⋮
Q2:
Regarding hardware, you explained that sell-through [see note] during the holiday season fell short of expectations, but how did the demand for multiple systems fare during that period? Also, with Nintendo Switch entering its seventh year next fiscal year, do you expect a natural decline in unit sales?
A2:
Furukawa: As background for our revised financial forecast, we explained that planned shipments for the fourth quarter (January-March) were revised mainly because holiday season sales did not meet expectations in overseas markets. The production constraints caused by the shortage of semiconductors and other components were largely resolved in October of last year, and through our efforts to deliver products for the holiday season, our shipment volume through the end of the third quarter generally matched the revised plan implemented at the time of our six-month financial results. On the other hand, holiday season sales were not as large as the past two years, with the result that sell-through fell short of expectations.
When looking at the overall Nintendo Switch family, demand for multiple systems continues to account for around 30 percent of unit sales this fiscal year, so there has been no major change. However, when you look at individual models, the demand for Nintendo Switch and Nintendo Switch Lite as additional systems has increased year-on-year. That said, although the proportion of demand for Nintendo Switch – OLED Model as an additional system was quite high following its 2021 launch, there has been an increase in demand as a first Nintendo Switch system over time. This resulted in a smaller proportion of Nintendo Switch – OLED Model systems being purchased as an additional console in the current fiscal year.
Nintendo Switch is coming up on its seventh year of sales in March, and we see this as uncharted territory in the history of our dedicated video game platforms. Under these circumstances it is hard to imagine that hardware sales will continue to grow at the same pace they have to date. However, there are titles under development for Nintendo Switch, and new titles will continue to be proposed going forward. We are seeing both new demand and multiple system demand for the hardware, so we think there is still room for growth in sales. To that end, we want to maintain a high level of engagement with the hardware and create new demand not only by releasing new titles but also by working further to convey the appeal of existing titles.
[Note] Sell-through refers to sales made to individual consumers. In addition to units sold by retailers, this number also includes units sold to individual consumers through Nintendo's direct-sales sites or as downloadable software.
Q3:
Considering the unit sales results for the current fiscal year, it seems like it will be difficult to stop the slowdown in hardware sales just by releasing new software. Are you planning any specific measures for next fiscal year?
A3:
Furukawa: Nintendo Switch will soon mark its seventh year since launch. Ideally, we would like to maintain unit sales volume next fiscal year at the same scale as this fiscal year. However, looking back at the holiday season, our results were affected in part by external factors like the change in consumer behavior caused by inflation and the diversification of entertainment choices due Nine Months Financial Results Briefing for Fiscal Year Ending March 2023 (Online) Nintendo Co., Ltd. to the resumption of economic activity. Especially in overseas markets, it was more of a challenge for Nintendo Switch to be seen by consumers as their first choice of entertainment. Sales have been steady entering the fourth quarter, but in the Nintendo Switch’s seventh year, it might be hard to increase unit sales with hardware-related initiatives alone. That is my candid impression. In your question, you said "just by releasing new software," but motivating people to play games for a long time and inspiring them to pick up new titles are both extremely important factors when it comes to maintaining the momentum of our dedicated video game platform business. Next fiscal year, we plan to release The Legend of Zelda: Tears of the Kingdom in May and Pikmin 4 in 2023. By using these kinds of opportunities to convey the appeal of Nintendo Switch, we will work to maximize sales through new purchases, replacement purchases, and additional purchases so we can maintain and increase our business momentum.
⋮