Nintendo blames falling Switch sales on supply and production issues

Component shortages and subsequent production issues are hampering sales of the Nintendo Switch.

According to Nintendo's fiscal report for the three months ended June 2022, unit sales for the entire Nintendo Switch console family declined by 22.9 percent year-on-year to 3.43 million units.

The company said that while demand remains stable as the Switch celebrates its sixth birthday, the semiconductor shortage and a dip in the number of new third-party titles negatively impacted sales.

Commenting on those supply and production issues, the Japanese company said it expects the situation to "gradually improve" from late summer.

"Due to delays in the procurement of components such as semiconductors this year, we have not been able to conduct production as planned. However, we expect procurement to gradually improve from late summer towards autumn, giving us a clearer outlook regarding production for the remaining calendar year," it wrote.

"In preparation for the holiday season, we will leverage appropriate means of shipment, and work to deliver as many Nintendo Switch systems as possible to consumers in every region."

As for how that impacted Nintendo's fiscal performance, consolidated net sales declined by 4.7 percent year-on-year to 307 billion yen ($2.3 billion) and profit increased by 28.3 percent to 118.9 billion yen ($891.6 million).

Turning our attention to Nintendo's software business, sales of Nintendo Switch titles were down by 8.6 percent year-on-year -- although there were some notable performers including Nintendo Switch Sports (4.84 million units), Mario Strikers: Battle League (1.91 million units), and Kirby and the Forgotten Land (1.88 million units).

Overall, software sales totalled 41.41 million units during the quarter but ultimately couldn't match last year's performance.

Glancing briefly at the company's digital business, Nintendo said digital sales were "strong" on Nintendo Switch and noted that Nintendo Switch Online sales also increased.

"In addition, sales of add-on content rose not only for Nintendo titles, but also for titles from other software publishers, helping push digital sales to 88.0 billion yen, up 16.0 percent year-on-year," continued the company. "Royalty income was stable, however, income from smart-device content declined, resulting in total sales of 10.9 billion yen in our mobile and IP related income, down 16.8 percent year-on-year."

As it stands, the Nintendo Switch has sold 111.08 million units to date with lifetime software sales of 863.59 million units.

Looking ahead, the company's fiscal outlook remains unchanged, and Nintendo expects the launch of major titles like Xenoblade Chronicles 3, Splatoon 3, Bayonetta 3, and Pokemon Scarlet and Pokemon Violet to "invigorate" its Switch business.