Why are Nintendo Switch sales peaking much later than other Nintendo consoles?

[javi741]

Shadow1980 said:

The_Liquid_Laser said:

Shadow1980, thank you for this thoughtful post.  I want you to know, for the record, that I don't think you are 100% wrong.  Especially, if we focus the discussion back toward Switch sales, I think you have stumbled onto something that most others have missed.  For the record, I think both Animal Crossing and COVID had boosted Switch sales in 2020, but I don't think either one is the actually the biggest cause.  There is actually another sales factor going on that is not being accounted for.  The console market is actually going through a transition/transformation period that the PC market already went through.

If you go back 20-30 years, there were consumers buying laptop computers, but desktop computers were much more common.  Today laptops are more common among typical consumers and smartphones are even more popular than laptops.  (Although businesses tend to prefer desktop computers still.)  If a person wants a really powerful computer for the best price, then desktop is still the way to go, so why do so many more people use laptops then?  People tend to prefer the convenience of laptops, and you can often get one really cheaply if you are willing to get something really low powered.  Of course, smartphones are even more convenient and can get even cheaper than that, which is why they are even more popular.    

This sort of phenomenon is described in books like The Innovator's Solution.  The market as a whole often chooses a product that, on the surface, appears worse.  In reality they are sacrificing raw functionality for improvements to reliability, convenience or price.  This especially happens when the product with lower functionality gets "good enough".  Laptops are still not as powerful as desktops, even today, but at a certain point most consumers decided that laptops were "powerful enough" and laptops encroached upon the desktop market.  Many customers switched over to laptops and now laptops are more common outside of a business setting.  The Innovator's Solution even describes the math behind this.  The rate that the new market encroaches upon the old one can be described by an "S-curve", i.e. a logistic function.  (The author uses the term S-curve, but the math term is actually logistic function.)  It looks like an exponential function at first, but once the curve gets past the half way point, growth slows and eventually levels off into an "S" shape.

So, if we bring all of this back to video games, then handheld and home consoles markets would be analogous to the laptop and desktop markets, respectively.  At a certain point handheld systems should get "good enough" and encroach upon the home console market.  If you look at the handheld market closely enough, then it should also be obvious when this happens: with the Switch.  For the past two handheld generations, Nintendo has gone a different route with a 2-screen handheld system.  They have kept the power levels down and tried to focus on games (like touchscreen games) that couldn't be played on a home system.  All of this delayed the inevitable encroachment.  But with the Switch, the power level of their handheld system shot way up compared to the 3DS, and they even included a dock so that it was easy to play the system on a TV.  Nintendo is intentionally trying to encroach upon the home market. They don't just want former Wii U customers either.  They are going for Playstation and XBox customers.

If this is true, then what should the data look like?  It should show that Nintendo is getting a bunch of extra customers that they didn't have on the 3DS or Wii U.  At the end of the Switch's life we should see "extra" customers added to the Switch's install base like an S-curve.  Since we are currently only about half way into the Switch's life, then this surplus is going to look like exponential growth at this point.  And in fact, this is exactly we we do see.  Look at the gap chart (the first chart) whenever trunkswd compares Switch vs. 3DS + Wii U.  For both worldwide and the US, these curves strongly resemble exponential growth.
https://www.vgchartz.com/article/447667/switch-vs-3ds-and-wii-u-in-the-us-sales-comparison-january-2021/
https://www.vgchartz.com/article/447572/switch-vs-3ds-and-wii-u-sales-comparison-january-2021/

The Switch is really a handheld system that is also encroaching upon the home console market.  That is the biggest factor causing the spike in Switch sales.  They are taking future sales away from PS5 and X|S.  It's not obvious now, because Switch launched significantly ahead of the other systems.  Give it a few years though.  It took a few years for Switch sales to really take off, and it will take a few years before it's obvious that the other systems are going to underperform.  Switch is getting its sales growth by taking sales away from PS5 and X|S.  The handheld market is encroaching upon the home console market, just like the laptop PC market already encroached upon the desktop PC market.

I don't necessarily think the Switch is competing directly with PS & Xbox. Its release had no impact on sales of the PS4 & XBO. Also, while it's too early to say for sure what the PS5 & XBS are going to do, in the U.S., at least, the market for "conventional" consoles has been relatively stable, with combined PS+Xbox sales remaining relatively flat. Granted, the Switch marks a substantial leap in power from the 3DS, but it is far less powerful than the base PS4 & XBO were. That power gap manifests itself in the form of less impressive third-party support, at least when it comes to big-budget titles. Most of the big AAA third-party experiences, the lifeblood of PS & Xbox, are absent on the Switch.

The relatively few ports of multiplat AAA Gen 8 titles the Switch did get (e.g., Doom 2016 & Eternal, Wolfenstein II, The Witcher III, Mortal Kombat 11, Dragon Quest XI) almost all came well after their PS & Xbox releases, and performed substantially worse on the Switch, both technically and commercially (none of them broke a million). There have been a fair number of bespoke third-party Switch titles, but most of them aren't exactly lighting up the charts. Monster Hunter Rise will be one big exception (esp. in Japan where it's probably the #1 third-party franchise at the moment), the new Momotaro Densetsu has done well in Japan, the Switch ports of Minecraft and Among Us have apparently done decently, and Octopath Traveler sold at least two million copies, but those are the only confirmed multi-million sellers on the system made by a third-party (and that aren't Nintendo-themed, like Hyrule Warriors or Mario + Rabbids).

By and large, most people still buy Nintendo systems for Nintendo games. I don't see that changing in the immediate future. Third parties will still put their biggest and best games on PS & Xbox, and we're going to be unlikely to see Switch ports of recurring titles like Call of Duty, Battlefield, Madden, Assassin's Creed, Far Cry, Final Fantasy, GTA, and others. Even if Nintendo makes a Switch 2, its small form factor will almost certainly mean a significant power gap between itself and the PS5 & XBS, which will impact the kind of third-party support it gets.

Aside from that, your point about innovation is a good one. After struggling for two generations straight, Nintendo tried a different strategy with the Wii and it paid off. They went with a low-power, low-price system that focused on motion controls, which had never really been done right until the Wii Remote. The marketing for the system was brilliant. And it's entirely possible that, in addition to improved stock, its upward trajectory in sales could have been due to increasing numbers of casuals/non-gamers buying the system. They tried to do the same "low-power but innovative controller" approach with the Wii U but totally flubbed it.

On the handheld side, they innovated with the DS, which sold far better than the GBA; even in the U.S. where the GBA dramatically over-performed, the DS still sold nearly 48% more units than the GBA. While hardware revisions and special edition hardware releases can account for most of the DS's growth over time in the U.S., it can't account for all of it, and software doesn't appear to be a factor, so it could have been another instance of increased interest over time from casuals/non-gamers (games like Nintendogs and Brain Age doing exceptionally well could be interpreted as confirmation of this hypothesis). Nintendo tried the dual-screen thing again with the 3DS, but the only thing new they had to offer was glasses-free 3D, plus the system was overpriced at launch for a Nintendo handheld. While the 3DS didn't flop like the Wii U did (76 million is a solid total), it didn't perform nearly as well as the DS despite strong software support. Could the lack of innovation combined with other factors like pricing have resulted in Nintendo losing a lot of existing customers?

Now we have the Switch. Innovative? No doubt. Significant and growing periphery demographic? Check. That's why I suggested that increased interest over time could explain the growth we've seen. An increase in interest from lapsed gamers and non-gamers/casuals could easily explain the growth we've seen (anecdotally, and friend of mine was a lapsed gamer, having lost interest in consoles back in 2013, but he bought a Switch back in like late 2019 and it's the only console he uses now). People being cooped up during the pandemic and with some extra money to burn clearly was why the Switch grew as much as it did in 2020, but obviously not all of that was just from "traditional" gamers. With less traction among lapsed gamers and non-gamers/casuals, the Switch may have seen significantly lower, though still very large, YoY increases in 2020 (I still maintain that without the pandemic, the Switch would have been at best slightly up in 2020, but even slight growth, had it not been fully explicable from a 1-2 month boost from AC, could have still lent credence to the idea of increased interest from periphery demos). If increased interest among periphery demographics has been a big driver of long-term sales growth, then the interest has been more general, and not because people were suddenly flocking to the system for one or two particular titles in specific. While I do think the overall size of periphery demos is often over-inflated by many (I never believed non-gamers were the majority of Wii sales, for instance), it's clear that they have been quite important for Nintendo over the past 15 years.

And that's all I have to say about that for now. Sorry if this post came across as a bit ramble-y, but it's late and I'm way past my bedtime.

Is there any source that says those 3rd party multiplats didn't sell 1 Million on Switch or sold substantially worse? Cause I think a couple of the multiplats you mentioned may have hit over 1 Million sold. Witcher 3 in the last shipment report sold 700,000 units on Switch as of December 2019 and the game at that time been out for Switch for only 2 months. Its been over a year since that last update so I feel like it'll be safe to assume the Witcher 3 on Switch sold around or over 1Million during that year time especially since the game's interest became revitalized after the Netflix series release in late 2019 where Witcher 3 sales skyrocketed on Steam, Witcher 3 also got price cuts and sales in 2020 and the CEO of CD PROJEKT Red said he was very happy with how the Witcher 3 sold on Switch. I think its safe to say it did sell 1Million on Switch.

I also think MK11 may have sold 1 Million on Switch, in its release month it was the #1 selling Switch game in the U.S in April 2019, even beating out Nintendo's 1st party titles that month. Also it released the same day as other platforms so it wasn't at a disadvantage like other ports and I've been seeing MK11 on the top bestselling games list on the Eshop alot. I wouldn't be surprised if that game has sold over a million on Switch.

Also, Dragon Quest is dominant in Japan where Switch is the dominant platform there, if anything ill assume the Switch version is the bestselling one.