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The_Liquid_Laser said:

I do think you are still insufficiently bullish on Switch.  It's currently selling about even with the DS and yet you say the chance of it outselling the DS is "nil".  That is overly pessimistic.  If a system sold like that once, then it definitely has a chance of selling like that again.  The DS's legs from here on aren't even terribly impressive.  It had another 1-2 good years and then sales plummeted hard.  You really think Switch has no chance of outselling DS?  Really?

About a year ago, you were saying that Switch peaked in 2019 and it would decline in 2020.  Instead, Switch sales skyrocketed in 2020.  You were overly pessimistic in the past.  You weren't even remotely close.  Perhaps, you still are overly pessimistic?  You might want to consider that.

Nobody expected the Switch to sell what it did. If anybody actually did predict that, and did so prior to the pandemic, they are an outlier (and I would challenge them to prove themselves). As I said, the most optimistic estimates for U.S. Switch sales in 2020 at Era were below 7M. I don't believe we had a comparable thread here at VGC, but I don't recall the general consensus a year ago being the Switch would sell well anywhere close to 9M units in the U.S. in 2020. Even NPD's Matt Piscatella predicted that "All in-market hardware should see declines throughout 2020."

And why was that? Why did everyone underestimate the Switch? Because 2020 was not a normal year. The Switch showed unprecedented growth last year because we live in unprecedented times. There hasn't been a pandemic like this since long, long before video games were a thing. It's almost like people refuse to accept the fact that the Switch benefited from external factors like the pandemic and resulting increase in spending on at-home entertainment, which was further aided by stimulus checks. Even though the whole market clearly benefited, lots of people were like "No. It was Animal Crossing that did all that," even though there's no evidence that that was the case, or even that, in the abstract, a single game could, directly and by itself, propel significant YoY growth for months on end. It's been clear for months that a lot of people have thought I was wrong for even daring to suggest that the Switch's success in 2020 might be due largely to external factors, even though that's what the evidence clearly indicates. Presumably, the very idea is seen as implying that the Switch somehow didn't fully "earn" its sales, and is therefore seen as some sort of slight against the system.

Well, I don't have a dog in this race. You ought to know by now I'm a multiplatform guy. I don't have any bias towards or against any of the Big Three. I don't have any reason to downplay anything. I simply look at the numbers in context and try to draw what I think is the best conclusion possible. Based on all the data I've seen, everything indicates that, absent the pandemic, the Switch would have sold considerably less in 2020 than it did. For the first two months of 2020, the Switch was slightly down. Every indication was the the Switch was likely going to be at best roughly flat for the year, which is what most of the optimistic predictions from a year ago were assuming.

Then March happened. COVID caused everything to start to get shut down. People cooped up inside with no where to go except the grocery store. People started spending more money on things like video games. The whole console market started to grow, and while AC did indeed provide a boost that month, it was clearly not the only factor (and AC's own success, which is well in excess of the series norm, may itself be due in large part to the pandemic). Then stimulus checks started arriving in April and we saw even bigger spikes for the PS4 & XBO and the Switch remaining flat in terms of weekly average sales. Overall demand for consoles remained elevated afterward, well beyond the norm, with stock being the only real limiting factor. Hell, I even admit the Switch could have done even better in 2020 if stock was better. Every system would have done better than their actual final totals for the year, especially the PS4 & XBO, which were hit with stock issues way worse in relative terms than those affecting the Switch (only November was down YoY for it). They were doing far better than they had any right to be doing even after the initial spring spike, but fell off a cliff once stock was exhausted with no major restocks planned.

The story of the console market in 2020 was one of artificially increased demand driven by unusual circumstances. And because 2020 was not a normal year, when things do get back to normal the external factors artificially increasing demand for consoles will likely go away as people's spending habits change again. I believe that this will result in a reduction in Switch sales. It's not like COVID opened the floodgates and now this is the new normal for Switch sales in the near future regardless of all other factors. If the pandemic continues well into 2021 and we get yet another round of stimulus checks besides the one currently in the works, then yeah, this year could potentially retain at least most of the momentum of last year.

But it's going to take more than maintaining its momentum to beat the DS. The Switch has a huge mountain to climb. I posted the charts. You see what it's up against. The reason it ever had a surplus over the DS in LTD terms was because the DS had a weak start, and it was never a huge surplus to begin with. But the Switch's lead has been declining for the past two years and is now completely gone, and that's with a brief reversal in the spring and fall last year. The DS sold 11.2M in its fifth year, so just to match that the Switch will need to manage at least 24.3% growth over last year. It will have to do that without another major system-seller of the level of AC that could push several hundred thousand additional units out the door (unless BotW2 comes out, and even that might not blow up HW sales), and, depending how well immunization efforts go, possibly without any external factors to drive up demand for much of the year. If we ignore the initial spring spike of last year and focus on the May-Oct. period, the Switch averaged 121k/week in 2020. Even if it manages that all the way from January to October this year, it's still going to be lagging behind 2020, so it may need to improve on that just to hit 9M again, especially if nothing big happens this coming holiday season.

And if it's going to actually beat the DS, it needs more than sustaining its momentum. It needs growth. Serious growth. Just to stop its decline against and keep pace with the DS it will need to average 160k/week for the entire Jan.-Oct. period, and somehow manage to sell over 5M units during the holidays (>47% more than this past holiday season). That's an average of over 2M per quarter for Q1-Q3. In fact, I'd say 2M is the number to look out for during this quarter. If it doesn't do at least that, even with the benefit of the recent $600 stimulus and tax refunds, then it doesn't stand a chance at doing what the DS did in 2009.

If the Switch is only flat this year, it will be several million units in the hole against the DS, and on worse footing that the DS was when it went into its sixth year. This would compound the Switch's deficit seeing as the DS still managed to sell 8.56M units in 2010. That means that the Switch will need to sell some 20M units between now and the end of 2022 just to regain and maintain a lead over the DS. Twenty. Million. In two years.

If the Switch drops to, say, 7M units this year, which is certainly possible, then you can forget about it beating the DS. Not only will its deficit grow even more (to over 4M units, not including the DS's launch holiday), its deficit at the end of 2022 will likely end up being far too large to ever make up for. In fact, if it ends the year down 20-25% from last year, it may not even beat the 360 or PS2 considering how quickly Nintendo's popular systems tend to evaporate later in life. Not counting the Game Boy (because again the market treated the Color as an entirely new system), the DS was the only Nintendo system to have strong sales past Year 5, and almost all of that was in Year 6. It did less than 12% of its lifetime sales after Year 6. If the Switch isn't sitting at at least 47-48M by the end of next year, then it's not likely to beat the DS. And if it isn't at at least 40M, then it may at best only tie the 360.

The only way one could conclude that the Switch has a realistic shot of beating the DS is to assume that 2020's sales figures were totally normal, not in any way contingent on external factors, and are capable of being sustained or even grown over the next two years. Beating the 360 and possibly even the PS2 is still well within the realm of possibility at this point, but even that could depend on how long the pandemic persists and how much any future stimulus checks might serve to drive sales of consoles. It's not guaranteed. Beating the DS? The odds are not good, at all. The Switch's post-Year 4 sales will have to be the best ever for a Nintendo system, and I just don't see that happen, not when it's clear that the sales its had since this past March haven't been under normal circumstances.

And that's all I have to say about that. I did plan on posting some more charts today, but this post took a lot longer than I thought it would to write up, so that'll have to wait until tomorrow.



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In accordance to the VGC forum rules, §8.5, I hereby exercise my right to demand to be left alone regarding the subject of the effects of the pandemic on video game sales (i.e., "COVID bump").