Switch-off hits Nintendo as sales set to miss targets
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."