Millions of Nintendo fans are still waiting to get their hands on the blockbuster Nintendo Switch. The console is difficult to find in retail stores because the Japanese company has been unable to keep up with the soaring demand. A new report coming out of Asia indicates that you might finally be able to buy the Nintendo Switch without paying a premium price this holiday season. Yes, Nintendo has more than doubled the Switch production.
The Switch production ramp-up to help meet the holiday demand
The “upstream supply chain” sources told DigiTimes that Nintendo has asked its manufacturing partners to scale up the Switch production to 2 million units per month. The company is confident of hitting its annual shipment target of 20 million units. DigiTimes did not reveal the original monthly production rate, but it was estimated to be between 800,000 units and one million units. Initially, Nintendo had set an annual shipment target of only 10 million units.
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However, the official figures tend to be lower than what a company really aims to ship. According to the Wall Street Journal, Nintendo’s internal goal was to sell nearly 18 million units during the first year. It had shipped 4.7 million units between March and June this year. Shipments during the first six months are estimated to be less than half of the 18 million target. It means Nintendo expects the sales to skyrocket during the holiday season to achieve its annual target.
Nintendo shares surged 3.3% in Tokyo to ¥43,930 on Friday, its highest intra-day level in more than nine years. The company’s shares have gone up by 87% since the Switch launch in early March. Sources told DigiTimes that the Switch shortage had nothing to do with assembly issues or defective components. They blamed the limited supply of critical components such as DRAM for the shortage of the console.
Foxconn and Japan-based Hosiden are responsible for the Nintendo Switch production. DigiTimes added that other companies such as Wistron and Pegatron are also trying to secure orders for the console. It’s worth pointing out that DigiTimes has a hit-and-miss track record, so the report should be taken with a bit of skepticism. However, Nintendo has officially stated in the past that it expects strong demand through the holiday period.
Nintendo is yet to launch the Switch in many large markets
Wall Street analysts have predicted that Nintendo Switch would be one of the most sought-after holiday gifts this year. While holiday season should fuel the demand in Western markets, Nintendo is yet to launch the Switch in some of the world’s largest markets. In many other markets, the console was made available only in small quantities. Nintendo reportedly plans to start shipping the Switch to China in early 2018, which should further boost the console sales. It won’t be available in Taiwan until December 2017.
The Switch still faces supply shortages in Nintendo’s home market, as well as in many other markets such as the US. China lifted the ban on gaming console sales more than three years ago. Microsoft and Sony have already been selling their flagship consoles in China, one of the world’s largest markets. Console sales jumped nearly 57% in China last year. Nintendo has also joined hands with Tencent to add games built by the Chinese developer to the Switch platform.
Nintendo Switch is on track to exceed the lifetime sales of the Wii U console in the first year of launch. The Wii U, which had received a lukewarm response, had sold nearly 13.5 million units in its lifetime. The Switch production ramp-up indicates that it will sell more than 13.5 million units in its first year. However, Nintendo of America President Reggie Fils-Aime is still not confident in the company’s ability to fulfill the holiday season demand.
Smartphones, not Nintendo Switch, will dominate the handheld market
Sony, which makes one of the world’s most popular consoles, recently said it had no interest in launching a handheld console to challenge the Nintendo Switch. One of the reasons Switch became immensely popular is its hybrid nature. You can play it in the living room by connecting it to a TV or play it on the go. However, Sony’s gaming business chief Andrew House recently told Bloomberg that the handheld consoles had limited potential because most people are playing games on their smartphones.
Sony has a handheld console called PlayStation Vita, but the company hasn’t updated it in years. House blamed smartphones for the failure of Vita. In contrast, NPD Group says Nintendo Switch outsold both the PlayStation 4 and Xbox One in August this year. It means smartphones didn’t have a huge impact on the Switch sales. Many industry experts have still expressed concerns over whether the Switch could become a mainstream gaming console.
Nintendo focusing on mobile gaming
Both Nintendo and Sony have realized the importance of mobile gaming, and both of them have doubled down on it. Sony has set up a subsidiary called ForwardWorks to build games for Android and iOS devices. Nintendo has already launched popular games like Super Mario Run and Fire Emblem on mobile devices. It is also reportedly working to bring a mobile version of the Legend of Zelda.
Meanwhile, Nintendo has added as many as ten new games to the Switch eShop, including the Stardew Valley. The company continues to give gamers more reasons every week to buy the Switch console. Stardew Valley, a 2D farming simulator, was one of the biggest hits of the last year, and it’s now on the Switch. Other titles include Axiom Verge, Oxenfree, Tumblestone, and Volgarr the Viking.