Why Nintendo Switch Sales Seem to Be Slowing

It appears that the Nintendo Switch is losing some of its selling power. Let's explore why this might be the case.

In its earnings report for the 2022 fiscal year (March 2021 to March 2022), Nintendo reported that 23m Switch consoles were sold. This is a drop of 20% compared to the 2021 fiscal year when 28.8m consoles were sold.

This slump in sales comes at an interesting time, considering the release of the Nintendo Switch (OLED Model) was just a few months prior in October 2021. But this doesn't mean the OLED model was an unpopular release. Instead, the drop in sales of the Nintendo Switch can be attributed to a fair few things.

Radical Shifts in Supply and Demand in 2021

As lockdown became reality in early 2020, people began looking for new ways to entertain themselves at home. Video game consoles were the obvious solution, and Nintendo saw Switch sales skyrocket. Ironically, this can help explain the drop in Nintendo Switch console sales in late 2021/early 2022.

While Nintendo Switch sales for the 2022 fiscal year were lower than in 2021, it's still the second-highest level of sales since the launch of the Switch, per Nintendo's 2021-2022 fiscal report. This makes sense as most COVID-19-related lockdowns took place during the 2021 fiscal year (March 2020 - March 2021).

While it's impossible to tell exactly what sales would have looked like if the COVID-19 pandemic hadn't hit, it certainly looks like the current numbers are a return to the usual trend thanks partly due to the release of the Nintendo Switch (OLED model).

The Nintendo Switch saw sales drop by 33.3%, and the Switch Lite's sales dropped by 56.5%. While the OLED model wasn't a huge improvement, a mere $50 increase meant it was an attractive alternative to buying the original Switch. Without the novelty of a new console, Switch sales would likely have been even lower.

Semiconductor Shortages and Supply Issues

While demand for Switch consoles skyrocketed in 2021, Nintendo was subject to the same logistical difficulties and supply shortages that troubled many companies. According to Nintendo, this is the reason for the slump in sales:

Semiconductors are a vital part of the manufacturing process, so it makes sense that Nintendo is struggling to manufacture enough consoles to keep up with demand.

The Nintendo Switch Is Over Five Years Old

The Nintendo Switch was released worldwide on March 3rd, 2017, which makes it over five years old at the time of writing. Anyone that wants one has likely already bought one, and demand has decreased. As demand decreases, sales drop.

The Nintendo Switch has also been plagued with performance issues since its release. Five years later, we're still experiencing them. The release of the OLED model didn't help this problem, as a lack of hardware improvements meant the OLED model wasn't a huge improvement over the original Switch.

As games continue to get more intensive, Nintendo shows no signs of improving its hardware to match. Unless this happens, Nintendo's latest games will either suffer increasingly worse performance or be unable to take advantage of improvements in visual quality.

First-Party Sales of Games Are Still Increasing

Nintendo's first-party sales for the 2022 fiscal year were the highest ever. But at the same time, sales of the Switch console are dropping.

This shows that while Nintendo's games remain as popular as ever, fewer people are buying a console just to play them. Releases of first-party Nintendo games, like Pokémon Legends: Arceus and Kirby and the Forgotten Land, show that even well-known titles aren't enough to reverse falling Switch sales.

This isn't really a problem for Nintendo, however. In a May 2022 investor Q&A translated by Video Games Chronicle, Nintendo mentioned its focus on building "long-term relationships with our consumers" through both gaming and non-gaming software.

The Future of the Nintendo Switch

Unfortunately, it's impossible to point to just one reason for the slump in Switch sales. While the biggest impact is due to the supply chain shortages and shift in sales due to the COVID-19 pandemic, Switch sales are affected by a lackluster hardware update in the form of the OLED model and the fact that most people who want a Switch already have one.

While Nintendo Switch sales have slowed, Nintendo isn't concerned. People are still enjoying their Switch consoles, and 2022 releases indicate a bright future. While the release of the OLED model wasn't as groundbreaking as many hoped, it shows that Nintendo is still fully committed to the Switch, even as talk of a new console increases.