The Road to 160m+ for Nintendo Switch

[RolStoppable]

Shtinamin_ said:

I was going over their Revenue goal for FY'25 ¥1,350B and went to make some calculations.

Now I dont know much about how the revenue is calculated but I am making educated guesses based on their FY world report, so if someone does know how they calculate their revenue I will be open ears.

Lets assume the average cost of a Switch is near $300 (since Lite is $200, OLED is $350, and V2 is $300, and OLED is the majority of sales) with a goal of 13.5M units sold.

Lets also assume the average cost of a Nintendo game at $60 with a goal of 155M units sold.

If we add up their Fy'25 goals $4.050B & $9.3B. Add and convert them to ¥ using Nitnendo's $1=¥140 that will earn them ¥2,073.4B which is ¥722.4B more ¥ than expected, and we haven't even accounted for the merchandise yet. But if you drop the average cost of the Switch $50 (¥472,5B) and drop the price of the average game by $30 (¥651B) and increase the "other" category from the FY report by 18% (¥122.5B), we will be right at their Revenue goal at ¥1,350.27B.

My theory is that this FY we are gonna see ~$50 price drops for consoles, ~$30 drops in software, bundles, and a new Switch model near the $100 price range. With both $100 and the $300 OLED being the bulk of their sales.

Some bundles may contain MK8D + booster course dlc, SMO, TotK and SMBW. We may even see bundles with newer released games?

This is how they will be able to reach 13.5M hardware units, 155M software units, and ¥1,350B.

Wrong.

The forecast of 165m software units (yes, 165m) includes first and third party games alike, and physical and digital copies alike. But it does not include digital-only games, so there's an unknown factor here.

For third party games, Nintendo only records the royaltee fee they collect from third parties as their own revenue. Since they take a 30% cut on digital games, a $60 third party game sold on the eShop nets them $18, for example. On a physical $60 third party game they take a lower cut, around 20% (exact figure unknown).

When it comes to hardware, Nintendo records the revenue they get from selling units to retailers and said revenue is below the MSRP, because retailers want to make a profit off every sale, even if it's only a small one. Exact cuts are unknown.

Similarly, a physical first party game doesn't earn Nintendo $60 in revenue, but rather something in the neighborhood of $50 due to the retailer cut.

The bottom line is that you have to work with a lot of variables here and many of them have an unknown value. Or in other words, if it was so easy to predict Nintendo's moves based on their forecasted revenue, somebody else would have already done it.