Nintendo have published
the official English translation of the Q&A, for those who are interested. Unsurprisingly the reference to new hardware was a pretty standard non-answer.
I can see some increase in DLC, alongside subscription revenue, but they would need to be projecting an astronomical increase in these at a time when they're projecting a drop in both hardware and software sales, which seems off kilter. We probably will see digital downloads continue to rise, which would increase ASP on the software side, but that's been a pretty steady incline, and again it would need to be a pretty dramatic increase to account for the disparity between unit projections and revenue projections. Third party sales are higher-margin, but lower ASP, and they've been pretty steady at around 20% of sales, which would also need to change substantially to make a dent there. They could also sell more software directly (they've been doing so in other regions like UK for a while), but I don't expect this to account for a huge proportion of overall sales.
Of course it's possible that they're projecting a combination of these things, with big increases in DLC sales and subscription revenue, a significant shift to digital downloads, direct selling taking a large share of the boxed sales, and a big change in third party share. Together these could make a difference, but it feels unlikely to me that they would be so aggressive with their projections in these areas at the same time as they're being very conservative on their top-level software projections.
I didn't include FX in the list because it's not a variable; Nintendo have explicitly stated the FX rates they used in the projections. If I were making projections myself I'd definitely be considering FX as a significant factor (and questioning why their FX rates are so far off-market), but if I'm just looking to explain Nintendo's projections I know what FX rate they're using for them so it's not an extra variable for me.
Specifically they're using USDJPY at 115, and EURJPY at 125, comparing to an average rate in FY22 of 112.34 for USDJPY and 130.50 for EURJPY. They also stated in their Q&A that USD sales in FY22 were $6.3 billion, and EUR sales of €3.1 billion. If we assume the revenue split stays the same across regions in FY23, then taking that top level 5.6% off would mean $5.95 billion USD and €2.93 billion EUR sales projected for FY23. Taking their projected FX rates into account, that's an increase in revenue of 15.8 billion JPY on the dollar side and a decrease of 16.1 billion JPY on the euro side, for a total net impact of about 300 million JPY decrease in revenue from FX. Of course I'm making a few assumptions here, but with them projecting USDJPY down slightly YoY and EURJPY up by a larger amount, their FX projections mostly cancel each other out if we're just looking at YoY revenue impact. If I was looking at the overall impact on profitability it would be different, as they also have $5.8 billion in purchases in USD last FY, but just from a revenue point of view (and therefore from an ASP point of view) they don't seem to be projecting a significant impact from FX.
I don't think they're being super sneaky and including a "hint" in the guidance, but they'll include new hardware releases in their projections without necessarily having announced them, just as they'll include new software releases in their projections prior to having announced them. Historically they've released new hardware models more years than not, so it's not particularly out of the ordinary. This year they've projected unit sales to drop by a much greater amount than revenue, which requires an increase in ASP, and as that's unlikely to be significant on the software side, a jump in hardware ASP seems to be implied. This was actually asked about during the Q&A:
I don't think their answer really covers the gulf between unit sales and revenue projections, though. They say "because it will contribute to the entire fiscal term in this fiscal year, we believe this model will represent a larger portion of hardware sales", which would imply OLED would account for something like a 40% share of sales, similar to the past quarter. This wouldn't cover the required ASP increase, though, and I think the person asking the question was right to say that an "extremely" large portion of sales would have to be OLED; I'm calculating around 90%, which doesn't seem plausible at all. Their current product mix doesn't support the ASP increase implied from their projections, so I'm inferring a change in product mix, and in particular a more expensive model which would be needed to tie out their projected figures.