For the first half of fiscal 2023 that ended 9/30/22, Nintendo reported Switch hardware sales down from 8.3 million units in the previous year period to 6.7 million. In addition, forecasts for the year were lowered from 21 million Switch units to 19 million units.
Analysis
Despite the decline in hardware unit sales, Nintendo reported an increase in revenue. This was largely due to favorable exchange rates with a strong U.S. dollar compared to the Japanese yen. Nevertheless, Nintendo’s performance continues to be strong.
Of course, as we approach 6 years since the launch of the Switch, sales are going to decline. Nintendo lowered its forecast to 19 million which is more in line with DFC’s forecast of 18 million. Even at that level, the Switch is on par to equal or exceed sales of the PlayStation 5 this year.
It is also worth noting that Splatoon 3 which launched September 8 sold 6.7 million units in its first 4 weeks (some have put the figure at 7.9 million but we are using the number reported in the management briefing of November 9). Splatoon 3 has done particularly well in Japan.
Splatoon 3 is interesting because it features online multiplayer. This has been an area of weakness for Nintendo. Nintendo also announced that the Nintendo Switch Online service has passed 36 million. In terms of quality Switch Online pales in comparison to competing services from Sony and Microsoft. However, subscriber numbers are similar. Of course, Switch Online has a lower cost.
Even as the Switch does well it is clear that it is on its downcycle and Nintendo will need to release a more powerful hardware system. In the latest DFC video game forecasts it is estimated that a new Nintendo hardware system will launch in 2024.
