Nintendo has released a translated transcript of their Q&A summary during the Nine Months Earnings Release /
Financial Results Briefing (Conference Call) held on February 1st, 2021. The Q&A Summary touched on a number of subjects, most notably Switch Sales and how they can continue to grow further, changes in software sales, and that future software titles will be discussed at a more appropriate time. We have taken a few highlights of the Q&A summary below. If you would like to see the full Q&A Summary, you can find it on the Nintendo IR Information website here.
The cumulative sales volume for Nintendo Switch has reached approximately 80 million units,
and is now within range of the approximately 100 million units recorded by Wii. Going forward,
what do you think is needed to continue to grow Nintendo Switch sales even further?
Answer 4 Furukawa:
Nintendo Switch has entered the middle of its lifecycle, and sales have greatly increased in the fourth year after the 2017 launch, reaching a wider range of consumers. Because Animal Crossing: New Horizons was a hit, many consumers became interested in Nintendo Switch, and that was one of the major reasons for the sales increase of the systems. We are aiming tocontinue this momentum and increase the cumulative sales volume to overtake that of Wii.
While we are considering various measures to achieve this, one point that we consider critical to this effort is the fact that a wide range of consumers are currently playing Nintendo Switch. Many of those who purchased Nintendo Switch at launch have already played a variety of different titles, while there are also consumers who were encouraged to purchase a Nintendo Switch by the release of a game in a series like Pokémon or Animal Crossing. In addition, there are consumers who purchased a game system for the first time in a long while because in 2020, they were spending more time at home, or who purchased a system due to nostalgia from the Super Mario Bros. 35th Anniversary campaign. Nintendo Switch will be entering its fifth year, and it’s important for us to continue to provide the next title of interest to each of these various consumers.
And our research has found that approximately 20% of the Nintendo Switch family sellthrough between October and December 2020 in the main regions was due to demand for multiple systems within the same family. We will aim to continue increasing our sales volume by rigorously responding to this kind of demand for multiple systems as well.
Are there any changes in how Nintendo Switch software is selling due to the diversification of the consumer base? Looking at the balance of software sales in this fiscal year, it looks like the ratio of sales for evergreen titles has increased in comparison to new titles, and it feels as if the way software sells has changed, compared to when Nintendo Switch launched. Please also tell me about your initiatives for encouraging new hardware purchasers to continue to buy software.
Answer 5 Furukawa:
Compared to a typical year, unit software sales this fiscal year have included a larger contribution from titles released in previous fiscal years, and this is reflected in the list of million-seller titles. Looking at total sell-through of first-party titles in the major regions for April through December last year, you can see that titles that were released in the previous fiscal year or earlier accounted for approximately 80% when you include Animal Crossing: New Horizons, and around 60% when you exclude that one title. In short, titles released in previous fiscal years contributed greatly to our business, both for this overall fiscal year and for the holiday season.
In addition, many consumers who purchased hardware to play Animal Crossing: New Horizons have continued to purchase other software. Looking at the global numbers, they often purchase evergreen titles like Mario Kart 8 Deluxe, Super Smash Bros. Ultimate, The Legend of Zelda: Breath of the Wild, and Super Mario Party. In addition, Mario-related titles sold very well during the holiday season, as a result of the Super Mario Bros. 35th Anniversary campaign that began in September. In Japan, consumers also chose titles like Pikmin 3 Deluxe and KONAMI’s Momotaro Dentetsu: Showa, Heisei, Reiwa Mo Teiban. On the other hand, there are also consumers who continue to exclusively play Animal Crossing: New Horizons, and they are enjoying communicating with their friends and playing the regularly held in-game events.
In this manner, what a consumer plays next can differ depending on when and why they purchase their Nintendo Switch, so for the next fiscal year we will focus on encouraging more consumers to pick up already released titles in addition to providing new titles.
Global Nintendo Switch sales volume (sell-in) for the fourth quarter is forecast to be 2.4 million units, but based on external data, sell-through in Japan in January already reached a certain level, so there seems to be a major difference between the two. I assume that the sell-through number includes units shipped in 2020, so the actual difference between sell-in and sellthrough might be smaller. However, with the sales momentum being very strong, can you share your thoughts about the differences in sales trends for the fourth quarter in different regions?
Also, there have been no major titles released this fiscal year, so what will the software lineup look like for the next fiscal year?
Answer 6 Furukawa:
With regard to our sales forecast for the fourth quarter, we are in a different situation than we were with the release of Animal Crossing: New Horizons last year, but nevertheless, sales have maintained strong momentum. If this situation continues, we see the possibility of sales exceeding our fourth quarter plans, so we will keep up our efforts to sell hardware. As for the regional sales ratios, our plans are in line with the regional sales performances seen thus far.
Our software lineup for next fiscal year is a topic we will discuss at the appropriate time. We have already announced our plans to release Super Mario 3D World + Bowser’s Fury in February, followed by MONSTER HUNTER RISE in March (see note 1), and New Pokémon Snap in April (see note 2). As always, we are preparing a variety of software titles for consumers in the coming fiscal year.
Note 1: This title will be released and sold by Capcom Co., Ltd.
Note 2: In Japan, this title will be released and sold by The Pokémon Company
Source: Nintendo IR