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April 24, 2020

Nintendo increases production of Switch to meet Covid-19 lockdown demand

By MarketLine

Gaming giant Nintendo has reported that it is ramping up production of its Switch range in order to meet booming demand.

Demand for the Nintendo Switch and its hand held counterpart, the Switch Lite has been bolstered by the ongoing Covid-19 lockdown, as consumers seek to escape the bleak reality of being stuck inside.

The Japanese game developer has stated that it expects to produce approximately 10% more units of the Switch series in 2020, up from around 20 million last years, in accordance with parts suppliers.

This is particularly impressive given that the original Switch was released four years ago, as the performance of a console typically shows a huge growth spurt during the release of new generations of consoles, before demand naturally tapers off.

Demand has been bolstered by the highly anticipated release of Animal Crossing

While demand for the Switch and games consoles in general has been high due to the global lockdown, the popularity of Nintendo exclusive Animal Crossing: New Horizons has undoubtedly bolstered sales.

The whimsical, life simulation game was released on March 20, 2020, just nine days after Covid-19 was declared a pandemic by the WHO and lockdowns became prominent in countries across the globe.

In North America, one of the consoles largest markets globally, it was the best-selling game of March 2020, becoming the second best-selling game of 2020 and surpassing the lifetime sales of all previous Animal Crossing games.

The game was also a success in its domestic market of Japan, where its physical copy launch sales broke the record held by Pokémon Sword and Shield, for the biggest Switch game debut in the region.

While the game was expected to be popular upon its release, it is clear that the Covid-19 pandemic has created a heightened demand for escapism comfort, and Animal Crossing has successfully filled that void.

Nintendo still faces hurdles amid success

Despite its success, Nintendo must overcome supply issues to meet soaring demand. In as early as February 2020, the virus was causing disruptions with Nintendo Switch production, with CEO Shuntaro Furukawa stating that delays were “unavoidable.”

The Switch, alongside the Joy-Con controllers which come with the device, have been the main products affected by the outbreak, due to production bottlenecks. As a result, the Switch console itself continues to be in short supply worldwide, with prices in some regions increasing.

Nintendo has attempted to diversify production in recent years, relocating some of its console production to Vietnam last year amid the Sino-US trade war, but still relies heavily on its manufacturing facilities in China.

However, if Nintendo is able to successfully boost production of the system by 10%, it is likely to have a very fruitful year, at a time when many companies are struggling amid dampened demand.

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