Nintendo said that domestic sales of Splatoon 3 reached a record high in the first three days of the game being on sale. Splatoon 3 proved to be a hit in Japan, where it helped maintain momentum for Nintendo's legacy Switch console.
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This approach, which combines the home aspects of console gaming with the portability of mobile gaming, has proven to be very popular with gamers. Nintendo sold 132.46 units of the Switch, making it the company's second most successful console after the Nintendo DS.
Since the Switch's launch, Nintendo shares have risen more than 200%. The console has helped the company maintain sales momentum over the years thanks to a steady and strong influx of first-party games and popular characters.
Games including Mario, Zelda, and Pokemon are among the best-selling titles on Switch.
But there are signs that sales are starting to slow and Nintendo needs something new. In its September quarter results, Nintendo said revenue fell 4% year over year, and profits fell 19%.
“I think the new device will be released in 2024, maybe in the second half of the year,” Serkan Toto, CEO of Tokyo-based gaming consultancy Kantan Games, told CNBC.
“The original Switch is now almost 7 years old, and sales are declining… so it's just in time for a new Nintendo system this year.”
Piers Harding-Rolls, director of gaming research at Ampere Analysis, expects the new Switch device to be launched in the last quarter of this year.
For Atul Goyal, managing director at Jefferies, the timing of the launch will depend on recent sales. If the Switch remains popular through the holiday quarter, Nintendo could release a new console this fall, Goyal said. He added that if Switch sales decline in the December quarter, the new device could come as early as the spring or summer.
Nintendo has not announced its results for the December quarter yet.
Releasing a new console this year would also allow Nintendo to capitalize on the popularity of a number of its main characters following the release of the films. “The Super Mario Bros. Movie” has generated more than $1 billion in box office sales since its release in April and helped Nintendo post a revenue increase in the June quarter last year. In November, Nintendo said it planned to develop a live-action movie based on The Legend of Zelda, one of its most popular characters.
Not much at this point as The company has been very tight-lipped about what's next. Analysts expect what they're calling “Switch 2” to follow the hybrid approach set by its predecessor.
“I expect Nintendo's next console to be a follow-up to the Switch, where the hybrid hardware approach has been very successful,” Harding-Rolls said, adding that there will likely be an upgrade in the company's console's controller capabilities as well.
Kantan Games' Toto said he expects the successor to be “a new hardware and not just an upgrade.”
“Nintendo needs to significantly improve the specifications after 7 years, so they will definitely launch a successor,” Toto said.
Such an approach, based on the Switch's success, makes sense to many.
“It's likely an evolution, not a revolution, in console strategy. In other words, the iPhone model. With that comes the opportunity to ease the Switch's 130 million-plus audience into a familiar but more powerful form factor, and Nintendo's ability to sell 'first (and third) party games ) are compelling to a broad audience,” analysts at MoffettNathanson wrote in a note in December.
Harding-Rolls said the performance of the new console will be affected by product availability. But he said he could see it “achieving similar levels to the original Switch during the first quarter sales period,” which equates to about 7 or 8 million units sold to consumers.
Analysts at Moffett Nathanson said the Switch 2 was unlikely to “match or beat the Switch,” arguing that Nintendo's current console has benefited from people buying game consoles while staying at home during the Covid-19 pandemic.
However, analysts said that “this next console could match or even exceed the Switch's early performance, but slow as we get to year four and beyond,” as Covid-inflated comparisons for Nintendo's fiscal years in 2021 and 2022 are “extremely difficult.” To overcome it.”
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