Putting years of rumors to rest, Nintendo has finally confirmed that Nintendo Switch 2 will be announced in the current fiscal year, which ends in March 2025. While gaming fans are excited about the long-awaited announcement, would it be as successful as the original avatar?
In a post on Twitter (now X), Nintendo president Shuntaro Furukawa stated that the company “will announce the successor to Nintendo Switch within this fiscal year,” but did not give any further details. He also noted that the company will not discuss Switch 2 at the Nintendo Direct event planned for June.
This is Furukawa, President of Nintendo. We will make an announcement about the successor to Nintendo Switch within this fiscal year. It will have been over nine years since we announced the existence of Nintendo Switch back in March 2015. We will be holding a Nintendo Direct…
— 任天堂株式会社（企業広報・IR） (@NintendoCoLtd) May 7, 2024
Nintendo announced its Switch in 2015 and released it in 2017. The product was a massive game-changer and so far, the company has sold over 140 million units (141.32 million to be precise) of the console while software sales stand at 1.24 billion units. Nintendo Switch is the third best-selling console of all time behind only Nintendo’s own DS and the PlayStation 2.
Nintendo Switch Sales Have Sagged
The Switch 2 couldn’t come at a better time while Switch sales drag and Nintendo’s own flagship games become hard to run on the aging Switch. While the lifetime sales of Nintendo Switch look impressive, they have moderated over the last couple of years. The company, like other gaming companies, benefited from the COVID-19 pandemic as sales of games and gadgets soared.
The company released “Animal Crossing: New Horizons,” the fifth main entry in the smash hit series created over a decade ago, in the early days of the pandemic. The game would prove to be a massive boon for Nintendo, helping to fuel a 73% YoY rise in Switch sales between March 2020 and November 2020. Sales peaked at 28.8 million units in fiscal year 2021 and have since fallen gradually.
Nintendo Switch sales totaled 23.06 million, 17.9 million, and 15.7 million units in the fiscal years 2022, 2023, and 2024 respectively.
It’s not surprising for sales to fall as the product has now been around for over seven years and it’s normal for fatigue to start building in. Because Nintendo still hasn’t lowered the price of the original Switch ($299), it’s not surprising that consumers are starting to choose other similarly priced consoles with better, up-to-date hardware. Also, as is the case with many other companies, the higher sales in 2020 and 2021 were due to the demand pull forward. We see a similar trend in smartphones as well as PCs and sales have been quite tepid after the bump in 2020 and 2021.
Users have been complaining for years that the Switch hardware is simply too old and they have good reason to say that. Some games, like Nintendo’s flagship game, “The Legend of Zelda: Tears of the Kingdom,” run poorly on the device, and there are countless popular games that it can’t run at all. Specifically, in September 2023, users complained that Mortal Kombat 1 couldn’t be properly played on Nintendo Switch and the graphics were below par when compared with consoles from Xbox and PlayStation.
What New Features Could Switch 2 Have?
Nintendo hasn’t said anything about the new features in Switch 2 and does not intend to provide any information before the official announcement. However, analysts and console enthusiasts are speculating that the new console could have many upgrades.
Sources told VGC that just like Nintendo Switch, the upcoming console would be able to be used in portable mode. The publication also reported (citing sources) that to keep costs low, Nintendo could launch Switch 2 with an LCD screen, instead of OLED, which is pricier. It may also simply offer 2 different models, letting buyers choose which kind of screen they want.
According to sources, like the current version, Nintendo Switch 2 will also accept physical games via a cartridge slot. VGC, however, reported that it remains unclear if the new console will support backward compatibility support for Switch games (though it almost certainly will).
Dr Serkan Toto, a Tokyo-based industry consultant, told VGC that given the fall in Switch sales, an upgrade made sense for Nintendo. Referring to the expected 16.5% fall in hardware sales in the current fiscal year, he said, “I would generally say that looking at Nintendo’s financials, it seems clear that it’s time for a new piece of hardware in 2024.”
Toto added, “The only way to stop these losses from totally ballooning next fiscal is a new device, and the second half of 2024 sounds like a realistic release window to me.”
Could Nintendo Switch 2 be a game-changer?
While the new console now looks like a necessity rather than a privilege for the company, the jury is divided on whether Nintendo Switch 2 would be a game-changer. Earlier this year, Bloomberg reported that Macquarie analyst Yijia Zhai downgraded Nintendo stock from a “buy” to “neutral” doubting the success of the new console. “We do not think the new console will be as successful as the Switch, and see potential profit-taking after the announcement,” said Zhai in their note.
Goldman Sachs does not expect Nintendo Switch 2 to increase the company’s total addressable market but said things could change if it “turns out to be new concept hardware rather than a successor along the same lines as the Nintendo Switch.”
Meanwhile, Nintendo stock is in the red this year and is off the record highs it hit earlier in the year. The stock fell slightly in today’s price action as markets await more details about the upcoming console.