With few attractive titles for the holiday shopping season and shipments on track to fall short of the company's targets, doubts are growing whether Nintendo Co.'s (NTDOY.PK) Switch can ever become a mass-market product.
So far, the Switch has struggled to find customers beyond a core fan base. The Switch is on track to reach 35 million unit shipments by March, according to the average of eight analysts' estimates compiled by Bloomberg, short of Nintendo's target of 38 million.
"All great consoles need a great second year, and Nintendo hasn't delivered one for the Switch," said Cornelio Ash, an analyst at William O'Neil & Co. in Los Angeles. "Investors thought over five years they could sell maybe 90 million units. But after this year, that's looking pretty much impossible."
"The stock is heading back to the level when the Switch was announced, which doesn't say great things about its long-term prospects," Ash said.
This year's biggest disappointment has been Nintendo Labo, the cardboard add-ons that transform the Switch into playable objects. Like the Wii, they were designed to appeal to non gamers to broaden the device's customers beyond core fans. But sales have struggled. Last month, Nintendo President Shuntaro Furukawa told reporters in Osaka that "it will take time" to see if the product delivers.
"2018 was a reality check and brought lofty expectations back down to Earth," said Michael Pachter, an analyst at Wedbush Securities Inc. "The Switch is great, but is still primarily a handheld, and a very expensive one."
That opens the possibility of price cuts. History suggests reductions will have to be aggressive in order to work. Sales of the 3DS picked up only after prices were slashed by 40 per cent five months after launch, but the Wii U didn't recover even after Nintendo dropped the price by about 15 per cent within a year after release.
"I don't see sales growing unless the price is reduced to below US$200," Pachter said, indicating a 33 per cent cut from the Switch's current price.
While a lower price sticker would help boost Switch sales, it may further depress sales of the 3DS.
Another possibility is the introduction of different hardware versions, such as one designed for children.
Apart from potential price cuts and new models, the other key to regaining momentum will be new games. Nintendo is planning big releases next year, including a new Animal Crossing game, a Pokemon title and the latest installment of its Metroid series. Whether that can broaden the install base beyond core gamers remains to be seen.
"The Switch excitement has rapidly declined, " Ash said. "Unless there's significant change or something else new, the Switch story has been exhausted."
Full article: https://www.bnnbloomberg.ca/nintend...s-killer-product-for-new-gaming-era-1.1174252
