According to the company’s partners and suppliers, Japanese multinational company, Nintendo Co. Ltd., is gearing up for record software and Switch sales in the coming year. This will be a much stronger performance than what investors are projecting.

According to executives at allies, including component suppliers, retailers, and software publishers, Nintendo is planning for sales to be flat or slightly higher in the fiscal year ending March 2022 of its signature Switch game console, boosted by the introduction of a version with an OLED display. Console sales have been forecasted to decline next year.

Software sales are expected to reach 250 million units next fiscal year due to the releases of a series of marquee games. According to sources speaking anonymously, this is far more than the record 205 million units forecast for the current year as the plans are not public. Software sales have also been predicted to decline fall next year.

Some of the suppliers have been briefed while, based on orders, other partners established their own forecasts. A Nintendo spokesman refused to comment.

At first, the coronavirus outbreak was a stoppage and then an accelerant for Kyoto-based Nintendo, choking its supply and logistics at the start but then triggering a demand surge with global lockdowns driving people to seek entertainment and escape at home. What brought about a significant increase in Switch sales and hastened the transition from packaged software to digital downloads is the company’s Animal Crossing: New Horizons, which turned into the ideal virtual hangout for stress relief.

“Nintendo will need to start the next fiscal year without Animal Crossing and the pandemic, but that will be offset by a much stronger blockbuster software lineup and new hardware,” Serkan Toto of game consultancy Kantan Games Inc. said, according to Bloomberg.

Still Climbing

A revised version of the Switch is set to release in the latter half of this year with a larger and better display, including upgraded graphics when the hybrid console is plugged into a TV set, Bloomberg News has reported. Nintendo makes some of the biggest blockbuster games globally; these games contribute significantly to profit and spur hardware adoption.

According to Astris Advisory Japan’s David Gibson, the Switch and Switch Lite continue to sell well, with one reason being a poor supply of Sony Corp.’s PlayStation 5 and Microsoft Corp.’s Xbox Series X released in November. But as much of this year’s lineup of new games remains unannounced, scepticism revolves around the company sustaining its recent success.

“With or without an upgraded Switch, Nintendo’s hardware sales would probably decrease in the year from April,” according to Bloomberg Intelligence’s Matthew Kanterman.

Solid System

The same global chip supply bottleneck that has troubled more than one industry will also challenge Nintendo’s ability to fulfill the demand for the Switch. Beyond securing silicon from the likes of the world’s largest chipmaker, Taiwan Semiconductor Manufacturing Co.(TSMC), the Switch maker also faces scarcity of more generic parts like display driver integrated circuits and Bluetooth modules, sources said. Component suppliers said the situation may not improve for the rest of the year.

According to a report by Bloomberg, “makers of NAND flash memory — the media on which packaged Switch software is sold — are preparing more units for the coming fiscal year than they supplied in the current one, the people involved in the supply chain said.” As Switch is almost certain to surpass the 100 million units sold threshold, for their upcoming game releases as the console, software developers are prioritizing the console as it assures a large audience of potential customers. As of the end of 2020, Nintendo had sold 80 million Switch devices.

Games announced for this year so far include “several Pokémon titles and popular third-party games such as Fall Guys by Mediatonic.” Though the company has kept its release schedule for the second half of the year vacant, a positive surprise was delivered by announcing Splatoon 3 for 2022 last month, said Astris Advisory’s Gibson, indicating a strong games pipeline for the long term.

“The Switch is in the middle of its life cycle,” Nintendo President Shuntaro Furukawa said in February.

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