Shadow1980 said:
That's what I was saying. The longer they wait, the bigger the trough at the transition between the two systems. Nintendo is a publicly-traded for-profit corporation. They're not in this for bragging rights. They're in this to maximize profits. Sure, Nintendo could keep stretching things out to squeeze as much as humanly possible out of the Switch, and I'm sure some people that aren't Nintendo shareholders would like to see them do just that. If they did wait until 2025, the Switch could possibly hit the 160M mark, which, even if it falls a bit short of that, would still set a new record a lot of fans were hoping for. But it'd be a bad business move to wait any longer than necessary. A notable user over on IB said "Nintendo's business cycle necessitates a 2024 Switch 2 launch. Switch had a good run, but its sales are now declining sufficiently enough that it can no longer be relied upon to maintain growth moving forward." I'm inclined to agree. Sure, the Switch's maximum possible lifetime sales will be diminished by a 2024 release, but that comes with the benefit of keeping total sales high. Current projections have Switch hardware at 15M for the current fiscal year, a 48% decline from the Switch's peak year of 2020, while software is projected to be 180M units, a 23.4% decline from the 2021 peak. The longer Nintendo waits, the worse it's going to get. If Nintendo holds back on the Switch 2 until well into 2025 and the Switch drops to, say, 12M next fiscal year, that would make it the fifth-worst year for hardware shipments in the past 30 years. Sure, the Switch would have a higher lifetime total as a result, but I imagine the people who actually have money on the line care less about whether the Switch sells "only" 150M or potentially hits a record-setting 160M lifetime and more about keeping their yearly revenue numbers high. 2024 would be the most opportune time to release the Switch 2. Even with the typical post-replacement drop for a Nintendo system, if the Switch 2 has sales comparable to the Switch's (a reasonable prediction, assuming the same form factor, a reasonable price, good marketing, and enough stock to meet demand) and it does around 16-17M in FY2024-25, total hardware shipments will still end up at well over 20M, far better than the 12M units if they waited until 2025. They should continue with that momentum for the next several years as the Switch 2 matures and reaches the prime. If the Switch 2 is ready to go next year, then Nintendo is going to release it. They have nothing to gain financially by waiting longer, and could lose billions in potential revenue if they do wait. Those billions are worth a lot more than ensuring the Switch sells as much as possible. Sure, those losses might be incurred in only one fiscal year, but what company is going to take a big hit to their revenues in even one year if they don't have to? |
I think the other thing people don't get especially with modern platforms is "consumer who buys the next-gen version of console instead of older version =/= a lost sale".
Some people may not like it, but I'm pretty sure if they could have, Nintendo gladly would've traded 15-20 million off the DS userbase to give to the 3DS (so DS with 135 million LTD, 3DS finishing with 95 million LTD and in particular having more users early in the product cycle).
That's not a net loss for Nintendo business wise.
I think Sony is basically doing exactly this with the PS4/PS5 transition ... they are basically forcing late gen PS4 buyers to have to adopt the PS5, which can function as a PS4 also. But they still are leveraging the PS4's 120 million userbase with cross-gen titles, so basically they are having their cake and eating it too. They're not abandoning the PS4's install base (well at least through the first two years of the PS5's life cycle) *for software*, but they're also not so subtly pushing anyone who wants in on the Playstation *hardware* ecosystem to have to buy a PS5 by basically stopping PS4 production.
Ultimately I think that strategy is smart. The PS5 really hasn't had the greatest library of exclusives at all early on and has had availability problems too, but Sony has sold basically every unit they can make, I think in part that is due to the PS5 basically being the only system they will ship in large quantities and refusing to do the whole "well lets cut the PS4 price and let budget shoppers buy that one and let it hang around".
The other reason this can work now I think is because the whole "budget console" concept seems to have gone in the crapper. Sony refusing to drop the PS4 below $300 and having a $400 PS4 Pro meant the consumer for it could still be in play for a PS5. Nintendo refusing to drop the price of the Switch and even increasing the price for the OLED model at $350 means they probably could very easily entice a lot of those consumers who are willing to pay $350 for a Switch OLED to buy a Switch 2 at $399.99 instead ... why not, $50 more for a generational leap, I'm sure lots of people will gladly take that. It would be different if the Switch was like $199.99 or less and they were trying to convince that consumer to spend double that for a new system. That's a big difference with how hardware is sold today from previous console generations. Shifting people who were willing to pay $400 for a PS4 Pro or $350 for a Switch OLED into being early adopters for the next product cycle instead is entirely feasible. Even $300 ... if you're willing to drop that much for hardware this late in the product cycle, odds are you can be convinced to spend more to get the next-gen system instead because at $300 you're not really a budget shopper to begin with.
Last edited by Soundwave - on 10 July 2023
