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Forums - Sales Discussion - Why are Nintendo Switch sales peaking much later than other Nintendo consoles?

Dulfite said:
Shadow1980 said:

Two reasons:

1) It probably took some time to gain more traction instead of having an initial rush because it was a new concept and Nintendo was just coming off of the Wii U.

2) This guy right here:

Had there been no pandemic, Switch sales were likely going to be down or at best roughly flat in 2020. Hardly anybody was expecting any appreciable year-over-year gains, many if not most were expecting it to be down (at least in the U.S.), and nobody expected it to do as well as it did. Demand for consoles increased due to the pandemic and still remains elevated because of the general increase in spending on at-home entertainment, but once enough people are vaccinated and the numbers of cases are sufficiently down to where everything can safely reopen, I expect demand for the Switch to decline as pent-up demand for things like movie theaters and restaurants results in a spending spree on away-from-home events and entertainment.

While I don't think 2020 would have been AS good for Switch, it would have absolutely been up YoY still. Animal Crossing was massive on the 3ds and there is no reason to think Covid alone is what made people hyped for that game. Also, if Covid-19 hadn't happened, many games that weren't able to be released in 2020 would have been released, further helping hardware sales. On top of that, the tens of millions of Americans and hundreds of millions of total humans that lost jobs during Covid would have felt more secure in spending money on unnecessary entertainment like video games.

I thought that I was the only one who always get confused with this narrative of increasing game spending. Overall Covid has hurted the income of majority of families so I don't see how people getting less money exactly relates with higher spending in games

I'm waiting for some report of overall increase in console spending for 2020 to give this argument any sort of credibility

Last edited by IcaroRibeiro - on 20 February 2021

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IcaroRibeiro said:
Dulfite said:

While I don't think 2020 would have been AS good for Switch, it would have absolutely been up YoY still. Animal Crossing was massive on the 3ds and there is no reason to think Covid alone is what made people hyped for that game. Also, if Covid-19 hadn't happened, many games that weren't able to be released in 2020 would have been released, further helping hardware sales. On top of that, the tens of millions of Americans and hundreds of millions of total humans that lost jobs during Covid would have felt more secure in spending money on unnecessary entertainment like video games.

I thought that I was the only one who always get confused with this narrative of increasing game spending. Overall Covid has hurted the income of majority of families so I don't see how people getting less money exactly relates with higher spending in games

I'm waiting for some report of overall increase in console spending for 2020 to give this argument any sort of credibility

Well there is some evidence that suggests when people can't spend large amounts of money on big purchases (vacations, Disney world, new Mohab Keep Wrangler, etc.) they are more likely to spend it on smaller purchases. I looked into the great recession and the box office did extremely well back then, for example, despite so many other parts of the economy tanking. People like cheap escapism when they can't afford the expensive stuff.



Dulfite said:
IcaroRibeiro said:

I thought that I was the only one who always get confused with this narrative of increasing game spending. Overall Covid has hurted the income of majority of families so I don't see how people getting less money exactly relates with higher spending in games

I'm waiting for some report of overall increase in console spending for 2020 to give this argument any sort of credibility

Well there is some evidence that suggests when people can't spend large amounts of money on big purchases (vacations, Disney world, new Mohab Keep Wrangler, etc.) they are more likely to spend it on smaller purchases. I looked into the great recession and the box office did extremely well back then, for example, despite so many other parts of the economy tanking. People like cheap escapism when they can't afford the expensive stuff.

Yes, but is there any data to support a massive increase in consume of console games last year? Overall gaming market gets bigger every year, was last year a year of massive outlier growth as he implied? Or was a year of an standard growth like every "normal" year?



Dulfite said:

While I don't think 2020 would have been AS good for Switch, it would have absolutely been up YoY still. Animal Crossing was massive on the 3ds and there is no reason to think Covid alone is what made people hyped for that game. Also, if Covid-19 hadn't happened, many games that weren't able to be released in 2020 would have been released, further helping hardware sales. On top of that, the tens of millions of Americans and hundreds of millions of total humans that lost jobs during Covid would have felt more secure in spending money on unnecessary entertainment like video games.

It's easy to claim in retrospect that the Switch would have still been up regardless. But prior to the pandemic, nobody was expecting massive growth, with many expecting declines and even optimistic predictions assuming relatively modest gains at best. For example, NPD's Mat Piscatella predicted the Switch would be down YoY in the U.S., and in the NPD 2020 full-year prediction thread on ResetEra, the average of all predictions was just under 6.4M, and the best prediction was 6.9M. It ended up selling about 9M.

Animal Crossing was a known factor in January 2020, and people made their predictions accordingly. While it was going to be a system-seller, it might not have moved quite as many units (or sold quite as well in and of itself) had there been no pandemic, and losses elsewhere in the year could have negated those gains. Instead of 1M in March, the Switch might have only sold, say, 750k, but had it dropped even 5% overall for the April-Dec. period, the Switch would have been about flat overall for the year. A 10% drop for that period would result in it being down. And every indication prior to the pandemic was that the Switch was passing its peak, with YoY declines imminent. Getting to 7M would have required either March hitting 1M even without the COVID bump to assist AC (an unlikely outcome) or sales for the remaining 11 months of the year to have been at least slightly up. Nobody was expecting anything like a >10% bump in baseline sales (for reference, the Switch's sales for the May-Oct. period were up 76.8% YoY last year in the U.S., way beyond what anybody could have guessed).


Also, it's obvious that the pandemic had significant impacts on consumer spending. There have been actual professional and journalistic articles talking about the increase in spending on at-home entertainment. Google should help you find articles talking about the general increase in demand for consoles and at-home entertainment in general during the pandemic, but here's some good places to start:

https://www.ipsos.com/en-th/looking-escape-younger-people-more-likely-say-entertainment-costs-rose-covid-19
https://www.jpmorgan.com/insights/research/media-consumption
https://news.cision.com/simon-kucher---partners/r/new-study--gamers-around-the-world-are-spending-more-time-and-money-on-video-games-during-the-covid-,c3166869
https://www.bbc.com/news/business-54813841
https://www.spglobal.com/marketintelligence/en/news-insights/latest-news-headlines/demand-for-new-consoles-to-drive-gaming-industry-growth-past-pandemic-8211-analysts-62299438

And it may sound counter-intuitive, but video games appear to be recession-proof, so even when unemployment is up there appears to be no negative impacts on spending on video games. Sales of game consoles (both home and handheld) actually increased in the U.S. during the 2007-09 recession. While a lot of people have been hurt by things like the late 00s recession or the pandemic, most were still gainfully employed and had money to spend. An unemployment rate of 20% means that 80% of people are still employed, and those that were unemployed due to the pandemic, well, they were still getting income (plus in the U.S. we got those stimulus checks).

Without the pandemic, the Switch wouldn't have sold anywhere close to what it did without the pandemic. You don't get the kind of growth in baseline sales it saw under any kind of normal circumstances. Deep price cuts sometimes produce comparable growth, but rarely anything of that level, especially if the baseline was already healthy to begin with, and no single game has ever done anything like that by itself. The Switch's growth in 2020 was due to outside factors, which is corroborated by the PS4 & XBO as both also clearly demonstrated increased demand, at least as long as stock held out. The pandemic resulted in artificially increased demand for game consoles. Simple as that.

EDIT:

IcaroRibeiro said:

I thought that I was the only one who always get confused with this narrative of increasing game spending. Overall Covid has hurted the income of majority of families so I don't see how people getting less money exactly relates with higher spending in games

I'm waiting for some report of overall increase in console spending for 2020 to give this argument any sort of credibility

I didn't see your post at first, but my reply is relevant to you, particularly the second half or so of it.

Last edited by Shadow1980 - on 20 February 2021

There are a ton of reasons I can think of as to why the Switch has maintained spectacular commercial success for so long. The first of these is low expectations. With the exception of the Wii, if you looked at Nintendo's long-term trajectory in home console sales, the outlook had been growing consistently worse each generation: the NES sold better than the Super NES, which sold better than the Nintendo 64, which sold better than the GameCube, which sold better than the Wii U. The Wii was the exception to this rule. The rule was a long-term decline for Nintendo's performance in the home console market. And even their handheld system, the 3DS, just wasn't faring as well as previous Nintendo handhelds had by that same point in their respective lifespans with mobile phones now starting to eat into the handheld gaming market. People didn't expect that much from Nintendo by the time the Switch came around. The thing about low expectations is that they're easy to exceed. When people expect little of you, it's easy to impress them. So when Nintendo launched with titles like The Legend of Zelda: Breath of the Wild and an upgraded version of Mario Kart 8 right out of the gate, soon followed by Super Mario Odyssey, alongside a string of other first-party releases like Splatoon 2, Arms, and others within months, their dedication to strong first-party support for the new system was very clear immediately. Breath of the Wild, in fact, was considered revolutionary for the survival aspects it brought to the franchise. It was a solid start that quickly brought the core Nintendo fans on board, alongside many others. Something must also be said about the genuine brilliance of the ability to play this system both on a TV AND portably. This hook gave it access to both console gamers and those who prefer gaming on the go. Anyway, this start far exceeded expectations in general.

Since that time, strong first-party support has generally continued and the system what's more, owing in no small part to its portability, has become the go-to platform for lovers of indie games (like yours truly). The Switch has quickly accumulated the definitive library of independently-developed titles and that has brought in a whole new audience. Notching titles like Fortnite early on didn't hurt either.

Then, after a couple two and a half years when rivals typically release upgraded versions of their existing consoles to get their existing core players to buy the same machines a second time, Nintendo brilliantly took the exact opposite approach and, rather than launching a higher-tech version of the Switch, instead released a handhold-only version of the system intended to reach more casual gamers, thus not only securing double-sales from hardcore gamers, but also expanding their player base at the same time.

Then, of course, COVID-19 hit, which benefited the entire games industry to an extent because people now had few other things to do that were safe all of a sudden. Both console and video game sales in general increased during this period. And during this same time, Nintendo also began to focus more on expanding their player base to include more casual gamers with titles like Animal Crossing: New Horizons and Ring Fit Adventure, and so on, giving them the maximum commercial benefit from the situation.

And this brings us to today, where...and it really pains me to say this as a Series X owner, but frankly Sony and Microsoft opted to launch their new systems prematurely, before the COVID-19 pandemic had gotten under control and adequate supplies of key parts could be secured. This has led to a situation of simultaneous declines in the sales of the PlayStation 4 and Xbox One WHILE massive shortages of the PlayStation 5 and Series X/S have been experienced. This situation has left Nintendo's Switch really the only system in town. At this point, the Switch wins commercially by default not because it's necessarily the best machine on the market, but because it's the only one. What's a gamer who planned on buying a PS5 but can't find one to do with their money in the meanwhile?

Those are some of the reasons that come to my mind. Those things and good pricing and lots and lots of advertising. Bottom line: it's just been the right combination of brilliant hardware innovations, smart marketing, happenstance, and poor strategic moves by their rivals.

I'll add that, not to fault the big N for much right-deserved success, but I do have some worry about a future characterized by total market domination by one single company on the level we currently seem to be moving towards. Companies often start behaving differently, and more arrogantly, when they totally dominate the market, I find.

Last edited by Jaicee - on 20 February 2021

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Last year was a result of COVID + Lockdowns + people SPENDING LESS money + Animal Crossing NH.

Some people are still underestimating the last factor, and the decrease will be seeing with this year numbers starting from the end of March.



I agree with the 1 console thing. All the software development and marketing are all on 1 console.
Switch is one of if not the most unique console ever made.
Playstation, Xbox and the Mobile narket seem to not have a major impact on the Switch.
Switch lived through a pandemic.



Pocky Lover Boy! 

Animal Crossing becoming a cultural phenomenon in the system's 4th year, mainline Pokemon not arriving until the end of its 3rd year, third party support increasing over time as publishers were initially wary of investing in the successor to the Wii U, a lot of gamers holding off at first out of caution, the pandemic, word of mouth escalating as more Switches got out in the wild, there are a lot of factors.



Bet with Liquidlaser: I say PS5 and Xbox Series will sell more than 56 million combined by the end of 2023.

The console has a unique appeal, that's what I think. Its concept still feels fresh in 2021. Plus, it has a robust library for everyone. Aren't these the main reasons? 



Shadow1980 said:
Dulfite said:

While I don't think 2020 would have been AS good for Switch, it would have absolutely been up YoY still. Animal Crossing was massive on the 3ds and there is no reason to think Covid alone is what made people hyped for that game. Also, if Covid-19 hadn't happened, many games that weren't able to be released in 2020 would have been released, further helping hardware sales. On top of that, the tens of millions of Americans and hundreds of millions of total humans that lost jobs during Covid would have felt more secure in spending money on unnecessary entertainment like video games.

It's easy to claim in retrospect that the Switch would have still been up regardless. But prior to the pandemic, nobody was expecting massive growth, with many expecting declines and even optimistic predictions assuming relatively modest gains at best. For example, NPD's Mat Piscatella predicted the Switch would be down YoY in the U.S., and in the NPD 2020 full-year prediction thread on ResetEra, the average of all predictions was just under 6.4M, and the best prediction was 6.9M. It ended up selling about 9M.

Animal Crossing was a known factor in January 2020, and people made their predictions accordingly. While it was going to be a system-seller, it might not have moved quite as many units (or sold quite as well in and of itself) had there been no pandemic, and losses elsewhere in the year could have negated those gains. Instead of 1M in March, the Switch might have only sold, say, 750k, but had it dropped even 5% overall for the April-Dec. period, the Switch would have been about flat overall for the year. A 10% drop for that period would result in it being down. And every indication prior to the pandemic was that the Switch was passing its peak, with YoY declines imminent. Getting to 7M would have required either March hitting 1M even without the COVID bump to assist AC (an unlikely outcome) or sales for the remaining 11 months of the year to have been at least slightly up. Nobody was expecting anything like a >10% bump in baseline sales (for reference, the Switch's sales for the May-Oct. period were up 76.8% YoY last year in the U.S., way beyond what anybody could have guessed).


Also, it's obvious that the pandemic had significant impacts on consumer spending. There have been actual professional and journalistic articles talking about the increase in spending on at-home entertainment. Google should help you find articles talking about the general increase in demand for consoles and at-home entertainment in general during the pandemic, but here's some good places to start:

https://www.ipsos.com/en-th/looking-escape-younger-people-more-likely-say-entertainment-costs-rose-covid-19
https://www.jpmorgan.com/insights/research/media-consumption
https://news.cision.com/simon-kucher---partners/r/new-study--gamers-around-the-world-are-spending-more-time-and-money-on-video-games-during-the-covid-,c3166869
https://www.bbc.com/news/business-54813841
https://www.spglobal.com/marketintelligence/en/news-insights/latest-news-headlines/demand-for-new-consoles-to-drive-gaming-industry-growth-past-pandemic-8211-analysts-62299438

And it may sound counter-intuitive, but video games appear to be recession-proof, so even when unemployment is up there appears to be no negative impacts on spending on video games. Sales of game consoles (both home and handheld) actually increased in the U.S. during the 2007-09 recession. While a lot of people have been hurt by things like the late 00s recession or the pandemic, most were still gainfully employed and had money to spend. An unemployment rate of 20% means that 80% of people are still employed, and those that were unemployed due to the pandemic, well, they were still getting income (plus in the U.S. we got those stimulus checks).

Without the pandemic, the Switch wouldn't have sold anywhere close to what it did without the pandemic. You don't get the kind of growth in baseline sales it saw under any kind of normal circumstances. Deep price cuts sometimes produce comparable growth, but rarely anything of that level, especially if the baseline was already healthy to begin with, and no single game has ever done anything like that by itself. The Switch's growth in 2020 was due to outside factors, which is corroborated by the PS4 & XBO as both also clearly demonstrated increased demand, at least as long as stock held out. The pandemic resulted in artificially increased demand for game consoles. Simple as that.

EDIT:

IcaroRibeiro said:

I thought that I was the only one who always get confused with this narrative of increasing game spending. Overall Covid has hurted the income of majority of families so I don't see how people getting less money exactly relates with higher spending in games

I'm waiting for some report of overall increase in console spending for 2020 to give this argument any sort of credibility

I didn't see your post at first, but my reply is relevant to you, particularly the second half or so of it.

Yeah but how come this specific situation was only profitable for the Switch and not the other 2 consoles ? How come the Switch sold almost 30 million thanks to pandemic but the PS4 and Xbox sales were 40% down ? Why people would've only spend money for buying a Switch ?



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