Based on the article you posted it's expected that close to 8 million consoles might be sold until 2024, personally, I think that's underestimating the Switch especially if Tencent is pushing more Japanese games on the local market. Perhaps game pricing might be different in China, but we are talking about substantial sales, in South Korea the tie ratio is 1:3/1:4 so if we apply that to let's say 6 million Switch consoles in China until 2024 - that translates to 18 to 24 million additional software sales. I think the potential for the Switch in China is much higher as it's fast replacing the US as the biggest potential market for entertainment products. One of the reasons for example that some movies are making bank by being approved & released in China. There would be a similar situation for games, so PG games from Japan that are able to make it through the approval process will see huge growth in the coming years. One of the reasons I highlighted Marvelous & Capcom's relationship with Tencent, is that these are some of the companies that would gain the most out of the Switch success with their current planned line-up.
We are going to see a major recalibration in the coming years because of Nintendo becoming the market leader for console gaming in most of Asia. Consoles had huge competition from PC and mobile gaming in Asian markets like South Korea, Taiwan and China. Internet cafes were huge before the pandemic hit in most of China, Taiwan, SEA region. I'm inclined to think that the other reasons consoles have been lagging behind in Asia is because of their form factor and western focused design which assumes you have a lot of space and a TV where you live. Having both a Lite model and something that can connect to a monitor provides much better options. The fact that most AAA games would never get approval in China is another thing to consider. Finally we also have the recent focus of the Chinese goverement to address gaming addiction. Switch has always had a parental app, so by design it provides control over gaming behaviour - while the majority of Nintendo 1st Party games don't contain gambling mechanics.
In the past, Nintendo hasn't really had a device or the needed partnerships in place to get a foothold in China. Right now they are riding on a high due to games and a device that resonated so well with the region. COVID, coupled with Animal Crossing and Ring Fit has accelerated demand and has been able to drive a 150% increase YoY when in 2019 they were already selling over half a million in Taiwan and South Korea alone. China is the second-biggest video game market in the World, in terms of just PC and Mobile it's probably the World's biggest market, so even if we are looking at a 1% to 5% increase of the current market size by 2024 that basically means very substantial opportunities for growth, that shouldn't be underestimated. I think this will be noticeable during their next quarterly results when the numbers come out for Ring Fit, New Horizon, and hardware sales in the Other region.
