Nintendo’s former-Representative Director and President Tatsumi Kimishima answered questions during the a recent meeting of shareholders to answer questions about the company’s future.
Prior to his retirement, Tatsumi Kimishima previously stated that Nintendo aims to sell more than 20 million units in the current fiscal year (ending March 2019) and that goal hasn’t changed.
While there’s been some concern of the company’s lofty goal with only Pokémon: Let’s Go and Super Smash Bros. Ultimate as major titles in the pipeline for the end of the year, Nintendo says there’s more that hasn’t been announced for the software lineup including products for this holiday season.
Here are some highlights surrounding the Switch sales goals from the translated Q&A Summary by Nintendo:
You set a goal of selling 20 million hardware units and 100 million software units for Nintendo Switch for the fiscal year ending in March 2019. How does the current situation compare to your estimates? Additionally, one reason given for the recent drop in share price is the report that Nintendo Labo has been selling poorly. Could you share your thoughts on this?
Tatsumi Kimishima, former-Representative Director and President: Our sales targets for Nintendo Switch hardware and software during this fiscal year will not be an easy challenge to meet, but we are putting all of our efforts into doing just that. If you look at our software lineup for the fiscal year that we showed at E3, you can see a relative trend that the titles that resonate most with consumers are concentrated toward the latter half. That is why I think the way Nintendo Switch hardware sells during this fiscal year will be slightly different from in the last. A simple comparison of hardware units sold during the first quarter of this fiscal year might not look as good as the units sold during this period in the prior fiscal year. However, this is something we expected, so this shift is well within expectations when looking at our software lineup for the entire fiscal year.
And on the topic of Nintendo Labo, we are grateful for the tremendous response we have received from all kinds of places even prior to its launch. On the other hand, I see it as characteristically different from the titles we have released up until now and, therefore, the sales route and the flow until it reaches consumers also differs from other games. We anticipate that parents will purchase it for their children, for example, which potentially requires an opportunity to make a purchase like a birthday, Christmas or summer break. That is why we are currently focused on making sure that consumers fully understand the appeal of the product. What that means is the way we are selling Nintendo Labo is not like traditional games, where they sell well upon initial release and then sales numbers gradually decrease. Instead, we hope Nintendo Labo becomes a topic of interest for all kinds of people, and when an increased number of people want it and a certain time comes to make purchases, they will all buy it. Furthermore, regarding sales channels, we do not necessarily think that the types of retailers who generally sell a lot of games are always the most well-suited for selling Nintendo Labo, which is something we are keenly aware of when working to promote the product.
The semiconductor market has been very active lately, leading to outcries from other industries over component shortages and price increases. Things have calmed down a bit compared to the period between last year and the end of the year before that, but it seems like supplies of flash memory and passive components will still be fairly tight. I would like to hear what you think about the effects this will have on Nintendo Switch production and packaged software, as well as about how these prices will affect sales, and what you will do to counteract it.
Tatsumi Kimishima: We are planning to sell 20 million Nintendo Switch hardware units during this fiscal year, and are not having any problems securing the production quantities to do so. As you said, component prices are volatile, but we are negotiating so that we can avoid this having a significant impact on the cost of producing these 20 million units.
Hirokazu Shinshi, Senior Executive Officer: It was a tough environment last year, and it was not easy to procure parts, such as memory and passive components, but I think that manufacturers were exceptionally willing to cooperate with us because of the momentum of our product, Nintendo Switch, and because we shared with many of them our vision. Not only last year, but from several years ago we have seen rather tough situations come and go with regards to memory, so we have spent a lot of time communicating with manufacturers, and continue to negotiate on factors such as prices and lead times. This year is turning out to be another tough one, and that may well continue into next year, so we will continue our conversations with them to make sure we are getting adequate supply at a price that is as close to what we are looking for as possible. As for production quantities during this fiscal year, I believe we can have the units ready to meet our forecasts.
Management viewed E3 very favorably, but the share price fell by approximately 5,000 yen during two of those days. All of the key titles for this fiscal year are going to be released from the fall through the holiday season, so I am wondering if it is not possible to release attractive software continuously?
Tatsumi Kimishima: We have been putting forth our best effort to be ready to release information to consumers at the appropriate time. We are not yet at the point where we can announce our entire product lineup, including the products that will be released during the holiday season. We are aiming to sell 20 million units during this fiscal year, the second year since the launch of Nintendo Switch, and have released first-party titles like Nintendo Labo in April, Donkey Kong Country: Tropical Freeze in May and Mario Tennis Aces on June 22. And then for the holiday season, we are planning to release Super Mario Party on October 5, Pokémon: Let’s Go, Pikachu!/Let’s Go, Eevee! on November 16, and Super Smash Bros. Ultimate on December 7. We plan to use this robust lineup, including popular titles that were already released prior to the last fiscal year, to maintain and increase the momentum we have with Nintendo Switch for the holiday season, which is the most significant period for sales. We will communicate more detailed information to consumers at a later date.