Monday, November 29th, 2021

Switch is a Jaguar notebook, but Nintendo still feels investor pressure

Image: Nintendo Life

Today, Nintendo’s financial results for the second quarter have been announced. Animal Crossing: New Horizons Version 2.0 arrives one day early. In some respects, they are the result of two sides, but in the Nintendo conference room, you may feel a little stuck along the way.

First, here are some of the coverages referenced in this article:

Looking at figures in areas such as net sales and net income, 6 months It would be permissible to think that Nintendo is cruising and investors will fall to express their happiness. However, all profits above $ 1 billion are relative, as evidenced by the decline compared to the results of the 2020/2021 boom.

  • Net sales- 624.2 billion yen (about 5.47 billion US dollars)-18.9% decrease from the previous year
  • Operating income 219.9 billion yen (about 1.93 billion dollars)-24.5% decrease from the previous year
  • Net income – 171.8 billion yen (about 1.5 billion US dollars)-down 19.4% from the previous year

The arguably negative recent noise from investors is a decrease of more than 18.9%.Nintendo Stock Price (via Bloomberg) Was down 1.66%, which is not a big deal, but the current 49,140 yen has been close to the lows of the past year, which has been consistently declining.

Switch and Switch Lite achieved significant sales in 2020
Switch and Switch Lite achieved significant sales in 2020 (Image: Nintendo Life)

This could certainly be due to Nintendo’s strengths in the unique situation of 2020 weakened by a significantly different trouble in 2021. The 2020 surge in home entertainment demand fell into the hands of the big N, especially in Switch and Animal Crossing — Switch Lite inventories regained slack when standard model inventories were low. The situation in 2021 is very different.

Not only has the home-specific situation resolved last year, but global chip shortages and manufacturing problems are also having an impact.

Not only has the home-specific situation resolved last year, but global chip shortages and manufacturing problems are also having an impact. As a result, Nintendo needs to cut 1.5 million units from Switch hardware forecasts, and Nikkei suggests previous numbers. already It represented a 4.5 million reduction from plans earlier this year. Nintendo basically can’t create enough systems to maximize sales and profits.

And of course, on top of that, the elephant in the room is what you would call the switch “professional”, or the “next” switch. Not only online fans, but investors as well, were crazy about this year and expressed disappointment with the OLED model. If the switch was already low power when it hit the market with the Xbox One and PS4, it’s far away compared to the Xbox Series and PS5 systems. The “triple A” port is becoming less common, or some publishers try to convince switch gamers to buy the “cloud” version, but this doesn’t seem to work on a large scale. Conversations will not disappear until a new “generation” or a more powerful system emerges.

Nintendo's digital sales and trends are relatively static
Nintendo’s digital sales and trends are relatively static (image: Nintendo)

In addition, Nintendo’s digital revenue has fallen to everything else, and tends to be static, especially when Microsoft is pushing the market with the Xbox Game Pass. The negative rating of the Nintendo Switch Online Expansion Pack adds the feeling that Nintendo is struggling to find a unique angle of success in the field. With the continued growth of the download game market, Nintendo’s products are, at least in a good way, unobtrusive.

Still, on the positive side, switches are still popular and very beneficial due to their dilapidated off-the-shelf technology. It has proven to work particularly well as the first product to fully represent the integration of Nintendo’s home video game consoles and portable divisions. Its sales exceed the combined Wii U and 3DS, with the bonus that maintaining one primary system is much more efficient for the Nintendo team. The switch is catching the Wii and will soon overtake it. The best-selling title is Mario Kart 8 Deluxe, Outperformed the highly successful Wii equivalent. In the age of gaming on so many platforms (mobile, bigger PC space than ever, cloud streaming, etc.), Nintendo was able to create a success story that raised its position in a popular culture.

Lego block
Image: Lego / Nintendo

More theme parks and major movies are underway, and of course with existing partnerships like major Lego releases, Nintendo has established itself beyond games. It’s easy to predict when these initiatives will be combined with new hardware to further develop the company, perhaps 18 months from now.

Still, overconfidence is not recommended. It’s important to remember that Nintendo has moved from the dizzying highs of the DS and Wii to the relative struggle between the 3DS and the Wii U. Two consecutive “winning” generations are difficult to do.

The Switch generation is undoubtedly successful and will grow even more in the future.As forecast sales of 24.5 million Downgrade Due to production issues, it is impressive regardless of spin. Demand is still very high. Nintendo is once again making over $ 1 billion in profits. This is impressive. Still, success is relative — 2020/21 has set criteria that cannot be reproduced.

On the one hand, Nintendo is winning in a row. On the other hand, there is plenty of room for improvement and growth. Then pay attention to the holiday season.