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

2020 had Animal Crossing New Horizons, which is a second killer app for the Switch (or third, f you count Mario Kart 8).

The main reason is the hybrid nature of the console. Handhelds typically peak later than home consoles, and Switch is behaving more like a handheld. I suspect the reason for the early peak for Nintendo home consoles is because if 5 people live in a household, and 1 wants one, they get one, and then all 5 people have one; so if the other 4 want one, they already have it. With handhelds, if 1 person in that household of 5 wants a handheld, then that person gets one, the other 4 will buy there's later.

A hybrid Switch might actually have an advantage on handhelds because it can switch into a console for others to play who wouldn't normally play, which might serve to widen the demand by increasing the overall exposure to the console. Many people, especially young people and office/commuter class people are going to want their own Switch eventually for its handheld purposes, and usually young people live in households, so if there are 5 people sharing one Switch, that might turn into 5 people who want five Switches a few years down the road, especially if the younger people are going off to school.

Anyway, that's my theory based on what we've observed and the hybrid nature of the Switch.



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As with most consoles, the games.



SKMBlake said:

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 ?

Both ran out of stock and both Sony and Microsoft felt it was more important to focus on manufacturing the new consoles than keeping up with the new increased demand for the old ones. Also the Switch was in the peak of its life while the other two were near the end and declining so the former had a much bigger boost potential since a lot of people who have bought a Switch during the pandemic will have already had a PS4 or Xbox One and a lot of people who had none of them probably picked the Switch over the other two since it was more appealing to them, for example a lot of the women who bought a Switch.



Games, games, games. Even if it's not particularly strong on the (new) Nintendo first party front, ultimately people buy the box to play the games, and the Switch is becoming a monster when it comes to ports, older titles, and indies in particular. 

Also, since the console is more similar to a handheld/DS than console/Wii, it make sense that its sales trajectory is more closely following that of the former. Being part-handheld means that many will buy the console multiple times via new models and sometimes even multiple Switch consoles per household - as individuals will often want their own to play with.



 

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1. Corona.
2. Phased demographic popularity (2017-19 were more core gamers now more casuals).
3. More consistent software release in part thanks the abundance of Wii U re-release mo one played acting as new games.



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kazuyamishima said:

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.

This year is a lot more packed compared to last year though. We have Super Mario 3D World, Persona 5 Strikers, Bravely Default 2, Monster Hunter Rise, Ghosts 'n Goblins Resurrection, New Pokémon Snap, Apex Legends, Crash Bandicoot 4, Balan Wonderworld (lol), Miitopia (definitely big in Japan), Knockout City (maybe something?), Ninja Gaiden Master Collection, Mario Golf, Legend of Mana Remastered, probably some more games that are worth mentioning and even more games that aren't announced yet that will release before July.

After that we also know about Skyward Sword and No More Heros III in July and August.

I think Monster Hunter on its own will put up a good fight (hardware wise and especially in Japan) against Animal Crossing and with all the other games joining in, it won't be long until 2021 weekly sales are higher again.



Other consoles usually are evolutions of the console base concept, plus general purpose multimedia device Sony added (and MS bloated in importance compared to console main purpose), NS OTOHis revolution like Wii. This time the pandemic left people more free time at home to appreciate the advantages the new hybrid concept offers, making it take off higher and faster than even Ninty expected. Obviously pandemic helped, but its "help" worked because the hybrid really is an awesome concept, without pandemic it would just have taken off a little slower, and peaked even later, or maybe, having already peaked in that case, started slowing down and we would have seen the true hybrid concept peak next gen with Switch 2.
If sales stay so high long enough, I wouldn't be surprised at all to see Sony and MS using Zen 4 or later tech to make hybrid versions of PS5 and XS.



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You might as well ask why did the DS peak later than other Nintendo consoles. This is a question that typically excludes early Nintendo consoles by default because there's a desire to uphold the narrative that Nintendo consoles always peak early.

There's nothing complicated about consoles in general peaking early or late. They either have a strong software pipeline or they do not. Consoles that keep seeing strong lineups in year 4 peak later than consoles with declining software schedules. That's why the DS strung together three years with ~30m each.

For Switch it's the same thing, so every year since its launch I've told people that their narrative of an early peak is doomed to fail, because Switch's software landscape doesn't allow for it to happen. Likewise, once Switch will eventually decline, it will be a soft decline and not a sharp one. There are still people on this forum who consider lifetime sales of under 130m realistic and that's because they prefer narratives over analyses.

The advantage that Switch holds over the DS is that Switch is the only target platform for Nintendo's own games, so whereas the releases of the DS's best-selling first party titles were frontloaded (almost all of them released during the first three years of the system's life), we won't see the same thing for Switch. The recent announcement of Splatoon 3 for Switch should make people rethink how long Switch's lifecycle is going to be. It used to be the way that a game like Splatoon 3 would be prepared for a successor because Nintendo's EPD teams had to focus on a new console, but that's not happening with Switch. After all, this console is only ten days away from completing its fourth year before seeing its first price cut.



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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.

You are basing you assumptions on analysis made mostly during March to June where demand for games and consoles skyrocket but is missing sources implying their sales and revenue kept so high for the whole year enough to drive a monstrous ~45% increase for Swotch YoY

The only source that you bring that really shows meaningful data (ie data from what happaned during the whole 2020, not predictions made by July or August) shows a 35% increase on consumer spending but curiously attribute this not for Switch over performance, but the sucessful launch of PS5 and Series S/X, hence this hardware spending increase was very likely to happen regardless of Covid peaking or not, maybe not as high as 35%, but high still 

I'm really waiting for some aggregated Software revenues spending in 2020 for console games to see any real increase in demand for games during 2020. Hardware revenues are easier to have outliers, years of launch are likely to have artificial increases due to pricing and whatnot, but software sales truly shows us if people is spending more on games or not

Important disclaimer, the thread title says "Why is Switch peaking later?", not "why Switch sold almost 30 million in 2020". If the question was the second, then I would agree that Covid was definitely important

I'm on the boat that Switch was going to peak last year regardless, in reality I would say without Covid Switch could very well peak in 2021 (the fifth year, rather than the 4th). People on internet making wrong predictions is a nonissue, people on this forum were predicting Switch to sell 40 million lifetime in the launch year, why predictions about Switch sales should be taken in consideration? I don't understand that point of your argument 



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.

Especially considering a big part of the Switch's appeal is that it is a portable device. So that makes the 100% covid peak argument a little less believable.