Nintendo’s recent results briefing for the end of the previous fiscal year is a seven-page in-depth discussion of the Switch’s runaway success and their plans for it in the upcoming year. President Tatsumi Kimishima addressed the shortage concerns and fiscal expectations for their newest flagship product, among their other activities.
Nintendo is planning to ship 35 million units of the Nintendo Switch software worldwide this fiscal year. For Wii and Wii U, which launched during the holiday season in November, the attach rates for software through the end of the fiscal year in which each launched (the following March) were 4.9 units and 3.9 units per hardware unit, respectively. Nintendo Switch did not launch during the holiday season, but the software attach rate in under a month following its launch in March was 2.0 units.
These differences are due to the timing and cannot be compared directly. Mario Kart 8 Deluxe, which is releasing this week, has been highly anticipated by consumers and in fact currently, has more momentum than Nintendo expected. Nintendo believes it is most important to convert this anticipation to sell-through and bring enjoyment to our consumers. Consumers are also looking forward to future titles in the Nintendo Switch lineup, including ARMS and Splatoon 2, so Nintendo is aiming for an attach
rate of 3.5 units to 4 units over this fiscal year, comparable to that of Wii and Wii U.
Most notably: they are expecting the console sales equivalent of a record-making bumper crop for the 2017 holiday season, and are ramping up hardware production to meet it head on.
“If demand for Nintendo Switch reaches the same levels that Wii did, isn’t it likely that the product will be sold out during the holiday season if you can’t secure sufficient inventory levels by the fall?” asked the report. Kimishima replied thus: “We are planning to ship 10 million units this fiscal year, and this figure takes into account the fantastic response we have received from consumers. Planning to ship 10 million units means that we actually plan to produce more than that including units in our warehouse and in-transit product. We are not currently producing this full amount all at once. We expect that the number of consumers who want to buy the hardware will increase as we release titles such as ARMS, Splatoon 2 and Super Mario Odyssey, so our current production model takes that into account.
The question was specifically framed in context of the holiday shortages found the last time that Nintendo broke records with a console. The Wii, launched a decade ago, suffered shortages throughout its first year, even as it was producing 1.5 million or more new consoles a month. The Switch doesn’t have a specific production-per-month number pegged to it in the report, but Kimishima expects that they will be able to meet demands by the holidays.
Of course, currently, finding games for the Switch is probably easier than finding the Switch itself. As noted by Kimishima and the briefing’s questions, more copies of Breath of the Wild sold than the console it’s supposed to be played on, to some surprise.
The result was exactly as expected in the U.S., but the game is much larger in scale than previous games, and it reached greater popularity than we had expected in Europe and Japan as people tried it themselves or watched others play. Reviews of this game prior to release were also very helpful in communicating its appeal. Ultimately, we were able to achieve these results because of the response not only from fans of The Legend of Zelda series, but also from consumers who had played a Zeldagame in the past and wanted to play one again, as well as consumers who had never played a Zeldagame before but who heard the buzz and wanted to play.
We would certainly like to be able to predict the worldwide popularity of The Legend of Zelda: Breath of the Wild, as you suggest, but we are still not able to forecast to that degree of accuracy. The end result was that the number of units of this game shipped was higher than the number of units of hardware shipped.
Kimishima expects an attach rate average of 3.5 to four software titles per Nintendo Switch console over the fiscal year, roughly matching that of the Wii and Wii U. It is currently a comparatively meager two-to-one — due mostly to timing. The current “must-have” titles for the Switch are Breath of the Wild and Mario Kart 8 Deluxe, while by year’s end Kimishima anticipates the addition of Splatoon 2 and ARMS will do much to bolster the console’s library.