Nintendo Sold Nearly 30 Million Switches Last Year, but Supply Constraints Persist

Every console and GPU has been difficult to find for most of the past seven months, but the Switch is in a class of its own. The console has been scarce for over a year and now we know why: Nintendo sold 28.83 million Switches from 2020 – 2021, compared with just 21 million from 2019 – 2020. Sales from January through March of this year, specifically, were up 1.44x over pre-pandemic 2020.

Software saw similar growth, with total sales rising 37 percent to 230.88 million units. Animal Crossing led the market, with 20.85 million copies sold over the past 12 months and 32.63 million copies sold since the Switch launched. Total Switch sales are now ~84.4 million units, just four years after launch.

At the beginning of last year, Nintendo expected to sell 19 million units. In February, it raised its forecast to 26.5 million units. Nintendo is now predicting a 9 percent revenue drop and a 20 percent earnings drop for the fiscal year that will end in March 2022. The company said it could be facing supply constraints on the Switch going forward. The fact that the Switch is built on older process nodes may explain why Nintendo has had more luck shipping the hardware as compared with Sony and Microsoft. Chips alone are not the issue here; low-level components have increasingly been cited as the reason for manufacturing delays.

Are Gamers Playing More, or Are New People Gaming?

I’ve been thinking about the blockbuster gaming results Sony, Microsoft, Nintendo, AMD, Intel, and Nvidia have posted this year. There’s no doubt that gaming sales have surged. With little else to do, gamers have snapped up systems right and left. The question is, did these sales go to gamers who were padding out collections, or did they drive new people into gaming?

The answer could tell us a lot about what the gaming market will do as the pandemic winds down and life gets back to normal. If new people are gaming who weren’t previously gamers, there’s a chance we’ll see a long-term uptick in the number of people who game. Some analysts, for example, believe the recent robust PC sales growth will spark a revitalization of interest in the market that will persist for years to come.

The alternate outcome would be a greater-than-expected drop in console and GPU sales, as people who have been cooped up for over a year spend the summer and fall finding anything to do that isn’t gaming. Such a dip could still be temporary once cold weather arrives, but it would paint a very different picture of the pandemic recovery than what we’ve heard thus far. To date, AMD, Intel, Microsoft, Nvidia, and Sony have all maintained optimistic short-term outlooks and full-year projections. Nintendo is once again playing it safe on guidance, but the company has guided conservatively through the entire pandemic.

Rumors from a few months ago suggested the launch of a Switch Pro in 2021, with a larger display and 4K display capabilities achieved via Nvidia’s DLSS. Neither Nvidia nor Nintendo has commented on the existence of this product.

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