Nintendo hopes to that the Switch consoles will save the company from financial troubles, estimating to sell around two million Switch consoles at launch.
Nintendo's Financial Situation
According to Ars Technica, Nintendo is struggling to return to the solid financial health the company used to enjoy just a few years ago. After one-time sale of the Seattle Mariners notwithstanding and an unexpected windfall from the success of the once popular "Pokemon Go" game title, Nintendo is now expected to make just one-third of the money it did in the year 2009, at the peak of Wii-mania. That is mostly due to very low sales for the Wii U, estimated to reach worldwide just 800,000 systems sold in the entire fiscal year.
In an earnings release on Tuesday, Oct. 25, published on company's website, Nintendo has dropped its expectations for both its operating income and full-year revenue targets. With the present financial troubles, Nintendo is increasing its hopes of returning to highly profit figures with its just-unveiled Switch console. Before the fiscal year ends in March, Nintendo expects that the system will ship two million units, according to Nintendo President Tatsumi Kimishima.
Nintendo Switch Gaming Console
Kimishima's remarks accompanying the earnings release were reported in a Twitter post by The Wall Street Journal's Takashi Mochizuki. That estimated two million systems sold at launch is still smaller than the 3.06 million Wii U systems Nintendo shipped in the year 2012, during its launch quarter. However, that comparison might be misleading, since a month and a half for the Wii U's launch quarter is compared with less than a month of sales for the Switch console.
Another difference between the Wii U and the Switch is that the upcoming gaming console will launch in March, while the Wii U launched in the busy holiday season. Kimishima said that Nintendo won't go into the red selling Switch hardware, unlike the Wii U, which the company initially sold at a loss to try to build a base for software sales. Kimishima also added that, when setting price, the company is listening to consumers' expectations.
At the moment it's still not clear whether that means the company will sell the Switch console with a small profit margin built in or just at cost. Kimishima confirmed earlier reports that Nintendo would not release more information on the Switch's price or hardware specs this year. Anyways, until the next fiscal year, the Switch launch won't have a significant financial impact on the company.
Kimishima said there will be opportunities for players to try the unique hybrid system once the system is fully unveiled, but before it begins shipping on the market. The Nintendo CEO also said that he is confident at that point consumers would realize how the Switch handheld system that can easily transform into a console for the home is different from 3DS. But rather than immediately pushing the Switch to serve as a replacement, Nintendo will still continue to produce and support the 3DS for the time being.
According to CNN Money, for the 127 year-old company the introduction of its latest console will be one of the biggest moments in recent years. The unveiling last week of the tablet that slides into a dock to display games on TV was well received by consumers.
While gaming enthusiasts are calling the innovative Nintendo Switch console a potential game changer, investors weren't as impressed. Next day after Nintendo unveiled its Switch hybrid console, the shares of the company dropped 6.6 percent in Tokyo. It remains to be seen whether Nintendo's hopes to return to its former market success will materialize with the launch of the Switch.
