Why the stock market punishes Nintendo
Nintendo fell 5.84% after Bloomberg reported that the company will delay the launch of the successor to its hit console, Switch, to March 2025. But what do we really know about Switch 2?
It is not just the weakness on Wall Street caused by stronger-than-expected inflation data (and therefore the consequent fears of higher US interest rates for longer) that is rippling the waves in the Pacific. The start of the week on the Tokyo Stock Exchange with the Nikkei index down 0.08% to 38,455 points was also stormy due to the fall suffered by the video game giant Nintendo which lost 5.84% after Bloomberg reported the news of a possible delay of Switch 2.
HOW MUCH DID SWITCH 1 SELL?
With approximately 140 million Switches located in the four corners of the globe and considering that the rivals, PlayStation 5 and Xbox Series, are just halfway through their life cycle, one can sense the resistance of the Kyoto company to wanting to switch right now to a new machine, the one that the press calls Switch 2.
In fact, it is necessary to keep in mind that the public does not always reward the console which, before the others, inaugurates the next generation (emblematic in this sense was the flop of the Dreamcast, the first 128-bit console and, at the same time, the last one developed by Sega)
ALL THE CHATTER ABOUT SWITCH 2
In reality, there has been talk of an elusive Switch 2 for some time and, like the chatter surrounding the infamous "Wii U in HD" (which later turned out to be the current Switch following the failure of the previous machine), it should not have been a next generation and, as such, very different from the current one, as much as a technological update.
Even in this generation of platforms, in fact, the Kyoto company, just like the Wii U and the Wii before the Switch, suffers from a certain backwardness compared to its rivals which has made some porting impossible. This backwardness will have to be ironed out before the arrival of GTA VI , so as not to lose the opportunity to host the highly anticipated Rockstar Games title.
Also for this reason in the last period the rumors about the imminent presentation of Switch 2 had become more insistent: the current console is entering its seventh year of life and is doing so without major exclusives on the horizon.
But, what's worse, according to analysts it would have now "sold what is salable": in short, it is difficult to see total copies grow further. In the centuries-old life of the Japanese company founded in 1889, only the Nintendo DS has sold more (154 million copies), touching the record of the PlayStation 2 (155 million). Nintendo itself expects to sell 15.5 million Switches in the current fiscal year, which is a 13.7% drop in sales compared to the previous year.
WHEN WILL SWITCH 2 COME OUT?
According to rumors also reported by Bloomberg , no Switch 2 will be seen during 2024. Other very insistent rumors also gave the new console a release between November and December, or during the holiday period, when consumption increases.
Well, Bloomberg claims that Nintendo had initially decided to exploit this window for the launch of the next console while in the last period it has begun to warn its second and third parties of the postponement to the first quarter of 2025.
News that shocked the shareholders, who hoped for revenue growth due to the boost from the new console and above all were confident that the launch would take place in the wake of the Christmas holidays. It must be said that even the old Switch came out at the beginning of March, way back in 2017, and this did not stop it from imposing itself on its rivals.
This is a machine translation from Italian language of a post published on Start Magazine at the URL https://www.startmag.it/innovazione/perche-la-borsa-punisce-nintendo/ on Mon, 19 Feb 2024 14:31:42 +0000.