Nintendo knows how to capitalize on a successful game.
On Wednesday, the Japanese gaming company announced the launch of two new Pokémon games on its Switch console: Pokémon Sword and Pokémon Shield.
The move is a sign that Nintendo is trying to use adaptations of old favorites to breathe new life into its Switch gaming device. Two years after its successful debut, Switch sales expectations have proven too lofty, according to Michael Pachter, an analyst at private financial services firm Wedbush. Nintendo has responded by giving the people what they want — the classics they fell in love with years ago.
“Pokemon is absolutely their sweet spot,” Pachter said. “They’ll sell 12 to 20 million [games]. It’s something that Pokédads will buy because they remember and love the Pokémon brand.”
Pachter told CNN Business that Nintendo has at least 30 different brands, including favorites such as the Mario, Zelda, Pokémon and Super Smash Bros. franchises.
“The thing that’s impressive about Switch is that in the first two years, they have four of their biggest brands available on it,” he said. “Nintendo is like the Disney of games. It’s like bringing out a new Marvel or Star Wars movie — it’s guaranteed to do well because people love the brand.”
Pachter praised the Switch rollout and noted how different it was from the Wii U console, which didn’t have big-name games on it. Released in 2012, the Wii U was an attempt to capitalize on the success of Nintendo’s original Wii, but it failed to catch on.
Nintendo’s Switch console had the opposite problem. It was so popular when it launched that there were issues meeting demand. The device, which is one part mobile gadget and one part home console, sold 10 million units less than a year after it launched in March 2017.
It helped increase Nintendo’s profits and stock price. The company reported a 25% bump in profit compared to the same period last year. Making popular brands available on Switch has also paid off. In its third quarter earnings, released at the end of January, Nintendo raised sales projections for Switch games from 100 to 110 million.
Nintendo President Shuntaro Furukawa has repeatedly said the company will continue to rely on well-known franchises and debut new iterations of the popular brands to “enhance the allure” of the Switch.
Nintendo (NTDOF) recently unveiled new games in the popular Legend of Zelda and Mario series.
It also debuted a 99-player online version of the Tetris puzzle game. Tetris 99 is a “battle royale” game, which is a video game genre that simultaneously challenges multiple players. It forces them to fight to survive, and explore and scavenge within a game. The title has become extremely popular with the rise of similar games like Fortnite.
But Pachter noted that a number of Switch games sell for around $10, which is a lot less than what games for rival consoles like Microsoft’s Xbox and Sony’s PlayStation go for. He said the lower price point of some of the Switch games could have an impact on revenue.
There are also signs things are already slowing.
In its third quarter earnings statement, Nintendo cut its target for Switch sales from 20 million to 17 million. It also cut sales projections for its 3DS handheld system from 4 million to 2.6 million.
Pachter says the only way for Nintendo to hit its initial $20 million sales target is to lower the price of the Switch by about $100 and make it just a handheld console.
Nintendo was not available to comment.
As the Switch’s newness wears off, Nintendo of America is also undergoing change.
Last week, Nintendo named Doug Bowser as its new head of American operations. Bowser — who had a brief moment of viral fame this month for sharing a name with the famous Mario villain — will take over the role in April from Reggie Fils-Aime, who led Nintendo of America for the past 13 years and was popular with fans.
Given that Nintendo is a Japanese company and most of its operations are based overseas, Nintendo of America is largely focused on retail and partnerships.
“Reggie spent a lot of time being a spokesperson for the brand but Doug will market it,” Pachter said.
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