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I agree partially with Farsala point. Switch was desgined to be the sucessor of both Wii U and 3DS in theory, and Switch Lite would be the plan B if the hybrid tanked. 3DS still got exclusives and their games were not ported to Switch, overall Nintendo was satisfied to give 3DS a end of life and showed commitment with 3DS userbase, something they don't do often. However plans and reality often clash, I don't think the market saw Switch as direct sucessor of 3DS at first

One of the most underestimated reasons for Switch late peak is 3DS. 3DS userbase didn't massively come to Switch until the system was a bit more mature. Remember Switch hybrid model was a entirely new concept and one couldn't be sure by 2017 it was really the hardware that was going to get t all Nintendo IPs (including the ones mostly know for hanhelds like Pokemon and Animal Crossing), as such market showed some skepticism towards Switch. Remember the price trag of 300 USD was so far unheard from handheld gamers.

The next gen will probably see a sharp drop, as Switch 2 or whatever it will be called will not have the same skepticism or confusion. If it will be even worse if the system is fully backwards compatible as it will for all purposes make the original Switch outdated. I guess Nintendo will want it to make a fast transition deploying the same strategy Sony is doing now with PS5 and PS4. As such I'm expecting DS-levels of decline YoY (60% decline when the system launches, 65% decline the year later, 70% decline in the third year followed by death)

The question is how long is Nintendo waiting to launch Switch sucessor. Christmas 2023 seems to early, yet if they are going to use Sony model it makes sense to keep giving strong software releases in the end of life of the console as they will be be upgraded and sold as launch titles of Switch 2. Anyway, I'm betting Christmas 2024 or early 2025