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Forums - Nintendo Discussion - Update: Leaker says the new Switch model he teased is next-gen, not a revision, Q1 2024 release

VideoGameAccountant said:
Soundwave said:

COVID measures were largely scrapped by this point a year ago (unless you live in China, but China is not an especially large market for Nintendo), can't use the COVID boost thing as a cover forever. Movie theaters were open, airlines were flying again, bars open again, sports stadiums had let people back in, etc. etc. by this time last year. 

If the system is still showing YoY declines north of 20% at this point it likely is an issue of age related product saturation. I would expect a boost in April with TOTK and the Mario movie but in the bigger picture if that's the general trend, it is what it is. 

It's not like net profit is a secret either you can see decline in their profit margins year over year too, they have to disclose that to share holders. Revenue is only piece of the puzzle. 

They wouldn't get sued for a delay (unless they are a egregiously unprofessional), but they could be very easily on the hook to have to pay for chip development/royalty fees. Contracts are designed to protect the chip maker too, otherwise a vendor like Nintendo could have a company like Nvidia spend hundreds of millions or billions making a chip and then just keep saying "well, actually we don't need it now, wait till next year", I'm sure chip makers/vendors protect themselves (ie: probably Nvidia gets guaranteed yearly royalty cut from a chip they deliver to Nintendo that has to be paid whether Nintendo releases the system, makes money on the system, etc. etc. etc. that's Nintendo's problem, not Nvidias). 

There likely are penalties for booking fab lines (which have to be booked way in advance these days given component crunches) too and then just not showing up with a product. If I'm in charge of running a fab and you booked up production lines and then show up with nothing, you've fucked me over because it's not like I can turn around and find a vendor for that production at the drop of a hat. At best if you did this and you went crawling back to TSMC or whoever when you finally decide to make your product, if I'm TSMC I'm saying "well you know what you go to the very end of the line and there's no guarantee we give you this price or this production amount anymore" and frankly like what can you even say to argue that. 

Sitting on a completed chip that cost a lot of money to make is simply a bad idea for a number of reasons. There's very little chance you can sit there and just have other companies shoulder all the cost of a delay and not take a hit yourself when you are the one that ordered the chip, pretty sure an Nvidia and TSMC for example are smart enough to protect their own interests and not just get stuck paying the tab for 1-2 extra years or having a negative impact on their business because a company decided to get cute at the tail end of a product cycle. 

Nvidia especially is notoriously anal about getting their cut and getting paid, I know MS and Sony tried in the past (OG XBox and PS3) to get them to compromise on certain aspects of their contract and they were met with a pretty swift "fuck off, our deal is the deal" from Nvidia which is in large part why Sony and MS only use AMD these days. TSMC probably not smart to fuck with them either, production lines are in short supply if Nintendo has some quantity booked (probably through Nvidia) probably not a smart decision to throw that away. 

On the COVID thing, remember we are comparing year end 2022 to 2021. A lot of places were removing restrictions, but others weren't. And there is the fact some people didn't want to go out. However, my point is still the same. 2018/2019 would be more typical years because they don't have some shadow of COVID hanging overhead. 

On profits, that's fine. I haven't looks recently at their most recent financial releases so I'll take your word on it. My point was on revenue specifically

I agree with you on the rest. I doubt there would be much headache if Nintendo purchased the chips and held back on releasing the system, instead opting to build up supply (we can see how it screwed Sony this generation). Unless there is something else in these agreements I'm not familiar with, I wouldn't think that would be a problem. 

The problem would be someone has to pay for those chips, the manufacturing lines, etc. etc. etc. and that someone would be Nintendo. 

So yes, they could just sit on millions of mass produced chips for a year for example, but they would also be earning no money on those chips and the sunk cost would likely be high. You're talking about a chip that probably is not going to be that cheap to begin with either, so sitting on millions of them unsold would almost without doubt show up on their yearly financial reports as a massive fiscal year loss that they would also have to explain. No business likes sitting on millions of dollars of unsold inventory. 

I don't really see that as a particularly plausible avenue for them. There can be other practical problems there too like they may not be able to say in year 2 "hey we have a ton of chips we hoarded so lets stop/slow production in year 2 since we don't need that much excess chipsets", the problem with that is Nvidia and TSMC (or Samsung) likely have it written that they get royalty fees and a certain number of guaranteed chips every year ... things like that. Which is normal, the chip designer and the manufacturer need to protect their interests too, it's not just about Nintendo being happy. 

There's also a lot of other problems with stock piling chips a year+ in advance. You would probably be stuck with a constant pile of inventory made a year before it has to be sold which leads to you not being able to get the best price on the chip because you're in a cycle where you're always selling from inventory that was mass produced a year in the past. There would also be problems if you wanted to do a die shrink but you also have a fat pile of unsold inventory on the previous worse node.

There's just a lot of headaches with this route that I don't think they would want to be put in that position. Or I'll put it another way ... the upside on doing this would have be incredibly enormous, like having a system that's selling maybe 10-12 million units by its 8th year isn't really worth the trouble of doing all this. There would have to be something incredible happening with the ecosystem like the system showing no decline or even increasing in sales somehow or something crazy like that. 

The other thing with the COVID pandemic issue is if the point is that the pandemic basically inflated Switch sales, fair enough, but the flipside to that point then basically has to be that with the pandemic restrictions now basically over every where that decline would likely be worse going forward with the pandemic gone. And Nintendo actually does kind of acknowledge this in their last investor QA they cite one reason for the system's decline as being the Switch is having difficulty being seen as a go to entertainment device now that the pandemic is over (basically to that effect) people have more entertainment options. But that doesn't really bode well then for keeping an aging system on the market longer.

Last edited by Soundwave - on 13 March 2023

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Soundwave said:
javi741 said:

2025 is still certainly possible. People keep comparing the Switch to previous Nintendo consoles when it comes to their lifespan and release. However, the problem with that is that the Switch is a major anomaly compared to the previous Nintendo consoles. The Switch is the most profitable console of all time with software that's selling far better than any previous Nintendo console, so the lifecycle pattern that we've seen with previous Nintendo systems may not apply to the Switch.

While yes sales are dropping for the Switch, the profits are still extremely good for Nintendo and when we compare this fiscal year's profits for Nintendo to the DS's 6th year, FY ending 2023 would have an operating profit of 3.55B compared to 1.5B for the FY ending 2011. Profits for the switch's 6th year are 137% higher than the DS's 6th year. Also, Nintendo this fiscal year would see a 24% drop YOY in operating profit compared to the DS which saw a 52% drop YOY. So Nintendo has much less of a reason to panic and release a successor early this time around like the DS.

Releasing a new console should never be done in a state of panic to begin with, if you let your business collapse or decline that sharply that you desperately need a new console, your management has fucked up royally to begin with. 

Like Sony was also making large profits with the PS4 right up until it's final year, but they still went ahead with PS5 because they know every generation has to end at some point. 

This whole obsession with "milk a console dry to the bone to the point where you're in a really dire state of decline" is not really something that should be applauded. It's a stupid strategy. Your existing console should be in a state of gentle, natural decline when its replaced (like PS4 was for example, like Super NES was), not in a "holy shit, this thing is totally cratering" type of thing. 

Especially when it's your only console and you don't have a secondary hardware line any longer to bounce back off of. 

Once your console is past 5 1/2 years old and starting to show YoY declines in the 20-30% YoY range it's probably a not very subtle sign that it's time to start moving ahead with the generational transition, that's not a situation that's going to magically get better for you the longer you wait, it's more probable to only get worse.

Dropping a system earlier just for marginally falling profits may not always be the best thing, the Switch successor could easily be less profitable than sticking with current hardware if you release the successor too early. Nintendo dropped the Wii & DS pretty early in favor of the Wii U & 3DS which of course led to their first loss in over 30 years.

Nintendo wouldn't want to risk losing easy great, more-certain profit with their current hardware in order to drop the successor which is way more uncertain if it can produce profits as high, the Switch still this fiscal year would produce 3.55B in profit.

Nintendo also isn't in any sort of rush like the previous generation to release the Switch successor, they have no competitors who could steal their marketshare unlike with the DS & Wii where the DS had to compete with the upcoming PS Vita as well as smartphone games which were forecasted to kill the handheld gaming market. With the Wii, Sony & Microsoft already stole one of the main appeals the Wii had with the Kinect & PS Move which is part of the reason why Nintendo felt forced to drop the Wii earlier despite being a massive success. Switch isn't in any of those scenarios.

Sony would still release the PS5 despite the PS4 being profitable because Xbox is still a major competitor to them and they can't afford giving MS a headstart in the generation, nothing is threatening the Switch right now for Nintendo to be in a rush.

Last edited by javi741 - on 13 March 2023

I'm not doubting , but...

How reliable is that leaker?



My prediction in 2023.

SW: 27m

PS5: 24m

XBS: 12m

javi741 said:
Soundwave said:

Releasing a new console should never be done in a state of panic to begin with, if you let your business collapse or decline that sharply that you desperately need a new console, your management has fucked up royally to begin with. 

Like Sony was also making large profits with the PS4 right up until it's final year, but they still went ahead with PS5 because they know every generation has to end at some point. 

This whole obsession with "milk a console dry to the bone to the point where you're in a really dire state of decline" is not really something that should be applauded. It's a stupid strategy. Your existing console should be in a state of gentle, natural decline when its replaced (like PS4 was for example, like Super NES was), not in a "holy shit, this thing is totally cratering" type of thing. 

Especially when it's your only console and you don't have a secondary hardware line any longer to bounce back off of. 

Once your console is past 5 1/2 years old and starting to show YoY declines in the 20-30% YoY range it's probably a not very subtle sign that it's time to start moving ahead with the generational transition, that's not a situation that's going to magically get better for you the longer you wait, it's more probable to only get worse.

Dropping a system earlier just for marginally falling profits may not always be the best thing, the Switch successor could easily be less profitable than sticking with current hardware if you release the successor too early. Nintendo dropped the Wii & DS pretty early in favor of the Wii U & 3DS which of course led to their first loss in over 30 years.

Nintendo wouldn't want to risk losing easy great, more-certain profit with their current hardware in order to drop the successor which is way more uncertain if it can produce profits as high, the Switch still this fiscal year would produce 3.55B in profit.

Nintendo also isn't in any sort of rush like the previous generation to release the Switch successor, they have no competitors who could steal their marketshare unlike with the DS & Wii where the DS had to compete with the upcoming PS Vita as well as smartphone games which were forecasted to kill the handheld gaming market. With the Wii, Sony & Microsoft already stole one of the main appeals the Wii had with the Kinect & PS Move which is part of the reason why Nintendo felt forced to drop the Wii earlier despite being a massive success. Switch isn't in any of those scenarios.

Sony would still release the PS5 despite the PS4 being profitable because Xbox is still a major competitor to them and they can't afford giving MS a headstart in the generation, nothing is threatening the Switch right now for Nintendo to be in a rush.

Wii and DS had pretty long product cycles, there's nothing short about 6 years on the market. It's a normal product cycle, DS just over 6 years actually and seven actual holiday shopping seasons (04, 05, 06, 07, 08, 09, 10) without a successor. 

But even if Nintendo moved 3DS to 2012 and Wii U to 2013 ... then what? 3DS and Wii U would've done great? Wii and DS would've declined either way, like DS for example was reaching saturation points in the Japanese and Euro markets by 2010 already. 

They lost money on Wii U and 3DS because they were badly managed launches that were banking heavily on trends that were 3+ years past their prime ... ie: Nintendogs 2 would effectively be such a big hit that the it could carry a 3DS launch, NSMB was a big hit on Wii and DS so naturally it could carry the Wii U launch. They were wrong on both of those bets. They had oversaturated the demand for those concepts and people just weren't as excited about it a few years later. Who here was over the moon hyped about getting a 3DS for Nintendogs + cats? *crickets*

The 3DS honestly probably would have done worse if they launched later which would have cost them money that way too. I don't think it hits 75 million+ if they just held it off the market an entire extra year and then tried to launch it in 2012 instead. You're maybe talking 60-65 million units instead. They botched the launch window but by the fall of its first year they were able to get sales at least to a decent level with Mario Kart 7 and Mario 3D Land so losing that first year would have still hurt them. Like the highest selling holiday sales the 3DS had was holiday 2011 ... if they missed that window it would have been worse, not better for Nintendo long term. 

Last edited by Soundwave - on 13 March 2023