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Nintendo's new, less expensive Switch is a brilliant move that is likely to sell millions of consoles this holiday - and the company's stock is already jumping on the news
Nintendo's new, less expensive Switch is a brilliant move that is likely to sell millions of consoles this holiday - and the company's stock is already jumping on the news
Ben GilbertJul 12, 2019, 21:23 IST
Nintendo
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Nintendo's got a new console coming this September, and it's called Nintendo Switch Lite.
In releasing the Switch Lite, Nintendo is making two brilliant plays: Lowering the cost of entry to the Switch by one-third, and continuing its long history of making dedicated handheld consoles.
When most people think of Nintendo, they probably think of Super Mario and Donkey Kong and Mario Kart.
They almost certainly aren't thinking of Nintendo's handheld consoles first and foremost, but maybe they should be.
Those consoles - the Game Boy, Game Boy Advance, Nintendo DS, Nintendo 3DS - are the company's best sellers. In fact, the Nintendo DS is the best-selling Nintendo game console ever made, with over 150 million units sold.
And that's why it's such a tremendously big deal that Nintendo just unveiled its Nintendo Switch Lite console: A $200 dedicated handheld version of its already wildly popular Nintendo Switch system.
Why is the Nintendo Switch Lite such a big deal? Because Nintendo's handheld consoles are actually the company's biggest sellers, and the Switch Lite is an incredible replacement for the sunsetting Nintendo 3DS line.
Every Nintendo home console ever made — with one exception, the Nintendo Wii — has sold fewer units than every portable console Nintendo has made. Every single one, from the original Game Boy (118 million units) to the Nintendo 3DS (75 million sold and still going) has an absurdly high sales number attached to it.
Nintendo's DS sold nearly 155 million units, making it Nintendo's highest-selling game console of all time (Sony's PlayStation 2 is still the reigning king of game console sales, at over 158 million units sold).
By comparison, the extremely popular PlayStation 4 is around 100 million units sold after nearly six years of availability. The same can be said for the Nintendo Wii, which has lifetime sales over just over 101 million units.
All of that context is crucial to have before learning that Nintendo's most recent handheld, the 3DS, is currently being sunset. No major games are on the way, and its annual sales number has fallen off a cliff.
The Switch Lite is intended to pick up where the 3DS sales left off.
As Wedbush put it in a note this week, "Past iterations of Nintendo handheld hardware have routinely topped 25 million units in annual sales, and we think that the console quality of Nintendo software, coupled with a price point under $200 has the potential to drive sales significantly higher than we have modeled."
In so many words, this less expensive, portable-only version of the Switch is much more than just a cheaper iteration of the Switch: It's the latest entry in Nintendo's incredibly lucrative handheld gaming business.
Nintendo's stock price jumped on the news of the new, less expensive, handheld version of the Switch — and it's easy to understand why.
Nintendo announced the Switch Lite on Wednesday, July 10 at 8 a.m. ET, and by mid-morning Nintendo's stock had already jumped from $47 per share to over $48 — it's currently trading near its 52-week high of $48.68 per share.
The market's response to Nintendo's announcement is logical.
"We think the handheld-only version (called Switch Lite) has the potential to sell far more units than the 11.5 million we have modeled for FY:21.," the note this week from Wedbush says.
A note from Jefferies on Nintendo this week reflected a similar sentiment: "Switch has cumulative sales of 35 million so far and has yet to target 3DS owners who are price sensitive. We have no doubt that this option will boost demand for both hardware and high-margin software."
Both firms are recommending Nintendo stock as a buy, and are expecting a spike in Nintendo Switch sales this holiday as a result of the new console.
Something all the analysts are missing: A new, main series "Pokémon" game launches this November, and it's going to make the handheld Switch even more appealing during the holiday shopping season.
A huge part of Nintendo's handheld gaming history is directly tied to the "Pokémon" gaming franchise, which first launched way back on the original Game Boy.
On November 15, the next major entry in the long-running "Pokémon" game series arrives on the Nintendo Switch: "Pokémon Sword & Shield." And it's going to be a really big deal.
Aside from the fact that the game's main selling point is gigantic Pokémon (so-called "Dynamax" creatures), it's a certainty that "Pokémon Sword & Shield" will make a massive sales splash.
Look no further than the previous "Pokémon" games for evidence of that:
Between the last two major "Pokémon" games for the Nintendo 3DS, over 30 million copies were sold. Those are absolutely ridiculous numbers — each game sells as many copies as Nintendo's flagship "Super Mario" and "Legend of Zelda" franchises.
The Switch Lite is just $200, and "Pokémon" games are traditionally made for Nintendo handheld consoles. And by the way, yes, Nintendo is, of course, releasing a Pokémon-themed version of the Switch Lite in November (seen above).
Frankly speaking, it's likely the new "Pokémon" game will convince a lot of people to buy a Nintendo Switch this holiday.
