In its third-quarter financial results in early February, Nintendo confirmed that it was increasing its software sales forecast for the year from 200 million to 220 million units. While runaway early success Pokémon Legends: Arceus certainly a factor in the fact that “evergreen” old games still bring in multi-million dollar sales every year, with Mario Kart 8 Deluxe being a prime example (to the point where a new two-year DLC is now on the way).
However, when asked about the trend in the investor Q&A, company president Shuntaro Furukawa highlighted the impressive current sales of “evergreen” games, but made it clear that this probably won’t be sustainable in the coming years for the Switch. This will be a natural evolution as the system generation enters its final years; with fewer “new” owners opting for the system, there will be an equivalent drop in the number of those opting for highly acclaimed and important older games.
The goal, of course, is to offset any downturn in evergreen sales with positive results for a whole new experience.
Evergreen games released in previous fiscal years account for a large share of total software sales since last fiscal year. So far this fiscal year, in the nine months of April to December, games released in previous years accounted for roughly 60% of third-party software sales (through sales, see note) in major regions. Looking at just the three months from October to December, the share of evergreen games was roughly 50% due to high sales of new games.
As for the sales trends of evergreen games, consumers who recently purchase Nintendo Switch hardware often choose an evergreen game as their second or third game. Also, as the Nintendo Switch enters its sixth year, we believe the percentage of initial purchases, in terms of future hardware demand, will drop from what we’ve seen so far. We expect to see more purchases of multiple systems in the same home, as well as consumers replacing the previous Nintendo Switch system with the Nintendo Switch, the OLED model. In these cases, consumers often already own evergreen games, so we believe that the evergreen game sales ratio will decrease unless there is a significant increase in first-time hardware purchases.
On the other hand, we believe that both those who buy a Nintendo Switch for the first time and those who already have equipment are interested in buying new games. In the future, it will be important to offer not only a variety of hardware, but also to increase sales of both evergreen and new games.
Even before the inevitable additional Nintendo Direct broadcasts, 2022 already looks like a busy year for the Switch, with fresh announcements and dates for games like Nintendo Switch Sports and Mario Strikers: Battle League and “2022” windows for games like Mario + Rabbids Sparks of Hope, Bayonetta 3 and The Legend of Zelda: Breath of the Wild 2.
It will be interesting to see how the roster changes for the rest of this year and, of course, for 2023 in the coming months.