06.10.2020

Bloomberg: Nintendo may continue to release new versions of Switch similar to the iPhone model

Nintendo may refuse to create new consoles and simply update the Switch by analogy with Apple and its approach to the release of the iPhone. This is reported by Bloomberg, talking about the prospects of such a model and the complex relationship of the company with investors.Financial prerequisites for the new model

this year, the company’s shares have already jumped by 30%, and Switch sales in the first half of 2020 increased by 95%;

  • recently, Nintendo shares broke the barrier of ¥50 thousand ($473) apiece and in the foreseeable future may exceed the mark of ¥70 thousand ($662);
  • analysts predict that soon the company’s shares may even grow two or even five times;
  • given the record financial performance, the company can rebuild to a completely new model.
  • This is also due to the risks associated with the release of new consoles;previously, Nintendo has already been burned on this field.
  • If the Wii was a big hit, then the Wii U that followed didn‘t live up to expectations. That is why there is no guarantee that the next console after Switch will be successful, and the company will not face a new crisis.;Toan Tran of the consulting firm 10 West Advisors believes that Nintendo can get rid of the problems of console cycles by releasing new versions of Switch every few years: “With each generation of consoles, the user base and revenue are reset.
  • Instead, [Nintendo] could have a permanent base of 100 million consoles.”What could be Nintendo’s new approach?

Bloomberg compares the potential model of Nintendo with Apple, which regularly releases new versions of the iPhone, rather than trying to make completely new phones;

  • Thus, new iterations of Switch can be backward compatible with all previously released games, while providing users with enhanced features and improved features.;
  • If Nintendo decides to switch to a similar model, it will allow it to keep users inside its ecosystem and better forecast revenue.;
  • despite the fact that Nintendo has already hinted at the release of a new version of the Switch (according to Bloomberg, it may be released next year), the company has not said anything about switching to a completely new model.
  • Why are some analysts skeptical?

some experts believe that by focusing only on Switch, Nintendo will deprive itself of the status of an innovator in the console market;

  • on the other hand, the company’s desire for innovation sometimes plays against it.
  • Investor Aaron Edelheit notes that the value of Nintendo shares is at an inexplicably low level;Edelheit compares the situation around the company with Microsoft in 2013, which was at the stage of restructuring because of its business model and was disliked by many investors.
  • Investor relations and possible future

Bloomberg notes that investors are deterred by Nintendo’s past failures — especially when the company’s shares collapsed after the success of the Wii U;

  • Many were confused by Nintendo’s latest briefing.
  • The company has not made any adjustments to its revenue forecasts and has reported almost nothing about its plans;the managers only announced their intention to release a new gaming system in 20XX.
  • Because of the missing last figures, we may not even be talking about this decade;skeptics are also confused by Nintendo’s closed approach.
  • The company is reluctant to talk about the development of new projects and generally does not tell investors about its plans;Despite recent successes and a growing user base, Nintendo deliberately ignores industry trends.
  • The company is still in no hurry to gain a foothold in the mobile market, as well as to do online projects like GTA Online or Fortnite;at the same time, Ryan O’Connor from the investment firm Crossroads Capital is confident that the company’s shares will grow several times, even if Nintendo continues to “troll” investors.
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