Nintendo selling less Switch consoles according its latest earning report (that link opens a PDF file). And the popular video game manufacturer reduces its 2022 sales forecast for the highly-popular console. Why is this happening? Let’s review the issues affecting the company.
Nintendo Selling Less Switch Consoles Due To Parts Shortage
Reviewing the earnings report I see the company sold 6.68 million Switch consoles from April 2022 to September 2022. This figure is the total of all the SKUs (Base Console, OLED Model, and Lite Console). This number is down about 1.6 million units from the same time-frame in 2021. During that time Nintendo sold 8.28 million Switch consoles. Overall, the lifetime sales of the console is 114.3 million units.
What’s the reason for the decrease? In the Consolidated Operating Results section of the report the company states: “hardware units sold decreased by 19.2% year-on-year to 6.68 million units, due to factors such as a shortage of semiconductor and other component supplies.”
Nintendo Selling Less Switch Consoles And Lowered Its Sales Forecast
Digging into the report further I came to the section called Consolidated Financial Forecast. In that section the company explains why unit sales are lower than last year: “While there is a gradual improvement in semiconductor and other component supplies and a recovery trend in hardware manufacturing for Nintendo Switch, taking into consideration production and sales performances thus far, we have modified the Nintendo Switch hardware sales units forecast for the fiscal year.”
With that explanation I see Nintendo lowered their sales forecast for their console for the rest of 2022 and into March 2023. The company believes it will sell 19 million units instead of the 21 million it forecast.
Does This Signal Trouble For The Switch?
Does Nintendo selling less Switch consoles signal trouble? I don’t believe so. Nintendo made a profit even though it sold less units because it’s selling more software titles (physical and digital copies). In addition, DLC content is selling well for the video game manufacturer, and so is Nintendo Switch Online. Finally, 2023 is going to see major releases for the Nintendo, specifically The Legend of Zelda: Tears of the Kingdom.
However, the current model of the Nintendo Switch turns 6 years old in March 2023 and will run into problems competing with the PS5 and the Xbox Series S/X which are more powerful. Thus, Nintendo could continue to sell less consoles in the upcoming year even though it has big releases coming. To combat that I believe the video game manufacturer will release an upgraded Switch console to stay competitive. However, I have no evidence to back up that claim.