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RolStoppable said:

It's amazing how sales numbers are perceived so differently between Nintendo and Sony. When Nintendo has a 19 million year, it's time to hit the panic button and call it quits on the Switch business; a successor should launch sooner rather than later. When Sony hit 19m during the PS4's fifth full calendar year (2018), there was nobody to suggest that the PS5 should launch in late 2019 at the latest.

People talk about declining profitability for Switch without bothering to look into the causes. Revenue is down by 2% in the comparable nine-month-period, profit is down 13%. What happened is that material costs have gone up (components for Switch hardware) as well as overseas operating expenses for personnel and the like. These things are not factors that Nintendo could control, they were caused by COVID-19 measures of China and the rampant inflation following Russia's invasion of Ukraine. New hardware isn't going to solve these problems, because the aspects of the Switch business that Nintendo can control are largely not at fault for declining profitability.

In terms of Switch revisions, there are two major options:

1. A cost-cutting SKU, such as a TV-only Switch. Similar to Switch Lite in its approach, so features being removed in order to address the lower needs that potential customers may have. This would be a way for Nintendo to increase their average profit per hardware unit sold when looking at the whole Switch family.

2. A Switch Pro, boosting framerates and resolutions of both existing and upcoming games. Basically the sole reason why anyone argues that it's too late for a Switch Pro is an assumed too small power leap for an imminent Switch successor, but these people willfully ignore Nintendo's sales history. When has a leap in power in and of itself ever resulted in big sales for Nintendo? Not a single time. On the home console side, every generational leap in processing power has resulted in declining sales (SNES after NES, N64 after SNES, GC after N64, Wii U after Wii) while on the two occasions that had no such leap (Wii after GC, Switch after Wii U) Nintendo's sales increased tremendously. On the handheld side, nobody was ever wowed by the graphics of these small machines in the first place. That's why a Switch Pro wouldn't interfere with any next gen plans. Such an SKU would be merely an additional option for customers.

On the software side, we are six years in and there's still no Player's Choice/Nintendo Selects equivalent.

That's why it annoys me so much when people talk about the Switch business as if Nintendo had already exhausted all their options when all they've done so far is ride the high-profitability-train because all things Switch sold so well that Nintendo could afford to do so without making any efforts.

Stock price doesn't matter. I hope we aren't going to sit here and pretend that all investors now know how the business works. Nevermind that 8-10 years ago when the stock price was only a fraction of what it is now, Nintendo simply ignored all the voices that told them what to do, such as moving the Virtual Console to smartphones. There's no good reason to believe that Nintendo's board of directors will be fazed after a fiscal year with a projected operating profit of 480 billion yen.

Lastly, there's a Nintendo Direct today. Not the most interesting one of the year, because we certainly won't get to learn the full extent of 2023's lineup, but interesting nonetheless. Unlike other console manufacturers, the lion share of Nintendo's profit comes from selling games. The current fiscal year, despite the first yearly decline in software shipments, will still finish comfortably ahead of Switch's third full fiscal year.

1. Nintendo already has revised their own forecast down to 18 mill because their holiday season had soft sales, so 19 mill is pretty much out the window. They had revised down to 19 a few months ago from 21 million, so this is the second time they've had to revise downwards. 

2. If a Switch Pro was really releasing, it almost 100% would be releasing with Zelda: TOTK. I don't think people really properly understand how hardware development works either, this isn't like ordering lunch at McDonalds, hardware decisions have to be made years in advance and chip R&D has to be paid for. Nintendo can't just decide this year they need a Switch Pro and have Nvidia whip one out. I think if they were making a Switch Pro, that pretty much needed to release when the Switch OLED did. Otherwise it's what ... Switch OLED ($350) in 2021, Switch Pro ($399?) for 2023 and Switch 2 for 2025 ($399+?) ... I mean this is really overkill and getting into a release schedule that looks like a 90s Sega type of thing with expensive hardware being stacked together. Beyond that, I think Switch OLED IS the Switch Pro (or DSi XL or New 3DS equivalent), likely it was too expensive to change the hardware under the hood so they just chose to emphasize the improved display instead. 

3.) The SNES didn't sell less than the NES because the "graphics improved too much!" (literally a complaint made by no one, ever) it sold less because Sega put up tremendous competition and put them into a real fight. With the N64, Nintendo shot the poor system in the foot, the N64 would've easily outsold the SNES if Nintendo had used CD-ROM and not lost 90% of their 3rd party support straight to Sony. GameCube's success was basically tied to the PS2, Sony had to make mistakes to give Nintendo an opening and they simply didn't give Nintendo anything to work with. The problem with any of those systems wasn't with the chipset being powerful, it was a litany of poor decisions by Nintendo which then got pounced on by hungry competitors (you wanna censor Mortal Kombat? Great for Sega. You wanna kill all your developer support and give it to us by going cart-only? Great for Sony. You want to make a purple console that looks like a child's lunchbox, cell shade Zelda, and hand over your market leadership in the FPS genre? Great for Sony and Microsoft ... none of that is the fault of the chipset inside the machine being powerful or not). 

4.) "Stock prices don't matter" ... I mean yeah, they don't matter to a poster on an internet forum, lol. I'm pretty sure it does matter though to someone running a publicly traded business (of any kind). No company listens to everything every investor wants them to do, but in Nintendo's case, they probably are able to recognize they are likely on a decline pattern of this product generation, nothing "wrong" has happened, time doesn't stop for anything and we're getting up to 6 years, any hardware system is going to struggle to keep sales at peak levels. The issue centrally to Nintendo is they really only have this one hardware outlet now, it's not like there's a new home console and new portable to alternate between to boost business in the interim, so of course they are going to hear more from shareholders when the decline phase of a product cycle starts to become more obvious. 

Nintendo's stock price circa 2013 was in the shitter because it deserved to be in the shitter. They weren't delivering profits or sales. It would be the same if they were PepsiCo. or Nike or whoever. They did also cave to shareholder pressure and did agree to start making smartphone games which they previously said they would never do, so it isn't some factor that has no impact, it obviously does. 

Last edited by Soundwave - on 08 February 2023