Nintendo Is on the up Thanks to the Switch
It looks like Nintendo might overtake Microsoft in 2018. According to IHS Markit, over $10 billion was spent on Xbox hardware, software, and services in 2017, compared to the $8 billion that was spent on Nintendo products.
Compared to 2016, Nintendo’s numbers are around double, compared to the slight decline seen in Microsoft’s numbers.
What’s the driving force behind Nintendo’s increase? Mostly the launch of the Switch, although the SNES Classic and 3DS are also factors.
“Neither analysts nor investors predicted the strength of adoption for the Switch,” said Piers Harding-Rolls, one of IHS Markit’s game industry analysts.
“We have deliberately maintained a pace of content that we were unable to achieve with the Wii U,” said Reginald Fils-Aimé, the president of Nintendo of America.
Tatsumi Kimishima, President of Nintendo, suggests that part of the company’s growth is due to their increased focus on mobile gaming.
“With our mobile business, we have three goals,” he said. “One, of course, is because there are so many mobile devices in the marketplace and in the hands of consumers, this is a great tool for us to push our IP to a large number of people. This is a great way to introduce them to our franchises and characters, and thereby bring them back to Nintendo’s dedicated hardware as well as introduce them to Nintendo’s expanded software library.”
“Number two, we’d like mobile to be a pillar in and of itself—a business pillar that is profitable.”
“And the third goal for our mobile business, in the same way it worked for Pokémon, is to use games on mobile devices to increase the sales of other games we develop with the same characters,” he concluded. “This is synergy, right? In this way we hope customers will purchase other related goods and services, too. We want to use this synergy.”
In terms of future growth, IHS Markit predicts over $11 billion in spending on Nintendo products and services in 2018. Conversely, Microsoft is predicted to dip to around $9 billion.
Not only that, the company predicts that Nintendo’s growth will negatively affect spending on the Xbox and PlayStation, which are both entering the later stages of their life cycle.
Despite this improvement for the company, the PlayStation will likely remain the leader of the pack, despite a predicted dip in spending on the system’s products and services.