In its earnings report for fiscal year 2022 (March 2021 to March 2022), Nintendo said 23 million Switch consoles were sold. This is a 20% drop from fiscal year 2021 when 28.8 million consoles were sold.
This drop in sales comes at an interesting time, considering that the release of the Nintendo Switch (OLED model) was only a few months prior in October 2021. But that doesn’t mean the OLED model was an unpopular release. Instead, the Nintendo Switch’s drop in sales can be attributed to quite a few things.
Dramatic changes in supply and demand in 2021
As the lockdown became a reality in early 2020, people started looking for new ways to entertain themselves at home. Video game consoles were the obvious solution, and Nintendo saw Switch sales skyrocket. Ironically, this may help explain the drop in Nintendo Switch console sales in late 2021/early 2022.
While Nintendo Switch sales for fiscal year 2022 were lower than 2021, it’s still the second-highest level of sales since the Switch’s launch, according to Nintendo’s 2021-2022 fiscal report. This makes sense because most of the COVID-19 related lockdowns occurred in fiscal year 2021 (March 2020 – March 2021).
While it’s impossible to say exactly what sales would have looked like if the COVID-19 pandemic hadn’t hit, it certainly looks like the current numbers are a return to the usual trend thanks in part to the release of the Nintendo Switch (OLED model).
The Nintendo Switch saw sales drop 33.3% and Switch Lite sales fell 56.5%. While the OLED model isn’t a huge improvement, a mere $50 increase meant it was a worthwhile alternative to buying the original Switch. Without the novelty of a new console, Switch sales would likely have been even weaker.
Semiconductor shortages and supply issues
As demand for Switch consoles skyrocketed in 2021, Nintendo has been subject to the same logistical difficulties and supply shortages that have troubled many companies. According to Nintendo, this is the reason for the drop in sales:
Despite the constraints of a global shortage of semiconductors and logistical delays, sales this fiscal year reached the second highest level in the five years since the launch of the Nintendo Switch.
Semiconductors are an essential part of the manufacturing process, so it makes sense that Nintendo would struggle to make enough consoles to keep up with demand.
The Nintendo Switch is over five years old
The Nintendo Switch was released worldwide on March 3, 2017, making it over five years old at the time of writing. Anyone who wants one has probably bought one already and the demand has gone down. As demand declines, sales fall.
The Nintendo Switch has also been plagued with performance issues since its release. Five years later, we are still living them. The release of the OLED model didn’t fix this issue, as the lack of hardware improvements meant that the OLED model wasn’t a huge improvement over the original Switch.
As games continue to get more intensive, Nintendo shows no signs of improving its hardware to match. Unless this happens, Nintendo’s latest games will suffer increasingly poor performance or fail to take advantage of visual quality improvements.
First-party game sales continue to rise
Nintendo’s internal sales for fiscal year 2022 were the highest on record. But at the same time, Switch console sales are plummeting.
This shows that if Nintendo’s games remain as popular as ever, fewer people are buying a console just to play them. Releases of first-party Nintendo games, like Pokémon Legends: Arceus and Kirby and the Forgotten Land, show that even well-known titles aren’t enough to reverse declining Switch sales.
That’s not really a problem for Nintendo, though. In a May 2022 investor Q&A session translated by Video Games Chronicle, Nintendo mentioned its focus on building “long-term relationships with our consumers” through gaming and non-gaming software.
The future of Nintendo Switch
Unfortunately, it’s impossible to point to a single reason for the Switch sales slump. While the biggest impact is due to supply chain shortages and shifting sales due to the COVID-19 pandemic, Switch sales are impacted by a lackluster hardware update in the form of the OLED model. and the fact that most people who already want a Switch have one.
While Nintendo Switch sales have slowed, Nintendo isn’t concerned. People are still enjoying their Switch consoles, and the 2022 releases promise a bright future. While the release of the OLED model wasn’t as groundbreaking as many had hoped, it shows that Nintendo is still fully committed to the Switch, even as talk of a new console is growing.
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