The release of Nintendo's earnings call on Thursday morning highlights the strength behind the brand and its still viceroy grip on the industry, despite titans like Microsoft and Sony moving in on their own billion-dollar consolidation efforts. Nintendo announced subtly a plan to step into the metaverse conversation given this firm foothold.
The dual mobile and console-based Switch under Nintendo has sold 18.95 million units from March to December 2021. It vies to send 23 million more off shelves in fiscal year finalizing in March, which is a tick down from the previously set 24 million potential output.
Nintendo originally projected it would ship 25.5m Switch consoles between April 2021 and March 2022.
— Daniel Ahmad (@ZhugeEX) February 3, 2022
In October it reduced its forecast to 24m. Another revision was issued this month, down to 23m.
Impact of the global semiconductor shortage affecting all console manufacturers.
This slight blemish is due largely to the still ongoing semiconductor chip shortage, which has placated nearly every high-end tech company's device production, including Sony's PlayStation 5, Nvidia's various graphics cards, and Samsung cellphone offerings. On Wednesday, Feb. 2, Sony likewise issued a similar diminishing sales forecast, dropping its PS5 potential full-year output from 14.8 million to 11.5 million units.
Nintendo's CEO, Shuntaro Furukawa, offered a bit of insight on the roadblock following the earnings call:
"The outlook for semiconductors and other components has remained uncertain since the start of this fiscal year and distribution delays remain unresolved, so production and logistics continue to be impacted."
With Switch sales only slightly falling by the wayside, software development and downloads are on a steady rise despite now outperforming the Wii U in its entire lifetime. Nintendo saw a 31% leap in digital sales numbers when compared to the similar timeframe of yesteryear, equating to a 110.8 billion yen output amidst the December quarter. It bumped expectations about forthcoming software sales, eyeing a 220 million unit potential forecast on the heels of last month's strong Pokémon Legends: Arceus debut.
Furukawa unveiled back in November the company's commitment to broadening game development, investing an internal 100 billion yen to rein in surefire hits. He related similar standings on Thursday, yet likewise added that, as Sony and Microsoft gobble up talent, Nintendo isn't afraid to start its own M&A (mergers and acquisitions) spree - that is, only if necessary.
"Our brand was built upon products crafted with dedication by our employees, and having a large number of people who don't possess Nintendo DNA in our group would not be a plus to the company," explains Furakawa.
On the hot topic of both NFTs and the metaverse, Nintendo offered a toe-in-the-water approach. Statements made by Nintendo via David Gibson on Twitter relate that the Japanese company does "have interest in this area...but we wonder what joy we can provide in this area." Gibson later revised his comments specifically pertaining to NFTs, relating that Nintendo "was mainly focused on the metaverse."
Q) How think about metaverse and NFT?
— David Gibson (@gibbogame) February 3, 2022
A) We do have interest in this area, we feel the potential in this area, but we wonder what joy we can provide in this area and this is difficult to define right now (hey Facebook etc take note!!) 8/
Where and how exactly Nintendo may situate itself in this space is anyone's best guess, but the metaverse does have financial incentives, given Morgan Stanley's $8 trillion potential market evaluation of the endeavor. Even Microsoft's nearly $70 billion investment into Activision Blizzard has many considering it as a metaverse play, specifically Microsoft chief Satya Nadella, who tells Financial Times that the company's purchase is a stepping stone toward the internet of the future.
While it may still be quite a while before Nintendo adopts a metaverse strategy, the initial thought process and concept are there for the taking. Its swath of iconic gaming characters, which are made manifest via games like Super Mario, Pokémon, Legends of Zelda, Splatoon, and Kirby, highlight a potential keen interest in a digital theme park sort, utilizing gaming via broad social connectivity.
Hopefully, one day I'll be able to ride my Dragonaire throughout the metaverse, but as of yet, Nintendo is remaining rightly hesitant until further analyses can be made.
