In the 12-month period ended March 31, Nintendo earned ¥489 billion ($4.4 billion) in revenue, slightly down on the ¥504 billion it earned in the previous year. However, net profit increased from ¥17 billion in FY2016 to ¥103 billion ($925 million), beating Nintendo's own forecast by 14%.
The company said that the difference was down to better than expected shipments of the Switch, which sold 2.74 million units in March alone. That figure was attained by Reuters, which attended a press conference with Nintendo CEO Tatsumi Kimishima in Japan. Kimishima said that the company expects to sell a further 10 million units in the current financial year.So far, so good. Where I start to have issues with the hype, though, is when Nintendo start trying to draw parallels between the Switch's launch and that of their previous console success, the Wii:
According to Reuters, Kimishima said he was "relieved" by the console's early performance. "If the 10 million target is achieved ... that means the sales momentum would be close to the Wii," he said.
There's a problem with that comparison, though: the Switch is not the Wii, and the market that it's launching into is not the same as one that the Wii launched into.
Nintendo's Wii was a pop-culture phenomenon. Launching in 2006, at the start of its console generation alongside Microsoft's XBox360 and Sony's PlayStation 3, and prior to PC gaming renaissance, which didn't really get going until 2010, the Wii didn't have to vie for market share with established competitors. Everyone was starting from zero; no platform was coming into the year with tens of millions of customers who already owned huge libraries of compatible games.
The Wii had a couple of other features that gave it a competitive edge. One was its price point; the Wii was cheaper than its competitors. Its control scheme was also unique, and intuitively easy to use; children too young to read, and whose hands couldn't really wrap themselves around the standard XBox or PS3 gamepad, could still grasp and wave around the Wii's baton, as could older players who might suffer from, say, arthritis.
The elegance and simplicity of that interface also made it easy for non-gamers to use. You didn't have to know from experience which buttons normally did things in games, or work through a lot of tutorials to learn how to control the games. The result was a platform that could connect players from three to ninety-three; children could play with their grand-parents, allowing multiple generations of families to all equally access and enjoy gaming, really for the very first time in the history of video games.
The result was lightning in a bottle; people who Microsoft and Sony hadn't bothered to design for and market to were suddenly interested in gaming, connecting to and with the Wii in a way that they simply couldn't for the XB360 or PS3. Nintendo really couldn't make enough of them to keep pace with that early demand; stores couldn't keep the Wii on shelves. The only similar example of a game console success was Sony's PlayStation 2, which flew off shelves, in part, because it was also the cheapest DVD player on the market, in addition to being a game console.
None of that is really true of the Nintendo Switch, though. Gamers who'd previously discovered gaming thanks to the Wii have now outgrown it, and are demanding more variety and sophistication in their games, along with better performance. The gimmicky control scheme of the Switch isn't really a selling point, either, with many Switch owners ditching their Joy-Cons for the Switch's Pro controller's better ergonomics.
Unlike the Wii, where the quality of the unit was at least comparable to that of its competitors, the Switch looks and feels cheap, with a plastic screen that gets scratched by its own included dock, controllers that need extra insulating foam installed in order to work properly, and inadequate storage that make it essentially incompatible with the digital distribution that is taking over the industry... the issues just keep coming.
And while none of these might have been crippling if the Switch were launching onto a level playing field, the market that it's launching into isn't a level playing field. Thanks to Steam's 125 million users, PC (which wasn't a factor when the Wii was launched) is dominant in the current market, and Sony's PlayStation 4 isn't just outselling the XBox One, it's also still outselling the Nintendo Switch:
Sony Interactive Entertainment sold 20 million units of its PlayStation 4 console in the last fiscal year, boosting revenue by 6% and operating income by more than 50%.
[...]
Across the entire year, 20 million units of the PS4 were shipped, 13% more than the 17.7 million units in the previous fiscal year. Given that the PS4 had 40 million confirmed sales in May 2016, that puts the total PS4 installed base somewhere around 60 million - possibly just below, but certainly not very far away.
[...]
Looking ahead, Sony expects PS4 shipments to decline to 18 million next year. However, it expects the GNS division to improve in general, with a 14.6% increase in revenue and a 34% increase in operating income.
Remember, Nintendo are saying that they'll be thrilled to sell 10M units in 9 months, a pace of roughly a million units a month on average; Sony, on the other hand, are forecasting sales of 1.5 million units per month for the same period, and that's down slightly from the PS4's sales performance of the previous year. Sony are starting with a 60 million lead in player base, and will probably increase that lead even if Nintendo's Switch performs as well as Nintendo is hoping.
At this point, it's worth remembering that the WiiU had a player base of 13 million when it was discontinued, because developers couldn't be bothered to make games for its different OS and weird control scheme when it didn't have even half as many users as the XBox One... which itself still has only half as many users as the PS4. And the only game of note that the Switch has going for it right now is Zelda; yes, ports of Skyrim and Shovel Knight will probably sell reasonably well to Switch owners who have nothing else to play and a desire to justify their Switch purchases, but ports of games that most interested gamers already own on other platforms aren't going to sell Switches to the skeptical.
And when it comes to Nintendo's own new-game releases for the Switch... is the obligatory new Mario game going to be a better system seller than Breath of the Wild? Will anyone care about the new Mario game that doesn't already own the Switch? Are gamers really desperate enough for gimmicky tech demos like Arms to drop hundreds of dollars on a new console just to get them?
I know that Nintendo fans (and shareholders) have a lot of hopes pinned on the Switch changing Nintendo's fortunes in the highly competitive gaming market, but... how does that happen, exactly? Unless the Switch suddenly starts selling faster than the PS4, fast enough to regain some of the ground that Nintendo lost with the failure of the WiiU, I just don't think that the Switch can ever have anything like the momentum of the original Wii.
And, failing that, I don't see how the Switch does anything but follow the WiiU into irrelevance and eventual obscurity.
[Quotes from gamesindustry.biz.]