Nintendo Q3 FY22 Earnings Report

The biggest takeaway from the first nine months of the fiscal year that ends on March 31, 2022, is that, as of December 31st, 2021, the Nintendo Switch is the third best selling Nintendo system of all time. At the end of the Q3 FY22, Nintendo Switch had sold 103.54 million units, which just eclipsed the Nintendo Wii, which sold 101.63 million units. Do you remember the craze around the world for the Nintendo Wii? Everyone wanted one, you could never find one and no matter where you went, everyone had one, including your grandmother.

Obviously, part of the reason that the Nintendo Switch has gone on to sell as well as it has is because it feels like a natural evolution of the Nintendo Wii, we also tried to figure out what console was most like the Wii and it wasn’t close. It wasn’t close in our opinion because the Nintendo Switch shares so much DNA with the system from the motion control excellence of the Joy-Cons, which are far superior to the Wii-mote, the exercise centric games and the multiplayer options available locally are just a few of the ways that the Switch carries on the Wii legacy.

With the Nintendo Switch having sold 103.56 million units, it now only sits behind the Game Boy at 118.69 and the DS at 154.02. The Game Boy figures take into account the original and the Game Boy Color, while the DS figures include the close to one thousand iterations of the DS. The lineup includes the Nintendo DS, DS Lite, DSi and the DSi XL.

The Nintendo Switch likely has at least one more iteration of the hardware in the works which would likely be the Switch Pro that has been speculated for some time now. As of now we have seen the Nintendo Switch in 2017, Nintendo Switch Lite in 2019, and the Nintendo Switch OLED in 2021. Using this release cadence, it seems unlikely that we would see the Nintendo Switch Pro until 2023, even though it was speculated to be released in 2022 alongside the sequel to Breath of The Wild.

In case you missed it, the only systems ahead of the Nintendo Switch are the Nintendo Game Boy and the Nintendo DS, which means that the Nintendo Switch is Nintendo's best selling home console of all time,

Hardware Projections

Burying the lead a little, earnings for Nintendo Q3 FY22 were pretty great but they don’t look fantastic because they are being compared to FY21, which included most of 2020, which was an aberration for gaming as sales were through the roof everywhere. Chip shortages and logistical issues still plague many tech companies reliant on these products. Even automobile manufacturers have long delays in their delivery timelines to customers as there just isn’t enough chips to go around. In relation to this problem, Nintendo has revised their hardware projections from 24 million units sold down to 23 million units.

Breaking down hardware through the first three quarters of the year, which was 18.95 million, it was 11.79 of the original Switch, 3.99 of the Switch OLED and 3.17 of the Switch Lite. These figures represent solid sales for the Switch OLED, which was only on sale for two months out of the first 9 months, it was also much harder to find than the other versions of the Switch and this likely hindered sales of the OLED model slightly. Most importantly, the strong sales of the Switch OLED are impressive because of the minimal upgrades the OLED offered outside of the most obvious screen.

Things don’t appear as positive for the Switch Lite as in the first nine months of FY21, Lite accounted for over 30% (7.33) of total Switch sales vs the same time frame during the current fiscal year where the Lite is only accounting for slightly 16% (3.17) of total Switch Sales.

Software Projections

Nintendo has now revised their projections for the rest of FY22 changing total software sold in the fiscal year from 200 million units up to 220 million units, which is likely based on the strength of Pokemon Legends: Arceus as well as Pokemon Brilliant Diamond and Shining Pearl, which we will talk about shortly.

When looking at the changes in hardware and software figures, overall, this is a net gain for Nintendo and their shareholders because Nintendo is expecting an additional 20 million units sold and the amount of sales from an extra 20 million software titles is drastically higher than the sales of one million units of hardware, the profit is likely much higher too, as historically, console manufacturers make the bulk of their profit on the software side. Digital sales accounted for 40.2% of software sold which declined from 40.9, but this is good news that most people who adopted buying digitally during pandemic have stuck with it.

This change in forecasting led Nintendo to increase Net Sales as well as Net Profit which they have increased by 50 Billion Yen. If you look at how things settled out last fiscal year, Nintendo is likely going to surpass their software projections as they are already at 179.29 million compared to 176.10 in FY21, which ended at 230.88. FY22 has seen and will continue to see a strong lineup of releases which will help Nintendo achieve these figures.

Poke-money

Only one of their releases from the first three quarters of the year is really burning up the charts and that is Pokemon Brilliant Diamond and Shining Pearl. These games were released on November 21, 2021 and in just a little over a month sold 13.97 million and have easily topped 14 million just a few days after the new year.

The performance of Brilliant Diamond and Shining Pearl makes me think that Nintendo feels strongly about Pokemon Legends Arceus performing better than they originally anticipated. Pokemon Legends Arceus is currently sitting at an 84% on metacritic and will likely remain in that ballpark since the majority of reviews have been tallied.

Just announced on Nintendo’s official Twitter account, Pokemon: Arceus has sold over 6.5 million copies in its first week. Putting that into perspective, when Animal Crossing: New Horizon became a phenomenon during the early pandemic in March 2020, it sold 11.77 in its first 11 days, which is about a million copies per day and that is close to what Pokemon Legends: Arceus is selling.

Fast Forward to the present and Animal Crossing: New Horizons is currently the second best selling game on the Nintendo Switch with 37.62 million copies sold. Will Pokemon Legends have the same long tail that Animal Crossing New Horizons did? It seems unlikely but its safe to say that it should end up safely near the top of the list by the time the dust settles.

Looking at the rest of the top ten games sold list for the Nintendo Switch and assuming that by the time the fiscal year ends, Pokemon Legends will have outsold Ring Fit Adventure with 13.53 million units, which seems like a safe bet by March 31, 2022. This would mean that the top ten games on the Nintendo Switch would be 40% Pokemon titles. Its not a huge surprise considering how Pokemon titles dominated the portable charts and the Switch has taken over the reigns as Nintendo’s flagship portable title as well.

Software Sales

When looking at their recent releases outside of Brilliant Diamond and Shining Pearl, nothing jumps off the page. Mario Party Superstars sold 5.83, Skyward Sword HD sold 3.85, New Pokemon Snap sold 2.36, Mario Golf Super Rush sold 2.26, Miitopia sold 1.63, WarioWare: Get It Together sold 1.24, Game Builder Garage sold 1.01 and last but not least, Metroid Dread sold 2.74. It’s always worth noting just how good Mario Kart 8 Deluxe is still doing as the 2017 title sold 7.96 million in the first three quarters.

Most of the titles seem like they are performing within estimations, but I would guess that WarioWare: Get it Together and Mario Golf Super Rush underperformed. It looks like Metroid Dread and Mario Party Superstars outperformed expectations. Super Mario Party currently is the 7th best selling game on the Nintendo Switch and within just a few months, Mario Party Superstars sold almost 6 million and will likely continue to sell well since its an evergreen title.

Its also very great to see Metroid Dread do as well as it did selling almost 3 million copies since being released at the end of October which are strong numbers for just a few months. Metroid Dread also seems like a title that will continue to sell due to many end of the year lists, including ours where we named Metroid Dread our co-game of the year.