Some people will recognize "open your eyes" as a quote from an upcoming video game that releases on Nintendo Switch, but it is more than that. It doesn't just mean that you should make predictions while essentially being blindfolded by your own choice. Open Your Eyes is also the name of the level 3 finisher of Baten Kaitos Origins' character Milliarde that hits all enemies for high damage. That's what this thread is going to do.
Over the past couple of days it was hard to miss how negative this forum has been in regards to Switch's sales prospects. What bothers me the most is that the vast majority of people think that decline for Nintendo is a given, some even going as far as already high-fiving each other because now it's only a wait of a couple of years more until they will be able to play Nintendo games on PlayStation. I know it stings that PS has sold hundreds of millions consoles, but has always missed out on the best games; people long for the day that this devastatingly long streak comes to an end.
At this point some people will already be upset enough to hammer in an angry response, but you really should read on. I am going to challenge the assumption that Nintendo has nowhere to go but down, so I will list many smaller assumptions that typically feed into the one big assumption. Not everything will apply to everyone, but at least something has to apply to everyone, otherwise you wouldn't arrive at the one big assumption that makes you throw out numbers like 20, 30, 40 or 50m units lifetime
1. "Nintendo's mindshare is on the decline."
Let's start with an obvious one. People aren't interested in Nintendo anymore. They have given up on them. But is this really true?
Since we are on a sales website, it stands to reason that we use sales data to make predictions. If we look at what Nintendo has done in the recent past, we won't get around their smartphone games which had a verifiably positive effect on Nintendo's hardware and software sales. When Nintendo announced that they would be making smartphones and provided their strategic outlook, people kept ignoring it and instead opted for the line of thinking that Nintendo is selling out or already planning their exit from the dedicated gaming hardware market. But instead things played out like Nintendo expected and the sales of their dedicated gaming hardware and software received notable boosts. Following the release of Pokémon Go, the 3DS won an NPD month out of nowhere and was up year-over-year in all following months. Japan showed a similar effect. For Europe we don't get any numbers, except for Nintendo's shipments; they were up too.
Nintendo's strategy for IP awareness is working. Nintendo's mindshare is on the rise.
2. "Most Nintendo fans here don't like the Switch all that much."
This is expanded on with reasons like "price is too high" and "Nintendo fans want powerful hardware." But how many of those people are really worth listening too?
For starters, most of those people bought a Wii U for $350. At that point a red flag should go up, because we are on a sales website and can easily check whether or not someone's opinion is in line with actual market reception. Since the Wii U was a huge failure, anyone who thought that it was worth $300 isn't exactly the best person to talk to when it comes to judging price and value of a Nintendo console. Regarding powerful hardware, we have options to look at. Firstly, the GameCube is the best example of powerful Nintendo hardware; it was a failure. Secondly, if Nintendo fans truly valued powerful hardware, then each Nintendo home console should have comfortably outsold its handheld counterpart in each generation; sales data begs to differ.
An irrelevant minority shouldn't go into sales analysis, or at the very least should not be considered as representative of the majority.
3. "Switch is screwed because people got burned by the Wii U. People don't trust Nintendo anymore."
A look at sales data should make it obvious that the majority of Nintendo fans skipped the Wii U altogether, so the only people who got burned by game delays and droughts are the ones who bought a Wii U. Everybody else didn't really give a damn about the Wii U to begin with and the only hard feelings that would have existed date back to over five years ago when Nintendo announced that they would make a piece of trash. Sane people do not hold grudges over video games forever.
Also worth of note, Nintendo is clearly rebranding itself. A new generation means that a company can get rid of baggage. GC being a failure didn't harm the Wii.
4. "No Western multiplatform support means that Switch is dead on arrival."
Sales data of all previous Nintendo systems shows that multiplatform support, especially from the West, didn't play much of a role. Nintendo isn't like PS and Xbox, and people do not buy Nintendo systems to play PC ports. The most important games from America and Europe (important means that we can say they have a notable positive effect on Nintendo's hardware sales) that are still relevant today are IPs like LEGO, Skylanders and Just Dance. Nintendo has no trouble getting them anyway.
5. "The Switch launch lineup is weak."
For the love of Din, Farore and Nayru, take a look at sales data! Notice a pattern here? You are supposed to use numbers, not feelings, when making sales predictions. In March and April Nintendo will already have ticked the boxes for epic single player game (The Legend of Zelda: Breath of the Wild) and massively popular multiplayer game for both online AND offline modes (Mario Kart 8 Deluxe). How many consoles in the past launched with such juggernauts?
"But Zelda and Mario Kart are on the Wii U."
What did I say about sales data? Use it, you simpleton. Not only was the Wii U a huge failure, but ports of great games have sold well on previous consoles. Market reception tells us that games like The Last of Us, Halo: The Master Chief Collection and, of course, Grand Theft Auto V are more desirable than almost all of the new stuff that has come out.
And if you belong to the trolls who push lines like "Nintendo fans buy the same games over and over again" and "Nintendo fans buy anything Nintendo puts out", then that would be all the more reason that you conclude that the Switch launch lineup is a beast.
6. "Nintendo didn't show many of their own games. Looks like there will be Wii U-like droughts again."
You are too used to other console reveals where wild promises and announcements are made. All Nintendo games that were announced are scheduled for 2017. You are also oblivious to the fact that Switch will get all of Nintendo's games as Switch will be the only Nintendo console this generation. Droughts like on the Wii U are simply not going to happen.
7. "Nintendo can't sell a system primarily with their own games."
Ever heard of sales data? You can browse the topseller lists of all Nintendo systems here on VGC. Take a look at Nintendo's two most recent consoles:
There are ten unique IPs that sold more than 4m copies with individual installments. No other video game developer has such a varied and successful portfolio of IPs. Nintendo games have always been the main pillars for success, regardless of how many third party games were put on their platforms.
8. "3DS and Wii U hardware had no problems, or at least not as many as Switch has."
I don't think anybody would say this, but a lot of you must be thinking it regardless. If you expect further decline for Nintendo this generation, you basically must believe that the 3DS and Wii U were better executed than Switch.
What is wrong with you?
9. "Nintendo's addressable market is limited to Wii U and 3DS owners."
Oh man, this is the point where you really have to open your eyes and not be so narrow-minded. You let your personal feelings dictate your sales predictions. "Switch is expensive, doesn't have Western multiplatform games etc." You project your idea of what console gaming has to be on everyone else. You believe that people who do not own and want an eighth generation system (Wii U, 3DS, PS4, PSV, XB1) are not interested in consoles, period. You don't want to consider the possibility that all of the eighth generation systems might suck to a lot of people. I mean, look at the choices of the eighth gen: Nintendo does what they want with no respect for previous sales data, Sony and Microsoft offer dumbed down PC gaming, plus a handheld that doesn't get any games worth of note.
Now Switch comes and offers completely different values. A passionate gamer who couldn't care less about the crappy eighth gen could look at Nintendo's new console and say: "Zelda is a massive open world game again, that's right up my alley because that's the Zelda I loved. I can take this thing to my office, effortlessly set it up during breaks and rock games like Mario Kart, Bomberman and Street Fighter 2 with my colleagues. And it's only $300? Are you kidding me?"
The point is, the value evaluation for Switch in the real world will be very different to what is done on gaming forums where local multiplayer and leaving your house are frowned upon. In the real world the gaming of the NES and SNES days is highly valued. On gaming forums SNES games are considered worse than indie games, because "indie games are newer". Switch is set up to resonate strongly with the passionate gamer of the old days who nowadays has no console made for them. If you weren't so close-minded, you'd realize that Nintendo doesn't even need non-gamers to make Switch a big success. There is a large market that is not properly catered to, and that's the former gamer.
10. "Switch's price is too high."
This is the best point that is made for why the Switch will have problems. But is it really that big of a concern? What are the alternatives to Switch? There is none, so Nintendo can be bullish with the price. Eventually it will come down and have different bundles.
I'll leave this thread incomplete because it is already too long as it is. Discussions on VGC should make more use of sales data again. It's not smart to assume everything will stay as it is, because when did that ever hold true? It's also not smart to underestimate Nintendo. The VGC community still feels the burn from Splatoon where it was a foregone conclusion that the game would fail because Nintendo's trajectory was one of failure and the game was different in pretty much every way to regular shooters. And now the community looks at Switch and doesn't hesitate for a second to use the same logic that was applied to Splatoon. Did you not learn anything? Switch offers different values than any console Nintendo has made before.
Didn't proofread, so there's a good chance that some things are missing in the points that I brought up. Want to watch football now. I regret that I didn't put in more insults, but that stuff requires fine-tuning.
UPDATE: April 29th, 2017
Earlier this week Nintendo released their financial results for the fiscal year that ended on March 31st, 2017. Here are the important shipment numbers as well as the forecast for the following fiscal year:
Switch - 2.74m (original forecast was 2m)
The Legend of Zelda: Breath of the Wild (Switch) - 2.76m
Forecast for Switch hardware - 10m
If the forecast is met, then Switch's total after 13 months (12.74m) will almost match Wii U's lifetime numbers (13.56m), therefore serving the people who predicted Switch to do worse than Wii U not only a slap in the face, but a brutal kick in the groin area. Similarly, people who predicted 20m or 30m lifetime won't be seeing their predictions come true either. Those who said 40m or 50m can keep their hopes alive. For now.
The prediction thread that inspired the thread you are reading here
50m was generally the high end for predictions which still constitutes a significant decline over the Wii U and 3DS combined. The actual consensus was closer to 30m which is insane. The amount of people who predicted improvement was both miniscule in the thread as well as in the poll. As of this writing, the poll shows only ~7.5% predicting numbers greater than Wii U and 3DS combined, and this includes lots of troll votes for the >100m option which accounts for ~5.5% of the grand total, compared to only a ~2.1% share for the range of 80-100m.
My prediction in the thread was more than 100m lifetime. Something that already now looks a lot more likely to be closer to the actual outcome than the VGC consensus. Nintendo can beat my 2017 prediction of 8m units, maybe even comfortably so. But right now is the most volatile period of the Switch's lifecycle, because the price is at its highest point while the message that Switch will receive all of Nintendo's games going forward has yet to trickle down to the massmarket. I am not sure how 2017 will play out, but 2018 onwards is going to be smooth sailing with high sales numbers for both hardware and software. Long term success is a lock, short term is very hard to say because it's unclear how quickly the Switch concept can gain traction and maintain momentum. Japan and the USA are looking good, but the fragmented nature of the European market remains a question mark.
"Rol, you are so arrogant. A Nintendo fan predicting success for Switch is nothing unusual."
That's what many of you probably think right now. But there are two problems.
1. For Switch predictions, even most of the biggest Nintendo fans were strolling around like beaten dogs after the Wii U disaster and were cautious with predictions in the range of 40-70m. It was basically the exact opposite of the generation before when even most of the biggest Nintendo haters didn't dare to predict less than 50m units for the Wii U. My confidence in Switch was not a given, if the circumstances are properly remembered.
2. I was actually one of the few who predicted big failure for the Wii U. People tend to say that we must wait for sales to come in to make proper predictions, but that is wrong. This thread right here was posted on January 15th, 2017; that's only three days after the proper reveal of Switch. Similarly, it didn't take more than a couple of days for me to doom the Wii U and have Nintendo fans and others argue with me for ~1.5 years leading up to Wii U launch for how wrong I supposedly was. Anyway, here is a thread that I posted in July 2010 to explain why Nintendo is in a good position to stay #1 in the video game business, but the most interesting part starts at post #269 which was a bump on June 11th, 2011. That's only a couple of days after the Wii U was unveiled.
This is where my journey of being let down by Nintendo started. Of course you probably remember my recent past (say, the last two years) as having a positive outlook for Nintendo despite both the Wii U and 3DS being in trouble, but that's because I look into the future while the VGC community around me is stuck in the present. There have been notably positive signs for Nintendo ever since the day they announced NX and that caused the change of my general attitude towards Nintendo. I am ahead of the curve, be it positive or negative.
Here's food for thought: How many people are able to claim that they got both the Wii U and Switch correct?
Why is Switch going to be a success?
This thread was originally posted to highlight fallacies of the conventional wisdom. Point 5 ("Switch's launch lineup is weak") should already turn some doubters into believers, because it's the first point that can be proven one way or the other. With Switch still being widely sold out in late April with The Legend of Zelda: Breath of the Wild leading the way and Mario Kart 8 Deluxe completing the one-two punch for launch, it's clear that the thought of a weak launch shouldn't have been entertained to begin with, but that didn't stop NeoGAF and the rest of the internet to come up with preposterous ideas.
More importantly though, I wrote another thread to talk about Nintendo's positioning and strategy for Switch:
This was on February 14th, 2017. It was a given that Switch was going to be a success, what is not as easy to predict is how successful it is going to be, because the console reaches out beyond the people who were accounted for by sales data during the eighth generation. A close-minded analyst pretends that nothing outside the numbers exist, but an open-minded person would say that there may be no products that satisfies all of the existing needs. The mother of all fallacies is that the Wii U failure led to the conclusion that nobody wants Nintendo anymore; the correct conclusion is that the Wii U sucked butt, so good hardware was going to go a long way to get Nintendo back on track. Switch is good hardware.
Another important factor in Switch becoming a success is that Nintendo didn't suck up to third parties. Switch couldn't exist if Nintendo tried to appease the likes of EA, Ubisoft and Activision. Here's a thread that explains why Switch is the correct course of action:
It was written on June 29th, 2014. I like it because people rushed in to stick up for third parties. I also like it because with Switch Nintendo ended up doing what I wanted and Switch is succeeding. I added this because newer VGC members might not be familiar with my posting history, just like they might not know that I was always against the Wii U and am not one of the people who championed it at first and then turned around to bash it when it didn't become a success.
More updates to this thread will be done in the following quarters, but fear not, they won't be as long. The original original post was incomplete, so for this update I had to provide additional information that was either missing or requested, like my posting history.
UPDATE: July 31st, 2017
Nintendo's financial report provided updated figures for Switch hardware and its bestsellers by June 30th, 2017.
Switch - 1.96m for the quarter, lifting the LTD number to 4.70m.
The Legend of Zelda: Breath of the Wild (Switch) - 3.92m (+1.16m this quarter)
Mario Kart 8 Deluxe - 3.54m
1-2-Switch - 1.22m
ARMS - 1.18m
Nintendo is on track to meet their hardware forecast of 10m units for the current fiscal year. During the past quarter Switch shortages have continued in Japan and the USA while easing up in Europe. It's safe to say that global sell-through has surpassed 4m and momentum will remain strong with the successful launch of Splatoon 2. My prediction of 8m sold through in calendar year 2017 will be easily surpassed, by how much has to be seen.
A variety of interesting links to VGC threads and predictions of analysts
*Quick edit on August 3rd: In light of recent necrobumps of a couple of the below VGC threads, please refrain from necrobumping. You can get moderated for doing so. You can read the threads just fine without bumping them.*
A thread that discusses Switch's sales prospects. Can it beat the Wii? Thread created on May 2nd, 20
A thread from October 2016 that declared that Nintendo is committing the same mistakes with Switch as they did with Wii U. Also, NX (a.k.a. Switch) is dead on arrival, written in June 2016.
Anfebious predicts lifetime sales of more than 100m units on May 24th. Nautilus predicted 100m right after the Switch teaser trailer in October 2016, a highly speculative thread because many important details about Switch were kept under wraps until January 12th, 2017.
On January 17th Michael Pachter predicted Switch sales of 1m units for the fiscal year ending March 2017 and a further 4m in the fiscal year ending March 2018.
Following the Switch presentation on January 12th, a GDC survey among 4,500 developers had only 50% of them answer that Switch could beat the Wii U's lifetime sales. Apparently that qualified as optimism.
On January 13th, our friends from Polygon wrote an article about the disappointment of Nintendo fans who were strongly considering to delay their Switch purchase until at least the holidays.
Lifetime sales predictions for Switch, a thread created on March 30th, 2017.
On July 8th Michael Pachter can see Switch selling 50m lifetime, but can't see 100m units because that would be 20m per year.
This concludes this quarter's update. The outlook for Switch has already become considerably more positive since half a year ago and at the time of this writing the vast majority of predictions and expectations have risen above 40m units lifetime.
UPDATE: October 30th, 2017
Nintendo's latest financial report has been released.
Switch - 7.63m (+2.93m this quarter)
The Legend of Zelda: Breath of the Wild - 4.70m (+0.78m)
Mario Kart 8 Deluxe - 4.42m (+0.88m)
Splatoon 2 - 3.61m (NEW)
1-2-Switch - 1.37m (+0.15m)
ARMS - 1.35m (+0.17m)
More importantly, Nintendo raised their forecast for Switch hardware shipments from 10m to 14m. Sell-through numbers for calendar year 2017 should exceed 12m, beating my initial expectations (8m) by over 50%. This also means that the few people who predicted Switch to sell less than Wii U will be officially confirmed to be wrong in less than one year.
A variety of interesting links to VGC threads and predictions of analysts
Credit Suisse predicts 130m Switch consoles sold by the end of 2022.
A prediction thread in September 2017 for lifetime sales of various consoles, including Switch. The minimum prediction for Switch has raised to 40m, just like I expected in last quarter's update of Open Your Eyes. The community consensus has moved into the area of 80-90m, so it more than doubled compared to eight months before.
Then again, not everyone has seen the light yet. Posted in August in this very thread:
A flashback to how dire things looked for Switch right after the presentation in January 2017. Nintendo should go third party.
Links to the threads for the Switch reveal trailer and initial thoughts, both created on October 20th, 2016.
This concludes this quarter's update. By now there's little doubt that Nintendo has a winner on their hands with Switch. The question has shifted from "Will it succeed or fail?" to "How much of a success is it going to be?"
*Added on November 2nd: Colin Moriarty was right.
*Added on January 8th: An article from prior to Switch launch. No Grand Theft Auto, Read Dead Redemption, Call of Duty or Assassin's Creed for Switch. Doesn't bode well for Nintendo, its stock and investors.
UPDATE: January 31st, 2018
Nintendo's latest financial report has been released.
Switch - 14.86m (+7.23m this quarter)
Super Mario Odyssey - 9.07m (NEW)
Mario Kart 8 Deluxe - 7.33m (+2.91m)
The Legend of Zelda: Breath of the Wild - 6.70m (+2.00m)
Splatoon 2 - 4.91m (+1.30m)
1-2-Switch - 1.88m (+0.51m)
ARMS - 1.61m (+0.24m)
Xenoblade Chronicles 2 - 1.06m (NEW)
Nintendo increased their forecast for Switch hardware shipments by 1m to 15m for the current fiscal year. Switch has officially beaten Wii U now (13.56m), and did it in just ten months. Similarly, Switch's profit levels will be comfortably ahead of the 3DS and Wii U era, likely besting Nintendo's last gen consoles' lifetime achievements within the first full fiscal year. This proves that it really didn't take much for Nintendo to get things in order again. In theory, had Nintendo sold as many consoles with Switch as they did with 3DS and Wii U combined while avoiding to sell hardware at a loss, they were going to sit pretty.
From a financial point of view, it was always preposterous to suggest that Nintendo should go third party. A comparison between March-December 2016 and March-December 2017 shows an increase of 175% in revenue, almost 500% in operating profit and almost 300% in ordinary profit. The above hypothesis has been verified by Switch quickly.
The conclusion after 2017 is that the consensus of failure for Switch (50m lifetime or less) has been roasted and nowadays only a few crazy people remain left roaming. This thread wasn't created in response to their predictions, because there will always be crazy people. But one year ago the vast majority believed that Switch wasn't going to succeed. This changed in a big way over the course of 2017, so neither this update nor future ones will include many, if any, links to predictions of the VGC community or analysts.
UPDATE: April 26th, 2018
Nintendo Switch has completed its first full fiscal year and has been on the market for 13 months in total.
Switch - 17.79m (+2.93m this quarter)
Super Mario Odyssey - 10.41m (+1.34m)
Mario Kart 8 Deluxe - 9.22m (+1.89m)
The Legend of Zelda: Breath of the Wild - 8.48m (+1.78m)
Splatoon 2 - 6.02m (+1.11m)
1-2-Switch - 2.29m (+0.41m)
ARMS - 1.85m (+0.24m)
Xenoblade Chronicles 2 - 1.31m (+0.25m)
Kirby Star Allies - 1.26m (NEW)
The first 10m seller is in the books with Super Mario Odyssey while Mario Kart 8 Deluxe is bound to follow in the next quarter. Breath of the Wild could go either way next quarter, but is guaranteed to cross 10m in 2018. Splatoon 2 has a much longer road ahead of it, but will eventually get there.
For the fiscal year ending March 2019, Nintendo is forecasting Switch hardware shipments of 20m units which would bring the LTD total to 37.79m. Switch had passed Wii U lifetime shipments by December 2017, the next Nintendo console in front of it is the GameCube at 21.74m. This mark is very unlikely to be reached by June 2018, but it will be comfortably surpassed during the quarter that ends in September 2018.
UPDATE: July 31st, 2018
Switch - 19.67m (+1.88m this quarter)
Super Mario Odyssey - 11.17m (+0.76m)
Mario Kart 8 Deluxe - 10.35m (+1.13m)
The Legend of Zelda: Breath of the Wild - 9.32m (+0.84m)
Splatoon 2 - 6.76m (+0.74m)
1-2-Switch - 2.45m (+0.16m)
ARMS - 2.01m (+0.16m)
Kirby Star Allies - 1.89m (+0.63m)
Xenoblade Chronicles 2 - 1.42m (+0.11m)
Donkey Kong Country: Tropical Freeze - 1.40m (NEW)
Mario Tennis Aces - 1.38m (NEW)
That Switch hardware shipments would disappoint had to be expected after the weak sell-through in the USA during the months of April and May. Still, the actual worldwide result of 1.88m shipped underwhelms even more, because sell-through in Japan had been good during the quarter. Conversely, overall Switch software shipments are on pace to meet the forecast of 100m for the fiscal year, so it's not all bad.
Nintendo's projections for the fiscal year remain unchanged, but something will probably have to give eventually, be it unit sales, revenue and/or profit. Q1 of the current fiscal year has been weak and the culprit is easily identified: The lack of release of a guaranteed 5m+ seller during both quarters of calendar year 2018 had a negative impact on momentum; in calendar year 2017 Nintendo released one 5m+ seller in each quarter. The remedy to make things pick up again isn't rocket science either: Big games, bundles, a possible price cut, an improbable revision. Pokémon and Super Smash Bros. in November and December constitute a strong holiday lineup, but fiscal Q2 is about as strong (or rather weak) as Q1 has been.
Failure to meet forecasts is no doom and gloom though. In a scenario where Nintendo falls short on hardware, software and profits by 20% each, we'd still be looking at 16m hardware, 80m software and ~$1.5 billion in profits. That's still plenty healthy. It's important to remember how the perspective of success and failure has changed in the last 18 months. Before the Switch's launch it was deemed a success if Nintendo manages to remain in the hardware business, now it's a failure if Switch can't beat the PS4 in lifetime sales. The bottom line is that the current lull won't put Switch's future into jeopardy, so there's no reason to worry.
What's most affected by this weak fiscal quarter is Switch's ability to pass older consoles in lifetime sales. Three months ago it looked like Switch would comfortably beat the GameCube by September 30th, now it's not even a sure thing anymore. There are 2.07m left to go, so if fiscal Q2 is flat in comparison to Q1, Switch will fall short. Nintendo stated that sales momentum has picked up since E3, but we'll have to wait and see how strong of an increase it has been.Last edited by RolStoppable - on 31 July 2018