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StarTopic Future Nintendo Hardware & Technology Speculation & Discussion |ST| (New Staff Post, Please read)

So if the reports are to be believed, there will be no new systems, revision or otherwise until 2024?
from my understanding, if the reports are to be believed it should be out before the end of the fiscal year. it's simply a matter of whether or not you still believe the reports
 
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So if the reports are to be believed, there will be no new systems, revision or otherwise until 2024?
there aren't any reports of such other than analysist opinions (and none whom might have insider info, though if they did and didn't specify, that could put them into legal trouble)
 
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The main reason im curious is, my Switch fan has been having issues for a while, and id hate to go out and buy a new Switch only for a revision to come out soon after.
 
With all this talk about a new Switch being at least 2 years away, does that discount the idea of a new revision before then as well? or is this talk about a true next gen successor?
What talk are you referring to? Nothing has changed with regards to the previous rumors about some 4k capable switch happening this FY.
 
Just seen a few videos about the analysists opinions, thats all I mean.
Yeah the general consensus from analysts seems to be 2024 simply based on sales momentum, which IMO is a very shaky basis for that opinion from professional analysts but what do I know
 
The main reason im curious is, my Switch fan has been having issues for a while, and id hate to go out and buy a new Switch only for a revision to come out soon after.
I’d at least give it till E3/June-ish to see if any other rumblings start happening. I’m on the FY23 train and I feel like in the next month or two we’ll at least be able to say for sure if Drake made this fall.
 
It would simply be the next Switch system. Whether it's a successor or a revision is just marketing.
Exactly this, the next "version"will be a more modern, more powerful Switch, no-one knows what It'll be called. I've no idea why people spend so much time taking about "Switch pro" vs "Switch 2".
 
This smooth transition talk made me start believing in two things regarding the new hardware:
  1. BC has to be a fact, there's no way Nintendo will make a new Switch without BC, but I believe that it will be digital-only and you'll somehow have to register your physical copy to get a digital one.
  2. March 2023 seems to be the release date they'll choose because the other aspect you have to consider when you focus on "smooth transition" is sales, you can't wait for your sales to fall from a cliff to release new hardware, you gotta keep the momentum on your side. So the way I see it, they expect the new Switch to sell around 2 million in the current fiscal year and the old Switch to sell around 19 million, giving them the 21 million they forecasted.
 
This smooth transition talk made me start believing in two things regarding the new hardware:
  1. BC has to be a fact, there's no way Nintendo will make a new Switch without BC, but I believe that it will be digital-only and you'll somehow have to register your physical copy to get a digital one.
How would pissing off enthusiasts, who are usually the early adopters and the most vocal group, be considered a smooth transition. Not mention adding extra steps to play your games.

A card reader isn't expensive and mandatory downloads are already a thing for big 3rd party games, so I don't see why they would get ride of cards completely.
 
How would pissing off enthusiasts, who are usually the early adopters and the most vocal group, be considered a smooth transition. Not mention adding extra steps to play your games.

A card reader isn't expensive and mandatory downloads are already a thing for big 3rd party games, so I don't see why they would get ride of cards completely.
because Nintendo.

LoL, joking... I thought more about the space needed to add another card read than the technology itself. But you're right, if it's this easy to just add an additional car dread, maybe physical games will also be contemplated in the new Switch.
 
because Nintendo.

LoL, joking... I thought more about the space needed to add another card read than the technology itself. But you're right, if it's this easy to just add an additional car dread, maybe physical games will also be contemplated in the new Switch.
Physical games are going to disappear at some point in the future but IMO it's too soon, I really don't see Nintendo burning bridges with retailers any time in the near future.

They'll probably be the last of the three to completely dump physical.
 
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.

Thanks for the post. The increased ASP of Switch hardware is certainly a tantalizing possibility. There are a few other sources that could be contributing factors.
  • Increase in DLC sales: Nintendo may be expecting the MK8D Booster Course Pass to have a banner year. They might even have more surprise DLC upcoming.
  • More digital downloads: I don't recall any official confirmation about this, but the profit margin of a digital sale should be higher than a physical one. Nintendo may be forecasting the share of digital continues to climb.
  • Ratio of 3rd party sales: 3rd party titles generate sales commissions and are practically 100% profit. If the ratio of 1st party vs 3rd party sales changes in this FY, it may impact the net sales figure.
  • Direct sales of packaged games: Nintendo started selling physical games from their NA website since February. They could expand the direct sales to more territories.

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.

See above. In his top 4 he doesn’t say FX.

The answer is almost for sure slightly higher ASP given mix of OLED, and small tailwind from FX.

The information value of looking at change in sales vs. change in operating profit is near zero.

I’ll say it again - the odds of a hint in the guide is near zero.

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:

Q5.
When compared to the forecasted 5% year-on-year decrease in net sales for the current fiscal year, the decline in the hardware and software unit sales forecast looks to be out of proportion. It seems improbable that you would be able to achieve 1.6 trillion yen in net sales unless an extremely large portion of your sales comes from Nintendo Switch - OLED Model. In what ratio do you expect to sell each of the Nintendo Switch models? [...]

A5.
We have been able to maintain high demand for Nintendo Switch - OLED Model so far, and 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. Out of sell-through figures for the previous fiscal year, about 25% of overall hardware purchases were made by those who already owned a Nintendo Switch system. About 30% of Nintendo Switch Lite unit sales were repeat purchases (demand for additional Nintendo Switch systems after the first) and 40% of Nintendo Switch - OLED Model unit sales were repeat or replacement purchases. In order to achieve our forecasted sales of 21 million units, it will be essential to maximize demand among both first- time and repeat purchasers. Furthermore, we believe the proportion of Nintendo Switch - OLED Model sales will grow along with the increase in demand for multiple systems. [...]

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.
 
Nintendo will go digital only when their first party sales are primarily coming from digital while physical makes up a very small portion of the total sales.

For third party titles, it isn’t like they haven’t been pretty much digital only on the switch.

Alan Wake Remastered is the most recent example and also the most obvious example, but the trend is that third parties are going to be the main drivers for a digital only adoption from the consumer base with Nintendo following afterwards.

Nintendo offering a bigger storage would also help in this area, a lot better I might add.


It’s not like the major supporters in the switch aren’t mostly digital, with a few titles having a digital release. Granted, that’s also in part because these are ports of older games, they don’t really get a physical release often.
 
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because Nintendo.

LoL, joking... I thought more about the space needed to add another card read than the technology itself. But you're right, if it's this easy to just add an additional car dread, maybe physical games will also be contemplated in the new Switch.
Physical games are going to disappear at some point in the future but IMO it's too soon, I really don't see Nintendo burning bridges with retailers any time in the near future.

They'll probably be the last of the three to completely dump physical.
Maybe they will have a cheaper digital only in the future, like the competitors are doing, to speed up digital adoption, the Successor Lite being a prime candidate.

But until any of them can afford to lose the physical sales, I doubt someone will take the risk in assuming the vast majority of these sales will be converted to digital sales.
 
Physical copies of games will not stop existing anytime soon due to new kids and famílies getting into gaming everyday.
I don’t believe this is a limiting factor really or the only limiting factor I should say, several of the most popular games on the planet that are also popular with children are pretty much digital, with Minecraft being the exception but routinely charts very high digitally and is an evergreen. It also exists on smartphones and tablets which are far bigger in reach than console games are.

Other titles such as Fortnite, Among Us and Roblox are also digital only afaik, and are very popular with kids whether via smartphones or PC. The avenue of access for games has been predominantly in the digital side of the market.

I believe that one of the real limiting factor isn’t children and families, it’s the older generation that grew with physical media as the only option.

There was a chart that Nintendo had about the average breakdown of the the ages across their whole switch ecosystem, and we see that a larger portion of the audience is in fact adults.

nintendo-switch-age-demographics.PNG



Nintendo is also not a stranger to giving an option and growing their digital market share worldwide, vouchers are completely absent in their biggest market, but ~50% of their audience has access to the voucher program to utilize.

Another limiting factor would be the whole ability to access a piece of digital software. If the method of access is more convoluted and than what it needs to be, a.k.a. it’s more complicated than a smartphone or a PC platform like steam or EGS, then this is what would push someone to just buy a physical version of a game as it is straightforward. However we are seeing that it is not that convoluted or complicated, and is actually much more similar to the smartphone landscape in purchasing software from the digital store fronts on consoles.


Giving the ability to do refunds after say an hour or 2 would make the whole situation much more digestible to the consumer than before. It won’t happen though but still lol.
 
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I think dumping physical would be really unfortunate if this thing has backwards compatibility

if it doesn't, knock yourselves out. but if it's an upgrade, don't make people lose their libraries
 

Oh, I see. They want to go out of the foundry business. Interesting choice Samsung. I know you get no customers compared to TSMC, but this isn’t how you attract more of them!


I think dumping physical would be really unfortunate if this thing has backwards compatibility

if it doesn't knock yourselves out. but if it's an upgrade, don't make people lose their libraries
Oh for sure, I’m not talking about the next system, I was simply talking about digital adoption in general for the nintendo platform and the future.


Note: I did not specify switch as I’m not limiting this to only switch, I’m referring to their future in totality.
 
Personally I'd say anything north of 80%, and if I had to guess, I'd say over 90% are rebuys. But this is of course just a guess. But what I'm confident in is that the majority are rebuys. I'll be shocked if that doesn't turn out to be the case. I'm very confident that switch sales would be down about 40-50% vs a year ago if the OLED had not released.

https://www.nintendo.co.jp/ir/pdf/2022/220511_2e.pdf page 4

We have been able to maintain high demand for Nintendo Switch - OLED Model so far, and 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. Out of sell-through figures for the previous fiscal year, about 25% of overall hardware purchases were made by those who already owned a Nintendo Switch system. About 30% of Nintendo Switch Lite unit sales were repeat purchases (demand for additional Nintendo Switch systems after the first) and 40% of Nintendo Switch - OLED Model unit sales were repeat or replacement purchases.
 
Q4:
The upcoming software titles for the current fiscal year have already been announced to some extent, and I think one of the major differences from past platforms is that a rich lineup of new software is still being added to your library, even in the sixth year of Nintendo Switch. Can you explain the reasons for such a difference? Also, I think that a next-generation game system will be launched at some point in the future. Historically, newly launched platforms did not always have a smooth transition from prior generations. Please tell us your thoughts on how you plan to maneuver to the next generation of hardware.

A4:
Furukawa:
We have already announced some software titles that will be released through next spring. Unlike in the past, even though Nintendo Switch has gone through five years since its launch, there is still a rich lineup of new titles to be released. The biggest reason for this is that, thanks to the smooth launch of Nintendo Switch itself, we have been able to concentrate our development resources on one platform. On the other hand, looking back on past experiences of generational change such as the change from the Wii and Nintendo DS eras, we recognize that one of our tasks is ensuring the transition to future generations of hardware is as smooth as possible. To that end, we are focusing on building long-term relationships with our consumers (through Nintendo Accounts). While continuing to release new Nintendo Switch software for consumers to enjoy, we aim to maintain relationships across hardware generations through services that utilize Nintendo Accounts and by providing opportunities for them to experience our IP through other non-gaming channels.
 
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.
Couldn't it more or less be a combination of things? I tend to agree that Nintendo's answer to that question was not at all satisfactory, but if we factor in a higher % of OLED sales, more NSO subs, more NSO expansion pack subs, slightly higher digital sales, and all of that together, does that not come close to covering the gap? Or are we still way off?
Those are some nice receipts.
 
Q4:
The upcoming software titles for the current fiscal year have already been announced to some extent, and I think one of the major differences from past platforms is that a rich lineup of new software is still being added to your library, even in the sixth year of Nintendo Switch. Can you explain the reasons for such a difference? Also, I think that a next-generation game system will be launched at some point in the future. Historically, newly launched platforms did not always have a smooth transition from prior generations. Please tell us your thoughts on how you plan to maneuver to the next generation of hardware.

A4:
Furukawa:
We have already announced some software titles that will be released through next spring. Unlike in the past, even though Nintendo Switch has gone through five years since its launch, there is still a rich lineup of new titles to be released. The biggest reason for this is that, thanks to the smooth launch of Nintendo Switch itself, we have been able to concentrate our development resources on one platform. On the other hand, looking back on past experiences of generational change such as the change from the Wii and Nintendo DS eras, we recognize that one of our tasks is ensuring the transition to future generations of hardware is as smooth as possible. To that end, we are focusing on building long-term relationships with our consumers (through Nintendo Accounts). While continuing to release new Nintendo Switch software for consumers to enjoy, we aim to maintain relationships across hardware generations through services that utilize Nintendo Accounts and by providing opportunities for them to experience our IP through other non-gaming channels.


To me, this sounds something like regardless launch of next gen Switch, we will keep supporting current Switch users and users will have option of transfering all its current Switch games to next gen Switch hardware, also that there will not be clean break with last gen like before and that transition between current and next gen will be easier in every way than before.

Also, I think this talk is about next hardware (Drake) that Nintendo will release.
 
Q4:
Please tell us your thoughts on how you plan to maneuver to the next generation of hardware.

A4:
Furukawa:
we recognize that one of our tasks is ensuring the transition to future generations of hardware is as smooth as possible
This seems like such an unimportant statement but there's so much to unpack from the phrasing here
1) Nintendo is currently planning a transition to a new generation of hardware, he specifically says generation and not "revision" or "model", which means the idea of Nintendo moving to an iterative approach is now dead.
2) Because they are currently planning this transition, it probably isn't that far away. I would say this largely deconfirms a release later than 2024, at the absolute latest. Most likely though we see it next year.
3) With Nintendo planning a generational transition in the near future, a pro model is likely not happening. More likely is something similar to a PS5, where it will have a similar form factor and name and some games may be cross generation, but it will also have its own identity and exclusives.

You can say that I'm overthinking this, but I doubt it. In his answers to investors the president of a major company is going to be very careful with his phrasing and statements. I doubt very much that he is mistakenly referring to a switch pro as a new generation of hardware, and I seriously doubt he is publicly talking about plans 3-4 years away.
 
I think dumping physical would be really unfortunate if this thing has backwards compatibility

if it doesn't, knock yourselves out. but if it's an upgrade, don't make people lose their libraries
I feel like a card slot-less Switch Lite could be a possibility. One less point of failure, one less component to drive costs up, and of course, it would force whoever buys it to go all-digital which would be a huge boon to profits on this hypothetical super-low cost device. Plus being the low-cost entry model would mean not a lot of people are going to be upgrading to it from an existing Switch so that “losing the library” worry would be less… worrisome I guess
 
A4:
Furukawa:
We have already announced some software titles that will be released through next spring. Unlike in the past, even though Nintendo Switch has gone through five years since its launch, there is still a rich lineup of new titles to be released. The biggest reason for this is that, thanks to the smooth launch of Nintendo Switch itself, we have been able to concentrate our development resources on one platform. On the other hand, looking back on past experiences of generational change such as the change from the Wii and Nintendo DS eras, we recognize that one of our tasks is ensuring the transition to future generations of hardware is as smooth as possible. To that end, we are focusing on building long-term relationships with our consumers (through Nintendo Accounts). While continuing to release new Nintendo Switch software for consumers to enjoy, we aim to maintain relationships across hardware generations through services that utilize Nintendo Accounts and by providing opportunities for them to experience our IP through other non-gaming channels.
Is this the part that so many outlets, tweets, and threads had initially shared as Nintendo being "concerned" about the next-gen transition?
 
The odds of a pro switch existing seem exceedingly low now.
Nintendo is going out of their way to publicly talk about a new generation of hardware.
If a pro launches early 2023, they need to wait until at least early 2025 to launch their next console, at a minimum, because of several obvious reasons (1 year later the new console wont be much stronger than a pro, pro buyers would feel betrayed and angry, it would depress the launch sales of their next console likely permanently damaging its sales potential, etc.)
But why would Nintendo even be publicly talking about transitioning to a new console 3+ years in advance?
Occam's razor says that there is no pro, and Nintendo is simply going to launch a new console generation next year.
 
because someone asked about it
They can just not answer? Or even just be more vague about it. Say something generic like "we always think about how to transition to new products." I see 0 reason why he would go out of his way to start talking about specific plans on transition to a new console (in this case, how they plan to bring NSO accounts and presumably the stuff relating to them to the next console). Also, by talking about these plans, they are effectively committing to them. If the next console does not have NSO accounts on it, investors are gonna feel they were manipulated and lied to, they would have legitimate grounds to sue. So Nintendo has concrete enough plans about the next console that they are ready to commit to them publicly to their investors. They could be doing that 3 years in advance, but they'd also be pretty stupid if they did.

Also notice how when asked about new hardware he never brings up new models, revisions, a pro, whatever. He never mentions anything about an iterative approach, or anything else, and if the pro is coming, it's coming soon so you would think he'd want to talk about some of that.
 
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.
See my subsequent explanation on the prior page

CC: @Thraktor

Just FYI I went through this.

1. They assume higher ASP on hardware from mix shift to OLED. They most likely also assume lower margins on hardware.

2. At the same time they assume less sales of software.

3. So you have more low-margin hardware revenue and less high-margin software revenue.

4. Me and the average analyst is close to JPY 600bn (vs. their guidance for 500m) due to currency tailwinds and the assumption that software sales will exceed their 210m unit forecast.

I’m at about 240m software units.
 
1) Nintendo is currently planning a transition to a new generation of hardware, he specifically says generation and not "revision" or "model", which means the idea of Nintendo moving to an iterative approach is now dead.
To me, the only major difference between an iterative successor and a successor to me is that an iterative successor has a longer than expected cross-gen period. As the DLSS model* is concerned, I'm primarily talking about first party games. (I think the PlayStation 5 and the Xbox Series X|S are exceptions rather than the norm when the cross-gen period is concerned, given the state of the world when the PlayStation 5 and the Xbox Series X|S launched.) I imagine third party developers are still free to release games exclusive to new hardware if desired.
 
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This seems like such an unimportant statement but there's so much to unpack from the phrasing here
1) Nintendo is currently planning a transition to a new generation of hardware, he specifically says generation and not "revision" or "model", which means the idea of Nintendo moving to an iterative approach is now dead.
2) Because they are currently planning this transition, it probably isn't that far away. I would say this largely deconfirms a release later than 2024, at the absolute latest. Most likely though we see it next year.
3) With Nintendo planning a generational transition in the near future, a pro model is likely not happening. More likely is something similar to a PS5, where it will have a similar form factor and name and some games may be cross generation, but it will also have its own identity and exclusives.

You can say that I'm overthinking this, but I doubt it. In his answers to investors the president of a major company is going to be very careful with his phrasing and statements. I doubt very much that he is mistakenly referring to a switch pro as a new generation of hardware, and I seriously doubt he is publicly talking about plans 3-4 years away.

Agree, I was always saying that Nintendo will something similar what Sony done with PS4 and PS5 with difference that Nintendo will keep selling current Switch models after next gen Switch is out much longer than Sony halted PS4 production (and than when they had PS5 stock issues started PS4 production again).
 
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They can just not answer? Or even just be more vague about it. Say something generic like "we always think about how to transition to new products." I see 0 reason why he would go out of his way to start talking about specific plans on transition to a new console (in this case, how they plan to bring NSO accounts and presumably the stuff relating to them to the next console). Also, by talking about these plans, they are effectively committing to them. If the next console does not have NSO accounts on it, investors are gonna feel they were manipulated and lied to, they would have legitimate grounds to sue. So Nintendo has concrete enough plans about the next console that they are ready to commit to them publicly to their investors. They could be doing that 3 years in advance, but they'd also be pretty stupid if they did.

Also notice how when asked about new hardware he never brings up new models, revisions, a pro, whatever. He never mentions anything about an iterative approach, or anything else, and if the pro is coming, it's coming soon so you would think he'd want to talk about some of that.
he didn't say anything new though

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nothing about his response implies that the transition is imminent
 
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"Next gaming system" is much more vague than "future generation of hardware"
The former could have been a pro, in the same generation as the switch, obviously this is not.
I do agree Nintendo has been hinting toward this since last year though. They're just getting much more aggressive about it now, probably because it isn't that far away and their plans are becoming more concrete.
 
Sigh.

EDIT: Sorry, that's not useful.

It's tiring hearing people pick apart specific phrasing to fit their particular narrative, when in reality we learned nothing new here.
 
They can just not answer? Or even just be more vague about it. Say something generic like "we always think about how to transition to new products." I see 0 reason why he would go out of his way to start talking about specific plans on transition to a new console (in this case, how they plan to bring NSO accounts and presumably the stuff relating to them to the next console). Also, by talking about these plans, they are effectively committing to them. If the next console does not have NSO accounts on it, investors are gonna feel they were manipulated and lied to, they would have legitimate grounds to sue. So Nintendo has concrete enough plans about the next console that they are ready to commit to them publicly to their investors. They could be doing that 3 years in advance, but they'd also be pretty stupid if they did.

Also notice how when asked about new hardware he never brings up new models, revisions, a pro, whatever. He never mentions anything about an iterative approach, or anything else, and if the pro is coming, it's coming soon so you would think he'd want to talk about some of that.

Actually, it would be pretty stupid if Nintendo didn't share that they're committed to having a plan to keep around their 100 million current players.
 
Actually, it would be pretty stupid if Nintendo didn't share that they're committed to having a plan to keep around their 100 million current players.
I agree it makes perfect sense for a business to lock in their plans for their next console not coming for 3-4 years later to their investors, what could go wrong?
It also makes sense for them to be talking about their next console to their investors at all 3-4 years before it releases.

After all, otherwise we might have to admit there is no pro, and there is so much evidence of a pro all around us like

some guy on twitter said so
 
I don't think there's a Pro anymore, but I do think framing this as evidence that anything is coming soon is a mistake
 
2) Because they are currently planning this transition, it probably isn't that far away. I would say this largely deconfirms a release later than 2024, at the absolute latest. Most likely though we see it next year.
They had been planing this transition since at least 2014 (The famous interview about having one platform like iOS and Android). So I wouldn't look too much into this, even if I really doubt it will be 2025 or later.
 
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I mean, that question has "next generation" in it 3 freakin' times. With such a leading question, that's about as vague an answer as you can give.
Yeah I mean if someone invokes the word 3 times he has to answer him, obviously. He could not possibly just give a non-answer like "we continue to evaluate future hardware plans to satisfy out customers and grow our business" - since the guy said Next gen 3 times he had to give specific details on his next generation console. I'm sure he's kicking himself in his office right now thinking about how this investor outsmarted him like that.
 
oh no what if they spoke too soon and the switch 2 in fact does not use nintendo accounts or encourage IP engagement outside of games
 
I really just think this is an simple answer and nothing more.

Nothing about an eminent transition.

They asked a question and answered appropriately. They also answered in a way that reduces the stress investors have and thus less immediate pondering about the future of the platform. It was a simple, concise and straight to the point answer when they are in a position that is favorable not only to them but to their investors too.

An answer that is alluding to what Iwata said ages ago about an account system.

Nothing more, nothing less.

You can’t really gleam much from it anyway, even reading between the lines it doesn’t give you anything on time period.

However, it does confirm what everyone already knew: just that they will have BC for the next device, therefore confirming that the next device will be a device similar to the switch even if it would be called Nintendo Bedframe, it’s still gonna be a lot like the switch.

So, it won’t be Wii U to the Wii, more like 3DS to DS.

It’s a standard successor upgrade. Doesn’t try to go out of the way and be so bizarre and different that it’s unrecognizable and causes confusion.

That’s all.

No time.

Nothing.

Nada.
 
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