Nintendo President Shuntaro Furukawa held a presentation earlier today to go over the third quarter financials for fiscal year ending March 31, 2020. As always, we gain additional information from what’s in the financial statements, and this time is no exception.
One of Nintendo’s core strategies going forward is to expand the number of people who have access to Nintendo’s intellectual properties. The company is no longer content in just reaching those wanting to play the latest video games. They want to interact with a wider group of consumers. To that end they have been steadily increasing their presence in a variety of ways. One of the most notable has been mobile games – offering traditional franchises to a wider spectrum of players. This will continue to be the case going forward, with content updates coming to existing games.
Last fall they opened up a retail store in Tokyo and ever since it has been extremely busy and many customers have to wait a long time just to get in the doors. Nintendo is looking to expand its merchandise offerings as well as the number of locations of these retail outlets. It sounds like they’re open to the idea of more stores across the world. We know that the London pop-up store last holiday did extremely well, so we wouldn’t be surprised to see Nintendo open new locations in major metropolitan areas. It would make sense to open another in Japan (hopefully a bigger location) as well as places like L.A., and maybe even the Mall of America in Bloomington, MN (admittedly we’re biased). We’ve seen companies like Apple and Microsoft enjoy great success in opening their own retail locations and have long been hoping Nintendo would follow suit.
Of course, beyond the retail scene we’re all looking forward to visiting Super Nintendo World inside Universal Studios. The first one to open up is this summer in Tokyo. California should be next and Florida should follow up in a few years.
In addition, don’t forget that Nintendo is collaborating with Illumination (the makers of Despicable Me movies) on a new animated movie. Interestingly enough (and we’re probably reading too much into this) Nintendo seems to go out of their way to not mention it being a Mario movie, despite having confirmed that in the past. The picture is scheduled to hit theaters in 2022 and Mr. Miyamoto is co-producing. We’re sure Mario is heavily featured in the new flick, but maybe the movie’s concept has expanded to include other IP? We’ll have to wait and see.
The Nintendo Switch has continued to impress with exceptional sales. Nintendo has revealed that they sold through to customers over 2 million systems in the month of December, setting a new record since the height of the Wii. Despite 2018 being a stellar year for the Switch, 2019 was even bigger in all markets, exceeding sales of the prior year (23% up in Japan, 16% up in North America, and 15% up in Europe year-over-year).
On the software side Nintendo has apologized for the shortages of Ring Fit Adventure in Japan. Luigi’s Mansion 3 is selling twice as fast as the prior game in the series. Pokémon Sword & Shield sold 12.28 million in its first 9 weeks on the market, beating the previous record holders: Sun and Moon. Nintendo first party games sold 56.59 million units, up 26% over 2018. Third party games saw a massive 50% increase in sales during the same time period.
Nintendo Switch Online now has more than 15 million paid memberships worldwide. Nintendo says they’ll continue to enhance the appeal of the service to bring more features and more fun to the Switch.
When compared with 2018 hardware sales, the original model of Switch was slightly down in 2019. The addition of the Switch Lite hardware helped propel the overall number well above. However, it seems that Nintendo is not content with the sales performance of the Switch Lite. Indeed, from personal anecdotal evidence it seems like the Lite hasn’t sold nearly as well as Nintendo thought it would. Many stores never ran out of the devices, whereas the original Switch was often sold out across the country, especially this month (January 2020). Nintendo believes that they have not yet fully communicated the special features and appeal of the Switch Lite, and they hope to address this going forward.
Perhaps most interesting (and disappointing to us) is that Nintendo has confirmed they have no plans to launch a new Nintendo Switch model during 2020. This should squash all of the rumors of a “Switch Pro” coming out sometime this year.
It makes sense for Nintendo to get out ahead of these rumors, as they no doubt have a detrimental effect on potential system sales for the year. By confirming there won’t be any new models of Switch releasing in 2020 they put prospective buyers’ minds at ease and can purchase with confidence. That’s not to say they won’t continue to have special editions and new colors!
Lastly, Nintendo has doubled down on the Switch and continues to create new software for the platform. This isn’t a shocker, but it’s interesting that they felt they needed to spell it out. Perhaps with all of the excitement surrounding the impending launches of the PlayStation 5 and Xbox Series X, Nintendo just wanted to remind everyone that the Switch is here right now, and it’s going to continue to be their priority for the foreseeable future.
Nintendo Policy Briefing | 3rd Quarter FY 2020