Switch-off hits Nin­tendo as sales set to miss tar­gets

Irish Independent - Business Week - - TECHNOLOGY - Yuji Naka­mura

WITH few at­trac­tive ti­tles for the hol­i­day shop­ping sea­son and ship­ments on track to fall short of tar­gets, doubts are grow­ing whether Nin­tendo’s Switch can ever be­come a mass-mar­ket prod­uct.

When the de­vice made its de­but last year as a hy­brid con­sole that could be car­ried around, it was clas­sic Nin­tendo – a new gad­get that broke the norms of con­ven­tional video games. With a built-in screen and hy­per­sen­si­tive con­trollers, the Switch was billed as a wor­thy suc­ces­sor to the Wii, Nin­tendo’s block­buster con­sole.

The goal was to make the gam­ing ex­pe­ri­ence as seam­less as pos­si­ble, while let­ting peo­ple use the prod­uct in new ways, such as turn­ing it into a vir­tual pi­ano or mo­tor­cy­cle. But so far, it has strug­gled to find cus­tomers be­yond a core fan base.

The Switch is on track to reach 35 mil­lion unit ship­ments by March, ac­cord­ing to an­a­lysts’ es­ti­mates – short of Nin­tendo’s tar­get of 38 mil­lion.

Af­ter cram­ming its best fran­chises — ‘Su­per Mario’, ‘Zelda’ and ‘Spla­toon’ — into the first 12 months, the Ky­oto-based com­pany was left with fewer games to show off in the sec­ond year, hurt­ing hard­ware sales. Card­board ac­ces­sories in­tro­duced in April, called Nin­tendo Labo, have mostly failed to ex­pand in­ter­est be­yond those who were al­ready plan­ning to pick up a Switch. “All great con­soles need a great sec­ond year, and Nin­tendo hasn’t de­liv­ered one for the Switch,” said Wil­liam O’Neil an­a­lyst Cor­ne­lio Ash. “In­vestors thought over five years they could sell maybe 90 mil­lion units. But af­ter this year, that’s look­ing pretty much im­pos­si­ble.”

Nin­tendo has said it’s too early to eval­u­ate per­for­mance for the sec­ond year, and that it is stick­ing by its fore­cast.

The hol­i­day quar­ter his­tor­i­cally ac­counts for about half of the game-maker’s sales, and an­a­lysts have been re­duc­ing their full-year es­ti­mates for op­er­at­ing profit and rev­enue since March. Nin­tendo shares have dropped about 33pc since a Jan­uary peak, wip­ing out more than $20bn in mar­ket value. They rose less than 1pc in early trade in Tokyo yes­ter­day.

If Nin­tendo posts a weak hol­i­day quar­ter or Switch ship­ments show that it will prob­a­bly miss the fis­cal-year tar­get, ex­ec­u­tives will face tough ques­tions on how they plan to re­gain lost mo­men­tum.

That could open up pos­si­bil­i­ties for big­ger changes to the plat­form next year. “The Switch ex­cite­ment has rapidly de­clined,” Mr Ash said. “Un­less there’s sig­nif­i­cant change or some­thing else new, the Switch story has been ex­hausted.”

Bloomberg

Game on: the Nin­tendo Switch has strug­gled to find cus­tomers be­yond a core fan base so far and faces a crunch test over the hol­i­day sales pe­riod

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