The only video game systems that have sold over 100 million units are the PlayStation 2, the Nintendo Wii and now the PlayStation 4.\u00a0 The Switch has a long way to go to reach that mark, but it is possible.<\/p>\n
Among our test group, Nintendo\u2019s popularity has soared in the past year.\u00a0 The major driver of the Switch is its portability feature.\u00a0 Younger consumers in particular love this feature.\u00a0 Along with Minecraft, Nintendo has become the surprise success of 2019 among a younger, jaded U.S. audience.<\/p>\n
The Nintendo Switch Lite is a portable only $200 version of the Switch.\u00a0 Nintendo portable devices can sell far more than their console counterparts.\u00a0 The Nintendo DS sold over 150 million units.\u00a0 Its successor the 3DS has sold over 75 million in the smartphone era.<\/p>\n
With a portable system, there is the ability to sell multiple units to a single household.\u00a0 If you are a family with children, each child needs their own system.\u00a0 The Nintendo Switch Lite is clearly targeted towards that demographic.<\/p>\n
In the end, DFC forecasts that the Switch, including the Switch Lite, will fall just short of the 100 million mark.\u00a0 Of course, much of this will depend on the new systems from Sony and Microsoft.<\/p>\n
The challenge Nintendo faces is that the company is purposely self-limiting.\u00a0 Nintendo wants to sell software for a premium price and thus is very strict about digital rights management.\u00a0 Online services and data management are difficult on Nintendo platforms.<\/p>\n
Not surprisingly many of the early reviews on the Nintendo Switch Lite focus on the difficulty of content management.\u00a0 Today\u2019s consumer demographic loves portability.\u00a0 However, they also have a limited tolerance for challenges when it comes to accessing games.<\/p>\n
Overall, these are fairly small problems for Nintendo.\u00a0 The larger problem will be competition.\u00a0 Nintendo investors worry about Apple, Google and smartphones.\u00a0 However, the real competition is devices from Sony and Microsoft.<\/p>\n
Nintendo works in a more high-end niche of consumers willing to pay for dedicated video game hardware.\u00a0 There are now over 300 million consumers in that \u201cniche.\u201d Nintendo still has plenty of room for growth.<\/p>\n
Long term Sony and Microsoft need an answer to the portable feature.\u00a0 The track record of both companies in that area is weak.\u00a0 Recently with the PlayStation Vita, Sony had a major failure trying to create a portable\/console hybrid.\u00a0 Nintendo\u2019s own Wii U showed the difficulty and learning curve in trying to go in this direction.<\/p>\n
In terms of hardware units, the Nintendo Switch is expected to be the best-selling system of both 2019 and 2020.\u00a0 It should eventually become one of the top-selling game systems of all-time.\u00a0 However, the Switch will only be hitting the 50 million-unit mark at three years after launch.\u00a0 Reaching the 100 million-unit mark will be difficult.<\/p>\n
When talking with investors, it should be noted that a focus on gaining more value per user is key to success.\u00a0 Furthermore, making sure these users provide long-term value is crucial.\u00a0 Many companies are focused on nickel and diming consumers with free-to-play and loot box mechanics.\u00a0 That can be good for the short-term but can hurt when it comes to bringing consumers back.<\/p>\n
Nintendo can charge a premium because they provide value for the consumer.\u00a0 They can be an expensive product, but they also provide quality.\u00a0 So far Nintendo has avoided going for the cheap buck.<\/p>\n
The portability of the Switch expands the options and allows key portable Nintendo franchises like Pokemon and Fire Emblem to reach their intended audience, even in the smartphone era.<\/p>\n
![\"Nintendo](\"https:\/\/www.dfcint.com\/dossier\/wp-content\/uploads\/2019\/09\/nintendostock.jpg\")
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Nintendo stock has been a roller-coaster ride in the last few years.\u00a0 During the first 9 months of 2019, the stock is up almost 50%.\u00a0 Investors are currently coming back around.<\/p>\n
Nintendo\u2019s stock price still trades largely on the perceived competition with other mobile devices.\u00a0 The reality is that Nintendo is in a different market.\u00a0 The company is likely to continue to struggle to break into the mobile device market.\u00a0 However, there is still a great (and growing) market for premium dedicated devices.<\/p>\n
The latest DFC Intelligence Video Game Forecasts are available here<\/a>.<\/p>\n