Smaller and Cheaper Switch Consoles
According to Japanese business news outlet Nikkei, Nintendo wants to develop a smaller Switch version, which would focus on portability with a toned down functionality to make it affordable. The new Switch console is expected to be released to the market in 2019 along with a gaming subscription service similar to the Virtual Console of the Nintendo Wii. Releasing a cheaper Switch, which currently costs $300 in retail, could open up the company to newer markets, ramping up sales for the fiscal year ending in 2019.
David Cole, founder, and chief executive officer of DFC Intelligence said the game maker “needs to expand the audience reach of the Switch.”
While Nintendo has decreased its targets for the console, it has continued to see gains with the software units. The game maker shipped 53 million software units during the quarter ending in December, which was double to last year’s shipments. Super Smash Bros. Ultimate leads the charts, shipping 12 million units.
Nintendo is also trying its hands on mobile gaming, pushing out some of its successful franchises into the smartphone market.
Mario Kart Tour is Coming to Mobile
Mario Kart Tour will see the company debut its hit racing series into the mobile gaming world and its one that has been long overdue. The game will be released in the summer in Japan.
Unlike other game makers, Nintendo had struggled with the idea of bringing its gaming franchises to smartphones, preferring to focus its resources on developing games for its consoles. All of these changed afterward and Nintendo released a slew of mobile games such as Miitopia and Super Mario Run for mobile gamers.
The Mario Kart Tour franchise, which was expected to debut by the end of its fiscal year, has been pushed forward to allow for improvement in game quality and expand in-game offerings. The company also signed a partnership agreement with LINE for the development and distribution of mobile games. So far, Nintendo has kept gamers in suspense, releasing a logo and a release window for the eagerly anticipated franchise.
The company explained in its earnings report:
Mario Kart Tour was scheduled to be released this fiscal year, but in order to improve quality of the application and expand the content offerings after launch, the release date has been moved to summer 2019.