Technology
Monday, January 8th, 2024 3:38 pm EDT
Key Points
- Anticipated Launch and Timing Concerns: Analysts suggest that Nintendo is likely to unveil a new Switch console in 2024, aiming to leverage the enduring popularity of its iconic characters like Mario and Zelda. The original Nintendo Switch, launched in March 2017, pioneered a hybrid concept allowing gamers to seamlessly transition between TV and handheld play. Despite the initial success of the Switch, recent signs of slowing sales, with a 4% YoY revenue drop and a 19% profit decrease in the September quarter, indicate the need for innovation. Analysts, including Serkan Toto of Kantan Games, Piers Harding-Rolls of Ampere Analysis, and Atul Goyal of Jefferies, offer varying predictions for the launch timeframe, ranging from the second half of 2024 to the Fall or Spring/Summer of this year, depending on recent sales performance.
- Rationale for Launch and Hybrid Approach: The speculated “Switch 2” is expected to follow the hybrid approach of its predecessor, combining at-home console gaming with the portability of mobile games. Analysts envision the new console, often dubbed “Switch 2,” as a successor rather than a mere upgrade, emphasizing the need for Nintendo to drastically improve specifications after seven years. The strategy is likened to an evolution rather than a revolution, drawing parallels to an iPhone model. This approach aims to ease the transition for the existing Switch audience into a more powerful form factor while providing opportunities for Nintendo to sell compelling first and third-party games to a scaled audience.
- Sales Expectations and Impact of COVID-19: Analysts express varying opinions on the potential success of the “Switch 2.” While Piers Harding-Rolls anticipates the new console achieving similar sales levels to the original Switch during its first Q4 sales period (around 7 million or 8 million units sold), Moffett Nathanson analysts are skeptical about matching or surpassing the success of the Switch. They argue that the current Nintendo console benefited from increased demand during the Covid-19 pandemic when more people purchased gaming consoles while staying at home. The analysts suggest that the next console could match or exceed early Switch performance but might trail off in subsequent years as Covid-inflated comparisons become more challenging to overcome.
Analysts predict that Nintendo is gearing up to release a new Switch console in 2024 to capitalize on the enduring popularity of its iconic characters like Mario and Zelda. The original Nintendo Switch, launched in 2017, introduced a hybrid concept allowing gamers to seamlessly transition between TV and handheld play. Despite its success, recent signs of slowing sales and a need for innovation have prompted analysts to anticipate a new console this year. While Nintendo’s shares have surged over 200% since the Switch’s launch, the company reported a 4% drop in revenue and a 19% decrease in profit in the September quarter of the previous year. Analysts expect the new device, often referred to as “Switch 2,” to maintain the hybrid approach and potentially include upgraded capabilities for the console controllers.
Industry experts, including Serkan Toto of Kantan Games and Piers Harding-Rolls of Ampere Analysis, project a launch in the latter half of 2024 or the fourth quarter, respectively. The timing, according to Atul Goyal of Jefferies, may hinge on the holiday quarter sales performance of the existing Switch. Capitalizing on the success of recent movie releases featuring Nintendo characters, such as “The Super Mario Bros. Movie,” which grossed over $1 billion, further emphasizes the strategic timing for a new console launch.
Details about the “Switch 2” remain elusive, but analysts anticipate it to be a successor rather than a mere upgrade, with improvements in specifications to address the seven-year gap since the original Switch’s debut. A gradual evolution in console strategy, akin to an iPhone model, is expected, allowing Nintendo to leverage its existing audience while introducing a more powerful form factor. Analysts at Moffett Nathanson foresee challenges in surpassing the extraordinary success of the original Switch, which benefited from increased demand during the Covid-19 pandemic. While the new console is expected to perform well initially, matching or even exceeding early Switch sales, sustaining that momentum over the long term may be influenced by the evolving gaming landscape and changing consumer behaviors post-pandemic.
For the full original article on CNBC, please click here: https://www.cnbc.com/2024/01/08/nintendo-switch-2-console-coming-in-2024-analysts-say.html
