Sony’s PlayStation 5 and Microsoft’s Xbox Series X and Series S go on sale these weeks called to be the star gift of an atypical Christmas. Once the world’s top-grossing entertainment industry, video games are now the favorite pastime of a world in crisis. The nights in bars, cinemas and restaurants have been transformed into Netflix nights and games at the console.
Titles like Riot Games’ Valorant, Fall Guys or Among Us breathed fresh air into the world of video games at the best possible time, when it was most needed. But without any doubt, the most notable title during the confinement has been Animal Crossing: New Horizons by Nintendo. A game that tries to live together, to venture, to live life again without limits or fear; even if it was embodying a virtual character in a world where the harsh reality that was suffocating us at that time dissipated during each game.
Friends who could not visit each other, couples who were left with kisses to give and families with pending meetings found in these virtual islands a means to be able to do what they wanted and were no longer allowed. Switch’s Animal Crossing became a means of connection, not disconnection. The game restored the ties that the pandemic severed them.
Due in large part to the success of the title, Nintendo has improved its estimates for the fiscal year ending in March, and now expects to sell 24 million Switch consoles, 5 million more than planned.
Income comparable to the golden age of Wii and DS
The Japanese company now expects to increase its operating profit to $ 4.3 billion, 50% more than expected, and its income at 13,549 million dollars compared to the 11,612 million dollars estimated for the year. In the last fiscal quarter, Nintendo doubled its profits compared to the same period of the previous year, exceeding 2,816 million dollars.
The new forecast is cautious due to the immense demand the gaming industry is enjoying now that the options that consumers have when it comes to having fun are increasingly limited. Shuntaro Furukawa, president of Nintendo, told the shareholders’ meeting that this abrupt increase in sales since the start of the pandemic could be temporary. But it has been a historic quarter for the company, which is equal in revenue to that obtained in the same period in 2008, when the Wii and DS consoles were the most desired products in the entertainment industry.
Have been sold 68.3 million Switch units to date, and Nintendo has already fixed the problems that the console has been carrying on production lines since its launch. With a steady stream of hardware being distributed to retail outlets and exclusive titles like Animal Crossing: New Horizons, of which more than 26 million units have already been sold, Nintendo’s near future couldn’t look brighter.
Why Nintendo’s success is neither casual nor temporary
Despite the caution shown by Furukawa in its estimates and comments made at the shareholders’ meeting, it is clear that, beyond the convenient situation that the COVID-19 crisis has created for the company’s business, nintendo’s strategy works.
It is the first time that the company has achieved what it needed: compete against itself without depending on the renewal cycles of its immediate competitors or trying to compete by offering what they offer; because Sony and Microsoft do it better. The Switch is the culmination of an idea and a strategy that began in the era of Wii and DS: to offer something unique through the combination of hardware and software that does not pose a burden, as the Wii U did, for its well-known intellectual properties.
The Switch catalog is extensive, of great quality and has numerous titles from other studies that enrich it even more. Programming for the Nintendo console is no longer complicated or a dire business decision. In addition, the idea of merging laptop and desktop offerings has been a success, and the hardware finally adds, instead of subtracting. Therefore, in addition to having the exclusives that have always been the star reason for fans when it comes to acquiring a Nintendo console, the success of the Japanese company during the first half of the fiscal year will continue despite the exit for the PlayStation 5 and the Xbox Series X and Series S.
Looking to 2021
The war between PlayStation and Xbox will be the main protagonist of the Christmas campaign, but the great difficulties that consumers will have to acquire them, due to stock limitations and distribution problems caused by the pandemic, will hamper the takeoff of the new generation as Nintendo consolidates its offering: a versatile and cheaper console with a wide catalog of video games that have alleviated the dead times locked in their homes for millions of consumers.
By 2021, Nintendo plans to launch a new, more powerful version of Switch with 4K video output alongside several high-caliber titles from Nintendo itself and other studios, according to Bloomberg. It would explain the not so long list of news this year in order to respond to the offer from Sony and Microsoft. Even so, based on the latest quarterly results and the increase in sales, it seems that Nintendo is not going to need any ace up its sleeve to exceed the 102 million Wii consoles sold.
The good moment of Switch, together with the great opportunity that the company has to increase its income from digital sales and services, something that Sony is achieving with great success and that Nintendo is not yet exploiting to the fullest, and its rapid growth in China closing the gap with PlayStation invites us to think that the success of the Japanese study will not be temporary.