He specifically said 6th fiscal year, so I assumed he knew what he was talking about.
Well the decline isn't so steady. The reason I find Nintendo's forecast to be so surprising is due to this type of decline for the whole FY.
Nintendo expects overall -9% for the next FY. Somehow Nintendo has to stabilize the decline. A -9% decline in all regions would look like this.
Keep in mind Nintendo has not started Calendar year 2022 with only a -9% decline.
Still, I have to assume Nintendo knows a lot more about it than me.
The 22% decline is a comparison to the pandemic year, so the decline looks more severe than it would have been otherwise. Switch did not need the pandemic boost to home entertainment to best its previous fiscal year of 21m (ending March 2020), but the pandemic certainly added a couple of million units, making it a 28m year instead of a 25m year or whatever it would been otherwise. The fiscal year ending March 2022 also didn't allow Nintendo to produce as many OLED units as they wanted due to the semiconductor shortages and we can tell from Sony's PS5 performance that the quarters ending December 2021 and March 2022 were most affected by chip shortages for both manufacturers, so Switch starting the calendar year 2022 with a global decline of 15-20% isn't something to worry about when we apparently have the worst of the shortage behind us now (Sony forecasts 18m PS5s for the FY ending March 2023, a significant increase over their hampered March 2022 FY).
Nintendo certainly knows more than us, because the first party release schedule for the second half of the current FY is still mostly in the dark. Given how much they've loaded up the first half, it's fair to assume that their second half will be big too, because otherwise they would have spread out their releases more. Plus their forecast for total software shipped would have been more cautious. This is essentially the fiscal year where Nintendo's first party output will have to prove how much truth there was to Nintendo's repeated statements of giving Switch a longer lifecycle than their previous consoles, and based on the picture we have so far, it already looks to be much closer to be the truth than empty words.
So the two major points are that we are allegedly past the worst of the semiconductor shortages and Nintendo's first party release schedule being more robust than in the fiscal year before. That's how it's feasible to have only a 9% decline.
A third major point is, like in so many years before, that a price cut is doable. Lite dropping to $170, original to $250, OLED to $300. But like in so many years before, this might yet be another instance where sales remain too good to necessitate this step, so it's a lot less reliable to be counted on than the other two points. I do not count on a price cut to happen.
A decline of only 9% in Japan might seem to be least likely of all the regions, but Splatoon is disproportionally more popular in Japan, so its third installment driving OLED adoption to new heights isn't far-fetched. There's also the Monster Hunter Rise expansion launching soon, so it's not just Splatoon 3 this summer.