Nintendo said domestic sales of Splatoon 3 hit a record in the primary three days of the sport being on sale. Splatoon 3 proved to be a success in Japan, helping keep momentum for Nintendo’s ageing Switch console.
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Nintendo(*2*) is more likely to release a latest Switch console this yr, analysts told CNBC, because the Japanese gaming giant looks to capitalize on the interest in its characters starting from Mario to Zelda.
The Nintendo Switch first launched in March 2017 and marked a latest variety of hybrid console where gamers could play on their TVs but then take their controller, attach it to a tablet, and game on the go.
This approach, which combined the at-home points of console gaming with the portability of mobile games, proved highly regarded with gamers. Nintendo has sold 132.46 units of the Switch, making it the corporate’s second-most successful console after the hand held Nintendo DS.
Because the Switch’s launch, Nintendo’s shares are up greater than 200%. The console has helped the corporate sustain sales momentum over time due to its regular and robust stream of first-party games and popular characters.
Games involving Mario, Zelda and Pokemon are among the many Switch’s best sellers.
But there are signs that sales are beginning to slow and Nintendo needs something latest. In its September-quarter results, Nintendo said revenue fell 4% year-on-year and profit dropped 19%.
“I believe the brand new device will come out in 2024, probably in the second half of the yr,” Serkan Toto, CEO of Tokyo-based games consultancy Kantan Games, told CNBC.
“The unique Switch is now almost 7 years old, sales are taking place … So it’s absolutely high time for a latest Nintendo system this yr.”
Piers Harding-Rolls, research director of games at Ampere Evaluation, expects the launch of the brand new Switch in the fourth quarter of this yr.
For Atul Goyal, managing director at Jefferies, the timings of the launch will rely on recent sales. If the Switch remained popular in the vacation quarter then Nintendo could push a latest console out to the Fall of this yr, Goyal said. If Switch sales dropped in the December quarter, the brand new device could come as early as Spring or Summer, he added.
Nintendo has not announced its December-quarter results yet.
Launching a latest console this yr will even allow Nintendo to capitalize on the recognition of quite a few its key characters following movie releases. “The Super Mario Bros. Movie” has raked in greater than $1 billion in box office sales since its April release and helped Nintendo see a bump in revenue in the June quarter of last yr. In November, Nintendo said it plans to develop a live-action film of The Legend of Zelda, one among its hottest characters.
What can we learn about Switch 2?
Not much at this point because the company has been tight-lipped on what’s next. Analysts expect what they’re dubbing the “Switch 2” to follow the hybrid approach set out by its predecessor.
“I’m expecting Nintendo’s next console to be a Switch follow-up, because the hybrid device approach has been so successful,” Harding-Rolls said, adding that there is more likely to be an upgrade in capabilities to the corporate’s console controllers too.
Kantan Games’ Toto said he expects the successor to be a “latest device and never just an upgrade.”
“Nintendo must drastically improve specs after 7 years, so they are going to absolutely release a successor,” Toto said.
Such an appraoch, constructing on the success of the Switch, is smart to many.
“An evolution, not a revolution, in the console strategy is probably going. In other words, an iPhone model. With that comes the chance to ease the 130M+ Switch audience into a well-recognized but more powerful form factor, and the flexibility for Nintendo to sell compelling 1st (and third) party games to a scaled audience,” analysts at Moffett Nathanson wrote in a note in December.
Will the ‘Switch 2’ sell well?
Harding-Rolls said the performance of the brand new console shall be impacted by the supply of the product. But he said he can see it “achieving similar levels to the unique Switch during its first Q4 sales period,” which equates to around 7 million or 8 million units sold to consumers.
Analysts at Moffett Nathanson said the Switch 2 is unlikely to “match or surpass the Switch,” arguing the present Nintendo console benefitted from people buying gaming consoles while staying at home through the Covid-19 pandemic.
Still, the analysts said “this next console can match and even exceed the early performance of the Switch but trail off as we get into yr 4 and beyond,” as Covid-inflated comparisons of Nintendo’s fiscal yr in 2021 and 2022 are “too difficult to beat.”