Nintendo Switch 2 sets sales record in boon for games sector
The Japanese company has already sold more of the device than the roughly 2.7 million the original Switch managed during its first month in 2017.
The numbers, released by the company on Wednesday, bode well for its target to sell 15 million units by March next year. They also reinforce analysts' projections Nintendo may be able to sell far more if it can pump up supply.
Gamers from Tokyo to San Francisco lined up for hours last week to get their hands on one of the most highly anticipated gadgets of the year.
The long-awaited Switch 2 succeeds a global hit in the original, which pioneered a hybrid design that allows play both at home on a TV and on the move.
The release of the new Switch was regarded as a watershed moment for the industry, steering business decisions by partners and competitors for years to come. At a time of thinning margins and exploding development budgets, a popular new console may galvanise the sector and provide a counterbalance to the increasing dominance of a handful of marquee, live-service games.
Nintendo's shares, which hit a record in May ahead of the Switch 2's debut, fell more than 3% in Tokyo.
'There is very little margin for execution error for Ninty at this stage. The big issue right now is its high pricing, which is not a big deal in its first year when die-hards want to get their hands on the console,' said Amir Anvarzadeh, a Japan equity strategist at Asymmetric Advisors Pte.
The pressure will be on for it to reduce production costs to get the price down and tariffs may complicate that.
Catching up with runaway demand is the first major challenge Nintendo faces. The console is manufactured mainly in China by partners, including Foxconn Technology Group, exposing Nintendo to potential disruptions from a global trade war.
President Shuntaro Furukawa has apologised after customers came away from lotteries for the Switch 2 empty-handed. The Kyoto-based company has asked its partners to speed up production of the console.
It has also secured agreements from Japanese online marketplace operators such as Rakuten Group, Mercari and LY to discourage resellers from taking advantage of the hardware's scarcity.
A chronic shortage may spur consumers to turn elsewhere and flatten momentum.
Nintendo's priority is to sustain launch momentum for as long as possible, Furukawa told analysts at an earnings briefing in May. That is more difficult due to the Switch 2's higher retail price compared with its predecessor and growing weakness in the global economy.
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