Nintendo Must Plot an Exit From Switch’s Uncharted Territory

tech.hindustantimes.com:

The moment that Nintendo Co. investors have dreaded for years is finally here: peak Switch. Sales of its mainstay console are falling, along with profits. The Kyoto firm cut its outlook for the year ending March to 18 million units after a disappointing holiday season. During the height of the pandemic, it shifted nearly 29 million machines.

President Shuntaro Furukawa says the company's entering “uncharted territory” with the Switch, which first went on sale six years ago this Friday, set to become its longest-selling piece of premier home hardware. With 122 million sold to date, it's also the bestselling — but with no sign of a successor, some investors fret that the firm is over-confident in its longevity.

In the past, profits and share price have been tightly connected with the cyclical popularity of Nintendo's consoles. The stock reached an all-time high with the Wii in 2007, but crashed back to earth with the failure of its successor. The release of the Switch in 2017 started that pattern anew but with each generation, the user-base goes back to zero and must be rebuilt again. Shares are down 25% from the most recent high watermark two years ago.

Investors have long hoped this would be the cycle that enabled the firm to break out of this volatile model. Many have suspected, prompted by what they see as hints from the company, that it would shift to a smoother upgrade model to keep customers locked in, something looks more similar to the iPhone's generational upgrade cycle.

Now some are getting cold feet. A rumored “Switch Pro,” reported to be a more powerful version of the console, has failed to materialize; the company has denied in the strongest possible terms that such a device exists, beyond a vague 2020