Nintendo has lowered its target to only 24M units of the Switch game console in FY 2021 due to shortages in chips. This comes amid a 37% drop in sales. Nintendo had originally aimed for 30M units in FY 2021. Despite the high demand, the company has been unable to meet its target due to the shortage of chips.
Nintendo will only be able to produce 24M units of Switch game console in FY 2021
The Nintendo Switch is one of the most popular video games, but the company is facing production problems this year. It has struggled to meet demand due to shortages of certain components, such as semiconductors. As a result, the company has cut production this fiscal year. The shortages are likely to last until March, though the company is not saying when they will be resolved.
The company has also been hit by several high profile acquisitions made by its closest competitors. These acquisitions weakened Nintendo’s earnings last fiscal year. However, the recent success of Pokemon: Legends of Arceus and Mario Kart 8 have made the company more confident in its future. In addition to that, the company has raised its profit forecast for the fiscal year April-March. Previously, the company projected a profit of 340 billion yen ($2.3 billion), but it has now raised it to 400 billion yen ($3.0 billion). Nevertheless, Nintendo has only been able to produce 24M units of Switch in FY 2021.
As a result, the company’s revenue growth has slowed. Despite this, Nintendo has continued to generate recurring revenue from its digital services. Currently, the company has nine million subscribers and expects to have twenty-six million subscribers by September 2020. The company has been able to double its digital subscriber base in 18 months, which has helped to boost its overall revenues. Furthermore, the company is building an online base where it can sell videogames. The more people buy videogames online, the more profits Nintendo will generate. Additionally, it has introduced various plans for users to buy the Switch game console online.
Sales of the Switch game console have been slow, with sales of 6.68 million units falling from their previous yearly peak. But the company’s first-party games are still driving the popularity of the Switch. Six games have already sold more than 20 million units each. The console also has the advantage of being portable.
The Switch’s hardware upgrades include a larger OLED display, a more stable kickstand for tabletop play, a LAN port, and improved 64GB internal storage. The Switch also comes with compatible carts and will work with current GameCube controllers.
With the Switch’s high price, the company has worried that the higher price will hurt sales. The company also has to consider the fact that some users may opt to buy digital versions of AAA games instead. This will reduce the demand for physical games.
The company has tasked its suppliers to produce 30M units of new Switch game console this fiscal year. However, the company is not revealing whether or not it will include the Switch Pro in this target. Bloomberg reports that the Switch Pro is expected to enter production in July and release in September or October. A leak from the manufacturer of the OLED panel revealed that the Switch Pro is the successor to the Switch.
Nintendo has been working on video games since it transitioned from the coin-op division. The company has not kept its coin-op division for long and missed its target a couple of times. However, it wants to continue licensing more properties, but its affiliates are impeding this. This is why it needs a dedicated licensing division.
Nintendo’s supply crunch leaves Switch with a 37% fall in sales
Nintendo’s supply crunch is causing a dramatic drop in sales for its popular Nintendo Switch gaming console. The Japanese company is making less than half the number of units that it initially planned to make through March, which translates to 6 million fewer Switch consoles than it initially expected. Nintendo’s original plan was to build 30 million Switch units by March, but that has been cut to 24 million units, according to Nikkei Asia.
As a result, Nintendo has reported that unit sales for its Switch gaming console fell 22.9 percent year-on-year in Q1 2022. The company attributed the drop to a shortage of semiconductors, which are key to the console’s chip design. It also said that sales of third-party games declined, which negatively affected the console’s sales. However, Nintendo still expects that the situation will improve gradually over the coming months.
The company has said that while the console’s sales are down, its other products are performing well. The company is still confident that a major game release will re-ignite the console’s sales. In the second quarter of fiscal 2023, Nintendo has reported an increase in sales and operating profit. The company has been benefiting from the continued weakness of the yen, which partially offsets the effects of the slowing console business. The company also said that its “Splatoon” game has boosted sales in Japan.
The disappointing gaming performance is primarily due to comparisons with last year. Electronic Arts bucked the trend, posting a 50% rise in profits and a 14% growth in revenue in Q1. However, Nintendo’s results were largely impacted by the constant scramble to secure hardware. Nintendo’s operating profit slowed by 15 percent in April-June, primarily due to global semiconductor shortages.
Nintendo has reported that the Switch has sold 15 million units so far in its fiscal year. Of these, eleven titles were published by the company while the remainder were published by external partners. That’s down from 18 million units sold in the same period last year.
While consumers’ preferences are often changing, business trends remain important. By studying trends, a competitor can adapt and stay on top. Similarly, the rise of smartphones and tablets is a key example. These devices are more versatile and can execute endless games and apps.
This is not to say that the Wii U is dead in the water, though. As a console, it’s still a strong performer despite its low sales. This week, the Wii U sold 117 units, equalling three million LTD. Nintendo’s biggest competition, the PlayStation family, meanwhile, claimed eleven of the top spots. Six PS4 titles and two Vita titles made the top 11.
Nintendo will only be able to produce 24 million Switch game consoles in its fiscal year, which ends in March. Due to shortages of certain electronic parts and semiconductors, the company has had trouble making the consoles. However, strong demand for the Switch has kept production levels up. The console will cost around $70. It has received positive reviews from customers, and is expected to ship by March.