The Nintendo Switch has been a bonafide sales success despite many of the perceived barriers that surrounded its launch. Sure, the software launch lineup was sparse, and the operating system was (and is) a bit on the light side, and even the price point was considered high by some pundits. Still, through it all, Nintendo has been on message with its marketing and its rollout of major first party games every month or so with plenty of unique and fun digital games peppered throughout.
With its unique form factor and the ability to play anywhere at anytime, the Switch has become somewhat of a technological marvel – a device that is already loved by many who own one. Even though the console launched in March, typically a slower time of the year for system sales, Nintendo has managed to shift 1.2 million to retailers in just the first two months – all of which has sold through to customers. This is, believe it or not, 100,000 more sold than the original Wii’s first two months on the market (launched during the busy holiday season), which was a sales monster in its own right.
This has led to booming revenue at retailers who carry the Switch. According to Bloomberg, Best Buy got a super-sized boost from Nintendo in its first quarter, helping the retailer post a surprise sales gain. Comparable-store sales rose 1.6 percent, which is fantastic since most analysts had predicted a decline. This announcement sent Best Buy’s share prices to a record high with their biggest rally in nine months.
It’s not just Best Buy reporting the increased sales, but Target also noted that its electronics sales saw a nice jump thanks to the Switch. Remember, it’s not just the consoles that are driving the sales, but also hit software like The Legend of Zelda: Breath of the Wild – one of the highest rated games of all time, and the recently released Mario Kart 8 Deluxe. The latter has spurred sales of additional Joy-Con and Pro controllers, with many retailers reporting out of stocks on the different skus. Because of the hybrid nature of the Switch, more accessories than normal have been selling. So in addition to additional controllers, gamers are flocking to carrying cases, screen protectors, and Micro SD Cards. All of these incremental items (which by the way have much higher profit margins than the actual console) can really have an impact on retailers’ profitability.
GameStop is also among the retailers reporting higher income thanks to the Switch. If Nintendo could keep up with demand, the sales would have been even higher. However, despite Nintendo increasing production, it doesn’t look likely that demand will be satisfied any time soon. In fact, Tony Bartell from GameStop talked bout this on a conference call today with investors:
Literally we have the product sold before they hit our warehouse. But we haven’t seen supply even come close to catching demand at this point. The form factor of the games lends itself very well to a trade-in model. So we anticipate there will be a high percentage of trades for these games. I’d say the Switch, just like the Wii did, is driving a lot of new innovation. So in the next year I think you’ll see growth in new games.
Of course, this all has an effect on Nintendo as well, which is still riding high from last year’s amazing performance with Pokémon Go, the stellar sales of the 2DS and 3DS, as well as Pokémon Sun & Moon. Its own stock price has been boosted in recent weeks and is now sitting at the same level as it was at the height of the Pokémon Go craze last July. New games like ARMS and Splatoon 2 hit in the next two months and with E3 just around the corner, all eyes are on Nintendo to see what other announcements will be made. We just received word that the amazingly popular Monster Hunter series is coming to the Switch in Japan, so the system is definitely on the fast track to continued sales momentum.